People-focused services: key messages in response to the Public Procurement Open Consultation

Weaving a stronger social fabric requires moving from procurement to partnership

The Covenant: 

“If we are serious about renewal, civil society must be heard, not just at the margins but at the heart of decision-making. Civil society is a force for innovation. It has the local knowledge of what works, it is rooted in lived experience and earns the trust of those it serves. By strategically co-investing with government, social finance can help drive innovation through testing and growing new ideas.” 

The Rt Hon Lisa Nandy MP - Secretary of State for Culture, Media and Sport

Policy coherence: 

To reform the non-markets and dysfunctional markets in people focused services, distinct legislation is required. 

To attract the social finance needed for the VCSE public benefit sector to co-invest and partner with government to transform our communities; to re-imagine the delivery of public services and to deliver integrate neighbourhood teams (NHS), in alignment with in the spirit of The Covenant, the new legislation must distinguish:

1) market purchasing from system stewardship;   
2) procurement from partnership; 
3) competition from collaboration;                                
4) profit-focus from people focus;
5) transactional from a relational approach; and                  
6) additional social value from inherent social value.

From market purchasing to system stewardship

Commissioning community services to support vulnerable people is vastly different from the government buying marketized goods and commercial services. 

People focused services are not markets, they are publicly funded systems, desperately in need of co-design, VCSE collaboration and long- term system stewardship. 

With fundamentally different value systems, SMEs and VCSEs are heterogenous groups. To thrive, SMEs and VCSEs each need a distinctive enabling ecosystem and public policy approach.

Procurement from partnership 

While the NPPS Public Benefit Test is a welcome policy initiative, any binary in-source, outsource decision risks missing the opportunity to partner with VCSE social economy actors to test and grow new ideas and drive innovation. 

At the local authority level, over 75%[1] of budgets are now spent on people-focused services using commercialised procurement systems that are not fit for purpose. As outlined in The Art of The Possible in Public Procurement (2016), commissioning is a much wider concept than procurement, yet the more collaborative commissioning pathways – grants, reserved contracts, joint venture partnerships, innovation partnerships, alliance contracting etc - remain under-utilised. 

Proportionality and the Light Touch Regime: The thresholds and flexibilities available under the Light Touch Regime are misunderstood and little-used. We have seen time and resources being wasted on designing complex, multi-council, public sector procurement processes that ultimately fail, which could and should have proceeded as simple horizontal public to public agreements. 

 

From competition to collaboration

Already a feature of the NHS Provider Selection Regime, for the first time collaboration now features expressly and officially in relation to principal procurement legislation.  

To deliver on the Governments Missions and Plan For Change, the regulatory landscape must make it absolutely clear when contracting authorities should stimulate healthy commercial competition, and when a collaborative, system stewardship mindset is needed to co-design and deliver more effective people focused services. 

Policy documents across government are calling for agile, collaborative leadership, systems integration and VCSE Partnership. The 2023 Procurement Act states that authorities should: 

“work in partnership across organisational boundaries where appropriate”; and 
”work collaboratively to develop a pro-innovation mindset”. 

The Compact, NHS Integrated Neighbourhood Teams, The NISTA Teal Book, and the LGA all advocate more purposeful collaboration.

However, in practice, due to a lack of collaborative commissioning capacity, even contracting authorities with high levels of ambition and political will, can fail due to path dependency. Resorting to enforced competition and the procurement path of least resistance, damages trust amongst co-design partners and results in a return to processes that are not fit for purpose. 

Evidence of this can be found in recent failed attempts to re-balance the children’s residential services system. Agile collective governance models provide the flexibility needed to co-design place-based solutions in response to individual and local need.

From profit-focus to people-focus

Buying goods and commercial services for the public sector is inherently different from the commissioning of services for vulnerable people. 

Today, 80% of social services contracts are delivered by private-for-profit actors. 50% of the children’s residential system is dominated by six private equity actors, with profits in excess of £45,000 per child per annum being reported in a system where government is the only ‘buyer’. 

Explicit people focused services legislation dedicated to the advancing the long-term stewardship of this publicly funded system is urgently needed. People focused, purpose aligned private actors also willing to operate in the public interest and embracing social snterprise principles by agreeing to operate on an open book basis with pre-determined reasonable profit margins, could also be engaged in the delivery of people-focused services. 

 

From transactional to relational systems

Rather than a master servant relationship, people focused services should be co-designed with citizens and operationalised through mutually beneficial agreements with their trusted VCSE support partners. To identify what matters most in the context of people and place, lived experience & VCSE expert knowledge must be placed at the heart of the social value system intelligence. 

Deeply embedded in community, with trusted local relationships, VCSEs are naturally values aligned co-investment partners for contracting authorities seeking place-based solutions to complex societal challenges. By fostering competition where there used to be collaboration, public procurement processes disrupt trusted relationships and sources of embedded local knowledge. E.g. violence against women and girls - despite statutory guidance strongly emphasising the importance of collaboration with specialist charities, and the appropriateness of grant-funding, contracting authorities continue to utilise standard procurement processes which have been incredibly disruptive to relationships, intellectual property and threatening the resiliency of the sector.

From additional social value to inherent social value

Social progress is the primary responsibility of government.  As social value continues to evolve, the quest for materiality is deepening, along with the need to know whose life will change and in what way?  

The VCSE sector is distinctive and values-aligned with government. Despite, this the current procurement system fails to recognise the inherent social value of VCSEs. In  open letter to the LGA, a significant number of VCSE public benefit leaders including Julian Blake and Sandra Hamilton of Stone King voiced their concerns, calling for the TOMs™ system not to be used for the evaluation and procurement of people focused services. The letter outlines why it is wholly inappropriate for VCSE public benefit organisations to have to compete in a marketized system, that weights only a small percentage of social value in organisations wholly dedicated to public purpose. 

PPN06/20: In commercial market purchasing systems, we support extending this policy to sub-national actors. We would further encourage the government to mandate the use of the Social Value Model at the local government level, aligning the same approach across all contracting authorities. We do not support the government mandating a small number of streamlined social value criteria. We feel that the current Social Value model offers the right balance of standardised reporting without being overly prescriptive.