Why Carillion’s legacy might be better social value

The disorderly collapse of Carillion earlier in the year had repercussions throughout the construction industry, but its impact has been felt across the public services sphere; its fall raised fundamental questions about the risks of outsourcing and the effects of having services delivered increasingly by a very few large providers. Most prominently, the Public Administration and Constitutional Affairs Committee has been holding an inquiry looking at these issues, to which NCVO provided both written and oral evidence.

Ahead of the Committee publishing its findings, Cabinet Office Minister David Lidington yesterday announced a series of measures designed to improve the health of public service markets. Among the morning’s announcements were commitments to:

  • strengthen the application of the Social Value Act to central government departments, so that major procurements must have social value ‘explicitly evaluated’ as part of the process, rather than simply ‘considered’, and require regular reporting on the use of the Act
  • require public service suppliers to create ‘living wills’ (as banks presently have to)
  • issue new guidelines and principles to commissioners to encourage building mixed markets of suppliers.
  • require the largest government suppliers to accord with greater levels of transparency, namely by publishing KPIs such as response rates and customer feedback, as well as data on the way they’re addressing social issues such as workforce diversity, modern slavery and the gender pay gap
  • provide supplier management training to 30,000 contract managers and social value training to commissioners.

The first of these is perhaps the one that will resonate the most with the voluntary sector, as it represents a significant step towards the strengthening of the Social Value Act that we have long called for, both in our own influencing approaches (such as last year’s manifesto), and with others across the sector as part of the Social Economy Alliance. Achieving reform in this area, particularly at a time of legislative paralysis, is a great example of what can be achieved when the sector works and speaks together with one voice. Welcome too were the explicit acknowledgements that there has been too narrow a focus on value for money in commissioning and procurement, and that the voluntary sector is an important delivery partner for government.

Some are likely to consider these commitments insufficient to truly address the health of our public service markets. In particular, yesterday’s announcements do little to explicitly address the causes of some poor commissioning practices that have led to the aggregation of contracts, such as vastly reduced commissioner capacity and local authority income – or consequent poor practice such as asking voluntary sector providers to deliver at below cost or at unsustainable prices. While such criticisms hold weight, we hope that the stronger commitment to social value at a central government level will mark the start of a process that will eventually see it used better across the board.

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Michael Birtwistle Michael is our senior policy officer, covering issues around charity tax and finance (including social investment) and the impact of the economy on the sector.

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