There can be no doubt the inclusion in social value in many contingent and interim staffing contracts has started to yield some results for the local government sector. With between 10% and 15% of the total procurement weighting now sitting with the delivery of social value, we have started to see some incremental results.
This opportunity has been timely, with limited opportunities to reduce the upfront costs via framework suppliers, the only real way more value can be delivered is through social value.
There is now more accountability for outsourced managed service providers to engage with local communities, often through CV and interview advice in local schools and at job fairs. Things are indeed changing.
There is also a push by local authorities to have more say in which agencies are engaged on the Managed Service Providers (MSP) supply chain. Previously this was down to the MSP, with local small and mid-size enterprises (SMEs) often overlooked for sister companies or those large enough to offer economies of scale.
It is true that aside from the above, there are limited opportunities for additional value to be yielded from such a low margin, high mark up model that is the outsourced MSP market.
There are however significant opportunities if the model changes. What if, instead of paying someone else to deliver your provision and then persuasively asking for some return, you no longer had to leverage social value. What if you could shift from an ambition of social value to a reality of community wealth building? Simply put, you can, and it is delivering significant returns for residents across Kent, Hampshire, Luton, Surrey and Dudley, with Dorset also now adopting a different approach.
Through the creation of individual joint venture companies, in partnership with Commercial Services Group (wholly owned by Kent CC) these councils are now in control of how they shape community wealth building, as they move away from simply delivering social value, through their contracted MSP providers.
Firstly, these council-owned joint venture companies employ specialist recruiters who live in each geographical location. This alone has created in excess of 100 local jobs, for more than 100 local people, who work and spend money locally, which enables the local economy to flourish and keeps the local pound ‘local’.
There is also the prioritisation of local SMEs within the supply chain, real prioritisation, through the creation of a level playing field, in which local SMEs can and do excel, without the inhibitors of competing against group companies or national providers on volume based arrangements. This engagement has seen more than 60 local recruitment businesses grow, which again helps the local economies they work in, along with more than 9,000 local residents who have also found work through the joint ventures, all of which contributes towards the circular economy.
And then there are the joint venture companies themselves. At CSG, we are extremely proud all joint ventures are exceeding expectations, which also benefits local communities and economies. This is because each joint venture is established with the primary purpose of providing each council with overall savings, through the creation of a surplus, which is returned back to the public purse for reinvestment in frontline services and local communities.
Last year this amount exceeded £3m. In times of continued financial and budgetary pressures, the question to ask is ‘what could we do with £3m?’.
Yes the joint venture companies also deliver social value, with the teams engaging local community groups, schools and the 3rd sector to prioritise those most in need of help, in the uncertain employment markets we all face today.
On top of that the joint venture companies also have a proven track record of engaging with care leavers to provide them with employment opportunities, which often lead to long-term careers within the councils and the local economy. Speaking of which, did we mention the support the council-owned joint ventures provide to local schools and care providers, to enable them to attract and retain staff?
The world is moving faster than ever and local government is no different, so before you assign 10% of your procurement evaluation to social value, is it worth considering the model and how you can leverage real change, through community wealth building?
Steve Wilson is commercial director of Commercial Services Group