Advertisement

Using procurement to deliver social outcomes

The pressure to demonstrate added value in public procurement is growing. Steve Malone explains how a new alliance is harnessing the spending power of social landlords

Every year social landlords spend millions on furniture for their properties. The same goes for paint, kitchens, central heating systems, cavity wall insulation, waste management and cleaning services.

The list goes on. With over 3,000 housing associations, local authority landlords and arm’s length management organisations in the UK, managing approximately 4.5 million homes, the buying power of the sector is significant.

For many years now, social landlords have used this muscle, aggregating demand to drive down supply chain costs. But more recently there has been a move within the sector to explore the additional outcomes, besides efficiency and cost savings, that can be generated through collective procurement.

Social enterprises have long advocated the use of business practices such as procurement to generate wider benefits for communities, the environment, disadvantaged groups and local economies. But this is something that has always been optional – part of a private sector company’s corporate social responsibility policy or the personal ethos that drives a particular charity.

Back in June 2010 Chris White, Conservative MP for Warwick and Leamington, embarked on a journey to change this. He introduced the public services (social value) bill which aims to change how councils, some of the biggest budget holders in the country, buy goods and services.

So far the bill has passed all its stages in the House of Commons and will now be sent to the House of Lords for consideration. If it becomes law, local authorities will have to consider the far reaching economic, social and environmental impact of a service as well as price when picking suppliers.

This type of social value commissioning would ensure that public sector procurement muscle is always used to deliver deeper benefits for local communities, as well as achieving high quality, low cost services. Generating social impact will no longer be a luxury or add-on. Instead it would underpin the procurement methods of local authorities.

But if it is passed, this bill will only apply to local councils. What about other public sector bodies such as primary care trusts, the emergency services or independent social landlords?

Three buying consortia have joined forces to address this gap in the social housing sector, creating a community impact procurement model that can be used by any of their member housing organisations.

This alliance, set up by Fusion 21, the Northern Housing Consortium and Procurement for Housing is the largest grouping of social landlords in the UK. It has a combined membership of 1,170 housing providers and represents over 70% of the UK sector’s stock. The alliance’s total of 65 frameworks are currently worth £400m per year.

The aim of this large scale buying group is to harness the purchasing strength of its members to help local people find jobs in the construction industry. For every £1m of work awarded to a framework supplier, the alliance will secure 1.5 employment-led training places with that supplier. This will help to reduce local unemployment and tackle skills shortages in certain areas.

Social enterprise Fusion 21 has been using this job creation model to drive its procurement activity since 2002. So far thousands of local residents have achieved NVQ qualifications in building and health and safety and more than 800 permanent jobs in the construction industry have been created.

Dave Neilson, chief executive of Fusion 21, believes that rolling out this social value procurement system through the new alliance is an important way of helping member landlords all over the country to tackle worklessness and other issues within the community.

‘In setting up the alliance we wanted to replace the traditional focus on lowest price with a “triple bottom line”, ensuring the buying power of the social housing sector is used to meet social, economic and environmental outcomes.’

The alliance will focus on creating training and work for hard-to-reach and disadvantaged individuals, who are often social tenants themselves. This might include people who are long term unemployed, ex-offenders, individuals from BME backgrounds, people who have a disability and also women wanting to get into the construction industry.

In addition to creating jobs, the buying group will support a range of small local construction industry suppliers to offer their services on agreements. This will help local firms to grow by allowing them to break into the social housing market and supply social landlords on framework agreements. Currently 37% of suppliers on the alliance’s retrofit framework are small or medium sized and the group is aiming to increase this figure further in the next six months.

Another driver behind this buying group is the fact that many housing providers find the UK’s range of buying groups confusing, making the marketplace difficult to navigate and disaggregating demand.

Jo Boaden, chief executive of the Northern Housing Consortium, explains: ‘The last ten years have seen the emergence of a number of buying consortia that exist to combine market need and provide an easier route to compliant procurement. Whilst the motivations behind this move have been positive, some organisations have found the wide range of consortia options confusing, and there have been accusations of “too much choice” and a duplication of effort.’

By pooling the requirements of their members, Fusion 21, the Northern Housing Consortium and Procurement for Housing want to simplify the market without removing variety. Housing organisations will ultimately have a single point of access to agreements. The scale of the initiative will allow the group to achieve significant efficiencies through aggregated purchasing power, supporting housing providers to tackle key social agendas such as fuel poverty by achieving lower costs.

Initially, the alliance will provide one central procurement point for two frameworks – retrofit and gas servicing. As it develops, the buying group will aim to offer further joint frameworks and a range of additional services for its members.

Social housing organisations are all about communities. Many registered providers already have schemes in place to reduce unemployment, increase social inclusion, improve the local environment and support businesses in the area. But this activity takes time, money and dedication from cash-strapped social landlords.

Surely one way to add to this positive work is to knit the delivery of social impact into the daily running of housing providers. Ensuring that day-to-day procurement delivers benefits for local communities as well as improved productivity and lower prices for landlords seems an obvious way to start.

Comments

Subscribe
Notify of
guest
0 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments
Help us break the news – share your information, opinion or analysis
Back to top