Public Services (Social Value) Bill

Lord Mawson Excerpts

Friday 27th January 2012 Lords Chamber

[Lord Mawson]

My Lords, in speaking to the Bill I declare two interests: as a director of the social enterprises One Church, 100 Uses, a national regeneration agency, and of the Water City Festival CIC, which is based in east London.

I thank the noble Lord, Lord Newby, for introducing this Private Member’s Bill in the graveyard slot at this point on a Friday afternoon. It is in my view a most important Bill because it seeks to put its finger on a very important issue: public sector procurement and the culture that prevails within public service provision in this country.

We in Britain used to be known as a nation of shopkeepers. Today we need to become known as a nation of enterprising communities. A business is a community, as is a local school, a hospital, a village, a town, a London borough and even an Olympic Park. In a country that is nearly bankrupt, the real challenge that we face is how we now unlock the energy and enterprise within Britain's many and varied communities. How can we once again discover the entrepreneurial skills in our DNA—our inherent ability, which our Victorian ancestors were so adept at, of making something out of nothing? This is the key issue at the core of the Bill. If the next generation are both to survive the present harsh economic climate and to make something out of it for themselves and their children, then they have to become adept at creating something out of very little. Navigating the processes of public service delivery and procurement must help them and not get in the way. This is the big challenge of our day that underpins this legislation.

In the people of this country there is a sleeping giant waiting to be woken from its slumber. You can see this giant dozing in many of our communities. I see it daily in the dependency culture of some of our most challenging housing estates. I know this as a fact because I have spent a great deal of my life working in some of our most deprived communities and know what can happen when you wake the beast. The people who make a real difference in communities—the local chemist, the doctor, the head teacher, the social and business entrepreneur—are already there, but feel ground down in bureaucracy and the countless ideologies that we have built around our systems of government. For those practical people it is very difficult to find the energy to wake and engage with the outside world because moving the bedclothes has become so hard. Despite the rhetoric from a number of different Governments about removing red tape, in my experience it is getting worse, not better. Words are easy but actions are hard. We cannot afford bureaucracy any more: it is too wasteful.

I was with a successful small businessman recently whose family has created a flourishing shopping arcade that allows local people at small cost, in a very straightforward way, to open a small market shop and grow their own business. The culture is good and the relationships are healthy, but he tells me that every time the local authority officer appears with the keys jangling from his belt, he fears the worst—another set of requirements, forms to fill in and processes to go through that will increase his costs and, eventually, those of his traders. Social entrepreneurs experience exactly the same thing as this business entrepreneur, and it is stifling innovation and creativity.

I have just sat through the Health and Social Care Bill with its many amendments and listened to this Government, as I have listened to three previous Governments, telling me as a practitioner and entrepreneur how they are seeking to improve the health service. This Government, like the one before, are of course right to try and do so and their aspirations are correct, but the culture is not and neither is it changing. Just look at the number of people taking sick leave or retiring early in the NHS: good people who want to do a good day’s work. Already, despite the many amendments and words in your Lordships’ House, the experience of my colleagues on the ground, operating in the machine, tell me that it is business as usual in the NHS. They tell me that the same old faces, the same old ways of working and the same oppressive culture of the health service are bearing down upon them. There is a sense here and elsewhere that everything might seem to be changing, but the reality for practitioners is that they see little change—the culture is the same. There is a great difference between seeming and seeing.

The big issue that this Bill attempts to address is the culture of our public services in Britain. Its aim is, quite rightly, to create greater diversity in public service provision and to let loose these new emerging enterprising communities by creating flexibility, and that is exactly right. I was at a dinner recently with Sir David Varney, former CEO of Shell, chairman of O₂ and HMRC. He has run some very large institutions in his time, both in business and in government. He raised the question of why it was that Governments, regardless of which party is in power, with all their resources, often in reality seem to achieve so little, yet social entrepreneurs and local enterprises seem to achieve so much with just one man and a dog. How can we grab hold of the dog’s tail and shake it? This is the big question—the David and Goliath struggle. When you raise these issues, older and wiser heads than me predictably give weary smiles because they have heard it all before and know how difficult it is in reality to do. That might be so, but someone needs to throw the stone to create the ripples.

The big change that this small Bill must seek to make is that of culture. How do you create an efficient culture within public service delivery and procurement? How can we get more for less? How do we empower, energise and truly engage with communities through our systems of procurement?

I have read the cross-party debate in the other place between Chris White, Hazel Blears, Nick Hurd and others. I do not intend to repeat their points. They are all right, and while there may be minor differences between them, they are struggling with this very important issue, and we must encourage them to continue to do so. I support this Bill because there is ample evidence, which has already been given in the other place, of how broader and more imaginative procurement can pay dividends. I do not propose to add to that evidence in this speech. I am interested in the more practical matter of how we build on and grow the evidence.

While this legislation is important, it will change little by itself, as others have said. Large companies will soon learn how to jump through the additional hoops. For example, an employer can say that it will employ local people, but what does that mean if it is just a local address on an application form? It could easily end up a bit like much of corporate social responsibility, with lots of bright consultants writing reports. Indeed, it could in practice make life yet harder for small businesses that do not understand the game. It does not have to be like this. There are already living examples of imaginative broader procurement processes using current legislation. It is the culture and purpose of the procurement process that is different in these specific situations and we need to make this the rule rather than the exception. The change in legislation can be part of the process, but we are deluding ourselves if we think it is an end in itself.

The last years of my working life are focused on building and extending the work that my colleagues and I have spent nearly 30 years doing, which demonstrates in practice, on the ground, what this debate means, be it through the development of a local street, creating a music and arts festival or the redevelopment of church buildings. We need to identify and champion good examples that challenge the internal logic of government systems. It is in practical projects that we can really understand the issues that the Bill seeks to address. We learn by doing, not by talking.

Procurement tends to be done by staff who are solely tasked with procurement or other financial management tasks. If we want to change procurement processes, we need to change the way procurement works. Procurement staff and those managing them have to understand and buy into the broader goals of the wider vision. This is partly achieved through training, events, publications and having targets that are wider than just financial rewards. However, it is broader than that. It is fundamentally about cultural change in organisations. Procurement is not easy or straightforward, and staff are often running to stand still. They need support if they are seriously to embrace a more nuanced approach, to think a bit laterally and learn different skills. This will take significant investment from somewhere. We are asking staff to embrace not just the letter but the spirit of a new law, and willingly to make their working lives significantly more difficult. If errors are made while they are learning this new approach, will they be praised for clearly experimenting? Innovation means mistakes; you cannot get it all right. However, too often, we are good at the blame game. Those who experiment and challenge redundant processes are often penalised because of the errors they make and what they might cost. This applies equally to the legal teams of public bodies, both in-house and those contracted in. Unless a “yes, you can” attitude is encouraged, little will change in practice.

Passing the legislation is the easy bit. If Ministers are serious, they need to bring together a modest number of public bodies that are committed to this journey and use them as exemplars. In my neck of the woods, the London Borough of Newham, what Sir Robin Wales, the mayor, is doing through his programme of using procurement processes to reduce dependency and create local resilience is a good example. The procurement process that we have just gone through at the Olympic Park Legacy Company for managing the Olympic venues and the Olympic park—here I must declare an interest as a director—is another good example. Soon we will be responsible for building five new villages. What an opportunity for the London mayor, his officers, and central government to learn from the many years of experience that some of us have had of working with local communities around the park. This is a chance seriously to get a grip on what works in practice and build on it. From where I sit, I can confidently say that there is a real appetite for this journey, but it will involve both London and central government seeing this work as a piece of innovation and giving us the space to operate and innovate. There is a long way to go.

Speakers in the other place have given good examples of public sector innovation elsewhere in this country. All these positive examples demonstrate that this is not just about London or party politics but about what works in practice and liberates enterprising people within our communities. I believe that change comes from within. It is not about a top-down or a bottom-up approach; change happens from inside out. The change I describe will happen only if we take in hand the outdated machinery of government and bend it to our will. This is fundamentally a practical task for practitioners and the Government would do well to point to them and celebrate their work. This is a job for the Brunels of this generation—the engineers and entrepreneurs. It is not a task for the faint-hearted or those Guardian readers who, in my experience, are all too content to analyse the world to death and comment from the sidelines through newspaper articles and government reports. Gird your loins for this practical task; it is time that we celebrated practical people.

As this new culture develops, other public authorities can then join the process. I therefore question whether Clause 1(3)(a) should read “may” rather than “must”. I worry that forcing public bodies reluctantly down this path will be counterproductive and that the evidence will therefore be inconclusive at best. Perhaps the legislation could move from “may” to “must” when there is a critical mass of public bodies that have chosen to adopt this approach. This would also mean that we need not include all procurement; purchasing paperclips may not be improved by this process.

Governments of all hues have, in my humble opinion, too often imposed approaches without experimenting with them first. Initial flexibility might result long-term in a more sensible, graduated approach. Change is always easier and more focused with the willing than with 10 pressed men. Culture change depends upon a willingness to embrace change at all levels. However, as I have said, tinkering with the legislation is only part of the wider process of change. Fundamentally, I have learnt that there is a strong correlation between long-lasting change and human relationships. Legislation might oil the wheels of change but it is people who move the wheels forward. These relationships take time to build and public sector procurement needs to make allowance for this. Too often, the length of the contract, particularly for those involved in social change, is too short: many are limited to one year or less.

These relationships are crucial to both the short-term and long-term success of projects. As my colleagues and I began to engage with St Paul’s Way, a dysfunctional street in Tower Hamlets, following serious violence five years ago—here I must declare an interest—I was not surprised to find that basic conversations were not taking place between the housing provider, the local school and the health centre, despite the rhetoric about joined-up thinking at the time. Once these conversations were initiated at all levels of the public sector structures, and relationships cemented, this street was seen literally to transform. We are now about to open a new social enterprise in partnership with some large corporate businesses to explore how we now build on and extend this enterprise culture in a housing estate formerly defined by dependency. It was a privilege to show colleagues from the House some of this work last week.

St Paul’s Way Trust School, formerly a failing school, has just been described by Ofsted as one of the 50 most improving schools in the country. Professor Brian Cox recently became the school’s patron because it now specialises in science. When I described to Brian our organic approach to change, he immediately described how the CERN experiment developed 40 years ago through the relationship of a few scientists who dared to think the unthinkable and do it together. It was very similar. The CERN experiment may well change our thinking about relativity and how we understand our universe. Brian and I, with colleagues, are now exploring how we might bring something of this shared narrative together at a summer science school at St Paul’s Way in July. I would be honoured for colleagues from the House of Lords who are interested to join me at this novel community science school. As scientists, possibly including four Nobel laureates, share the details of their experiments we will share our narrative about a 30-year experiment in community regeneration which has produced clear results. Our shared narratives have an inside-out approach in common that has human relationships at its core. Brian is interested in teaching science in the schools that we work with because he knows that science education is fundamental to the growth of our economy. The inside of one of the UK’s most challenging housing estates is an interesting place to begin.

The set of dysfunctional circumstances I met in St Paul’s Way is not unique. It is the norm. I have seen this waste of public sector investment replicated across the UK in Bradford, Glasgow, Manchester and elsewhere. The sleeping giant is resident there, too, but, unlike St Paul’s Way, we are not awakening it there. We are putting it to sleep. Fundamentally, this is not about new money, but about using limited money in new ways. We need to work with practitioners, enablers and successful entrepreneurs. Go with the stones that roll: with practical people who want to build the change in an organic way, one step at a time. Let us stop thinking policy, strategy and framework, and focus upon people and relationships.

I have two final, practical, points. First, often, joint procurement of integrated services would potentially produce better results. Procurement based on outcomes rather than prescribing the process is often more appropriate. Community Action Network, which I helped to found, developed an approach to using small, local community organisations to deliver contracts called “smart intermediaries”. If there is a will, it is often surprising how a way can be found.

Secondly, in relation to the voluntary and community sector, recent years have given rise to the service level agreement replacing grants. These SLAs are, however, very one-sided. On the one hand, they are effectively a contract. If the contract is not delivered as specified, then payment is withheld, which is reasonable enough. However, unlike a contract, the issuing party—local authorities et cetera—can usually vary the terms, terminate at short notice and pay late, all without penalties. As a result, when financial times get difficult, contracts, which are expensive to cancel, remain, while SLAs get cancelled. A local community group would argue that having a decent contract was a contribution to the social and economic well being of an area, which the Bill seeks to promote. Whether the commissioning body sees it like this is a different matter.

Colleagues in the third sector will know that the Government are serious about these issues when they begin to see these small, practical steps that strengthen their hand. The financial problems we face as a country today are actually a fantastic opportunity. Let us take hold of them with both hands.