Nef (the new economics foundation) Sustainable Procurement and Commissioning - overview Elizabeth...

nef (the new economics foundation)

Sustainable Procurement and Commissioning - overview

Elizabeth Cox & Josh Ryan-Collins

Whole Life Costing Working Group 7th October 2008


Plan for the day

• 11.00 Introductions

• 11.10 Overview of nef sustainable procurement work (Josh)

• 12.10 CAA response (Liz)

• 12.45 Lunch

• 1.30 Valuing – SROI (Eilis)

• 2.00 Discussion/Summary


Defining VfM– Value for money is defined as the optimum combination of whole-of-life costs and

quality (or fitness for purpose) of the good or service to meet the user’s requirement. Value for money is not the choice of goods and services based on the lowest cost bid.

• HM Treasury (2006) Value for money guidance, p.7. [13 August 2008]

– In principle, any appraisal should take account of all benefits to the UK. This means that, as well as taking into account the direct effects of interventions, the wider effects on other areas of the economy should also be considered.

• HM Treasury (2003) Green Book, p.2. [25 August 2008]

– Wider social and environmental costs and benefits for which there is no market price also need to be brought into any assessment. They will often be more difficult to assess but are often important and should not be ignored simply because they cannot easily be costed.

• Ibid p.19.


Challenges for procurement officers

• Narrow interpretation of Gershon & VfM:– Cashable v ‘non-cashable’– Price > ‘whole life costing’

• Silos - Information on budgets and budget holders

• Aggregation• But remember: you are free to determine what

you are buying – you can contract for ‘the construction of a sports hall’ or you can contract for ‘the construction of a community centre and the regeneration of the community’


Resources

People (time & skills)

Inputs Outputs

Service & wider Outcomes (Place Shaping)

Money £s

Environment Environmental

Economic

Social

Longer term public benefit (3 -5 years)

coproduction

Resources Inputs Outputs Service level Ou tcomes Money £s

Cost savings - ANNUAL

Value for Money – narrow and real versions


Activities, outputs and outcomesActivities

The intervention provided. E.g. a training course.

Outputs

Direct and tangible products from the activity; for example the number of people trained, or the number of computers recycled.

Outcomes

Changes that occur for stakeholders as a result of the activity; for example, a new job, improved quality of life or increased community cohesion.

Both ‘hard’ and ‘soft’ outcomes can, and should, be valued


1.

Activity

2.

Output

3.

Service level outcomes

4.

Camden Community outcomes

–social–economic–environment

5.

Value–Quantitative–Qualitative–Monetizeable

Where value accrues:- To Service- Camden wide- central government

How to procure locally:1. Sustainable Commissioning model

Community strategy & Corporate priorities

Commissioner & service user priorities

National outcome frameworks


Activity Output Service level outcome

Camden Community outcome

Value

Designs and prints stationary

Recycles paper

Provides training, supported employment, therapeutic support and paid work to people recovering from mental health problems in Camden

Council stationary

No. hours of training, supported employment, therapeutic support& paid work

High quality stationary and recycled paper

[Improved mental health]

Local jobs created

Reduced Waste

Reduced worklessness & economic inactivity

Increasing no. of people with mental problems into work & staying in work

More vulnerable adults living’ independently

No. local jobs (supply chain monitoring)

Landfill Savings

[Preventative savings]

Costs of tenancy failure £2,000

Council staffed hostel £484 per week; local authority group home £202

Complex need placements - £1,200 per week

Incapacity benefit: £4,379 per claimant per year.

Two ways of seeing value – St James’ House social firm


www.homelessoutcomes.org.ukTracking outcomes –

Outcomes Star


Relating savings to outcomes star


Camden Community Strategy• ‘…increase local business activity’• ‘…increasing no. of disabled people &

people with mental problems into work & staying in work’

• ‘…sustain local economic services such as post-offices’

• ‘Reduce energy usage’


Islington Community Strategy• ‘Explore new ways of engaging with local

businesses’ (p30)

• ‘Develop initiatives to tackle and adapt to the impact of climate change and raise awareness of the issues’ (p30)

• ‘Reduce energy usage, reduce waste and promote walking and cycling’ (p30)


National Indicators

• NI 152 Working age people on out of work benefits

• NI 166 Average earnings of employees in the area

• NI 171 VAT registration rate

• NI 172 VAT registered businesses in the area showing growth


Construction – Norfolk district council

1 Local firm 2 Non-local firm

Round 1 £ 72,000 £ 120,000Round 2 £ 57,600 £ 20,400Round 3 £ 24,980 £ 6,760Total £ 154,580 £ 147,160

LM3 2.15 1.23

The local multiplier (LM3) effect


What is co-production

Produce: means - to make something or bring something into existence

Co: means - together; with in relation to services• active relationship between staff and service

users as co-workersin relation to communities• engaging the assets that exist within

communities to grow the core economy



• Investing in strategies that develop the emotional intelligence and capacity of local communities

• Devolving real responsibility, leadership and authority to ‘users’, and encouraging self-organisation rather than direction from above

• Offering participants a range of incentives which help to embed the key elements of reciprocity and mutuality


What isn’t co-production

Service user consultation

Informing people who use services

Service user involvement in service design

Representation on service boards and panels

Service users involvement in assessing services


What is co-productionProfessional designed

Professional

delivered

Service user designed

Service user

delivered

User self-help group

Traditional services

Expert Patient Programme


Reviewing Roles

Professionals as sole service planner

Service users/ community & professionals as co-planners

No professional input into service planning

Professionals as sole service delivers

Traditional professional service provision

Professional service provision - users and communities involved in planning and design

Professionals/ users/ communities as co-deliverers

User co-delivery of professionally designed services

Full user/ professional/ community co-production

User/ community delivery of services with little formal/ professional planning or design

Users/ communities as sole deliverers

User/ community delivery of professionally planned services

User/ community delivery of co-planned or co-designed services

Self-organised community provision



• Reducing or blurring the distinction between those who deliver and those who receive services, by reconfiguring the ways in which services are developed and delivered: services can be most effective when people get to act in both roles – as givers as well as receivers

• Allowing public service agencies to become catalysts and facilitators rather than simply providers


Getting impact in to the procurement process


Ask the right questions

• What role would you envisage for service users’ in the development and delivery of your service?

• How does your service identify and mobilise service users strengths?

• How would the contribution of service users, carers, family, peer group, neighbours and the wider community be measured or rewarded?


Guiding principles

• Recognising people as assets

• Valuing work differently

• Promoting reciprocity

• Building social networks


How to do it: Community Benefit Clauses

• "You can say in a contract that x% of jobs must go to the long-term unemployed, or new entrants to the labour market, or people needing vocational training. But you can't say that jobs must go to local people. That is the key… In reality, most - if not all - the jobs will go to local people or those from the surrounding area.

Mark Cook, Anthony Collins Solicitors


Raploch Urban Regeneration Company• Renewing deprived outer-city estate in Stirling• Demolishing 450 houses and building 900 new homes,

new roads & public squares• 10% of jobs to go to local people, with a target of 225 jobs• Contractors legally-bound to provide 5 apprenticeships,

10 jobs for semi-skilled operatives & 10 training places per year


Sustainable Communities Act• Local authorities are charged under the Sustainable

Communities Act to find new ways to support local enterprises to develop their capacity to provide sub-regional economic growth in respect to:– Local jobs and production within a 30 mile area;– More local and organic food;– Green energy within a 50 mile regional radius;– Provision of local services (eg. health, housing, banking, public

eating places, etc.)– Measures to increase mutual aid and community projects;– Measures to increase community health and well-being.


www.procurementcupboard.org.uk


Further information• [email protected]

• www.neweconomics.org.uk

• Fools Gold: How the 2012 Olympics is selling East London short, and a 10 point plan for a more positive local legacy

• Unintended Consequences: How the efficiency agenda erodes public services and a new public benefit model to restore them

• Public Spending for Public Benefit• Plugging the Leaks &The Money Trail• A Better Return: Setting the foundations for intelligent

commissioning to achieve value for money – I&DeA & OTS Third Sector Commissioning Programme

• Coproduction Manifesto

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