Public Services (Social Enterprise and Social Value) Bill

Debate between Chris White and Steve Baker

Friday 19th November 2010 Commons Chamber

[Chris White]

I do not know whether the deputy policy director has had the opportunity to discuss the Bill with the rest of her organisation, but all I can say is that we have had a clear statement of intent from the FSB that it supports the Bill in principle.

The Bill is intended to create the right future for our public services. Across Government, Ministers are talking about engaging VCSEs in delivering public services. They want to mutualise and localise. I welcome that, as I am sure many Members do, but it will not be achieved through mere rhetoric. Those providers have been bidding for contracts for years, yet many still fail to break into public service delivery. Why is that? It is partly a question of cost. The cost of bidding for public services contracts in this country is far higher than that of bidding for contracts in the private sector. A report by the think-tank ResPublica highlighted the fact that the average cost of bidding for a public sector contract was double that of bidding for a private sector contract. The cost puts civil society organisations off, and if we want them to be more involved in delivery, we have to reduce that cost.

The failure to break into public service delivery is also partly due to the complicated nature of bidding. Many organisations simply do not know how to bid for contracts, and even if they do, they often feel that they lack the necessary expertise to bid successfully. Given the prohibitively high average costs, they are worried about failure. The Bill does not address those points directly, although I hope they will be considered in good time. However, it is important that they be raised, and I believe that we need to do much more to remove those barriers.

What would be best is a widening of the concept of value. At present, “value” is a word that is often purely associated with financial cost. If one buys a box of eggs from one supermarket for 20p less than the price at a competitor supermarket, one is deemed to have got value for money. It has often worked that way in public service delivery. Sadly, the means of delivery and the potential benefits to communities are all too often ignored when it comes to considering the word “value”. I know that many colleagues feel that that is as it should be; after all, if it is cheaper to use one provider than another, why should the taxpayer pay for something that, on the face of it, appears more expensive? However, by focusing purely on short-term cost, we ignore the potential long-term benefits that other organisations could deliver, particularly VCSEs.

Let us take the example of a local authority seeking to hire an organisation to renovate some social housing. There are two bidders. One will simply renovate the social housing, but another will not only do that but take on long-term unemployed people and teach them skills in the construction sector. It will go out to local schools and provide hands-on training so that children learn about the sector. Yet provided that it costs less, the first bidder will often get the contract. That is simply narrow-minded. If we take people who are long-term unemployed off benefits and put them into work so that they can learn valuable skills, and if we teach young people how the sector works, and maybe inspire some to develop related trades, we will bring not only environmental but economic benefits to the wider community. Surely that is better value for the community and better value for money.

In the long term, that is far more valuable than merely paying to renovate a few houses, it is more cost-effective for the taxpayer and it is more beneficial to our communities. In short, it is a better deal, but to get that better deal, we must be willing to consider all the aspects of value, not merely a narrow few. Of course, some bodies and organisations have noticed that. It would be unfair to mention merely one or two at the expense of others, but forward-thinking commissioners across local authorities and the public sector have been considering the wider social, economic and environmental benefits that such contracting attitudes and approaches can generate, which is a big step forward in realising truly intelligent commissioning.

[Steve Baker (Wycombe) (Con)]

I am glad that my hon. Friend draws a distinction between values and price and that he recognises that great tapestry of rich value that comprises our lives. Does he agree, however, that a scale of values is absolutely intrinsic to individuals and that each of us values different aspects of our lives differently? With that in mind, why is it necessary to encode such scales of values in not only legislation, but central and local plans?

[Chris White]

I thank my hon. Friend for that. He has talked about two separate issues: the values of individuals and the values of our authorities and the commissioners in them. I think we would agree that those are different types of values; one involves people’s personal interests, while the other involves the interests of the taxpayer and wider society. The second is where the Bill will come in to make sure that the taxpayer gets best value for money and that the community is more involved. Social enterprises, in particular, have a great opportunity to bid for public services and to provide that better value for money.

Commissioning that takes a more holistic view and reduces demand on future services, commissioning that engages with, rather than dictates to, communities and commissioning that drives standards upwards—that is the method of delivery that VCSEs are best at providing. When given the opportunity to do extra, to engage with communities, to work with local businesses and to generate true value for those communities, VCSEs do so and thrive in the localities in which they operate.