1. nef (the new economics foundation) Sustainable Procurement and Commissioning - overview Elizabeth Cox & Josh Ryan-Collins Whole Life Costing Working Group 7 th October 2008

2. nef (the new economics foundation) Plan for the day 11.00 Introductions 11.10 Overview of nef sustainable procurement work (Josh) 12.10 CAA response (Liz) 12.45 Lunch 1.30 Valuing – SROI (Eilis) 2.00 Discussion/Summary

3. nef (the new economics foundation) Defining VfM –Value for money is defined as the optimum combination of whole-of-life costs and quality (or fitness for purpose) of the good or service to meet the user’s requirement. Value for money is not the choice of goods and services based on the lowest cost bid. HM Treasury (2006) Value for money guidance, p.7. [13 August 2008] –In principle, any appraisal should take account of all benefits to the UK. This means that, as well as taking into account the direct effects of interventions, the wider effects on other areas of the economy should also be considered. HM Treasury (2003) Green Book, p.2. [25 August 2008] –Wider social and environmental costs and benefits for which there is no market price also need to be brought into any assessment. They will often be more difficult to assess but are often important and should not be ignored simply because they cannot easily be costed. Ibid p.19.

4. nef (the new economics foundation) Challenges for procurement officers Narrow interpretation of Gershon & VfM: –Cashable v ‘non-cashable’ –Price > ‘whole life costing’ Silos - Information on budgets and budget holders Aggregation But remember: you are free to determine what you are buying – you can contract for ‘the construction of a sports hall’ or you can contract for ‘the construction of a community centre and the regeneration of the community’

5. nef (the new economics foundation) Resources People (time & skills) Inputs Outputs Service & wider Outcomes (Place Shaping) Money £s Environment Environmental Economic Social Longer term public benefit (3- 5 years) coproduction Resources Inputs Outputs Service level Outcomes Money £s Cost savings- ANNUAL Value for Money – narrow and real versions

6. nef (the new economics foundation) Activities, outputs and outcomes Activities The intervention provided. E.g. a training course. Outputs Direct and tangible products from the activity; for example the number of people trained, or the number of computers recycled. Outcomes Changes that occur for stakeholders as a result of the activity; for example, a new job, improved quality of life or increased community cohesion. Both ‘hard’ and ‘soft’ outcomes can, and should, be valued

7. nef (the new economics foundation) 1. Activity 2. Output 3. Service level outcomes 4. Camden Community outcomes –social –economic –environment 5. Value –Quantitative –Qualitative –Monetizeable Where value accrues: - To Service - Camden wide - central government How to procure locally: 1. Sustainable Commissioning model Community strategy & Corporate priorities Commissioner & service user priorities National outcome frameworks

8. nef (the new economics foundation) ActivityOutputService level outcome Camden Community outcome Value Designs and prints stationary Recycles paper Provides training, supported employment, therapeutic support and paid work to people recovering from mental health problems in Camden Council stationary No. hours of training, supported employment, therapeutic support& paid work High quality stationary and recycled paper [Improved mental health] Local jobs created Reduced Waste Reduced worklessness & economic inactivity Increasing no. of people with mental problems into work & staying in work More vulnerable adults living’ independently No. local jobs (supply chain monitoring) Landfill Savings [Preventative savings] Costs of tenancy failure £2,000 Council staffed hostel £484 per week; local authority group home £202 Complex need placements - £1,200 per week Incapacity benefit: £4,379 per claimant per year. Two ways of seeing value – St James’ House social firm

9. nef (the new economics foundation) www.homelessoutcomes.org.uk Tracking outcomes – Outcomes Star

10. nef (the new economics foundation) Relating savings to outcomes star

11. nef (the new economics foundation) Camden Community Strategy ‘…increase local business activity’ ‘…increasing no. of disabled people & people with mental problems into work & staying in work’ ‘…sustain local economic services such as post-offices’ ‘Reduce energy usage’

12. nef (the new economics foundation) Islington Community Strategy ‘Explore new ways of engaging with local businesses’ (p30) ‘Develop initiatives to tackle and adapt to the impact of climate change and raise awareness of the issues’ (p30) ‘Reduce energy usage, reduce waste and promote walking and cycling’ (p30)

13. nef (the new economics foundation) National Indicators NI 152 Working age people on out of work benefits NI 166 Average earnings of employees in the area NI 171 VAT registration rate NI 172 VAT registered businesses in the area showing growth

14. nef (the new economics foundation) Construction – Norfolk district council 1 Local firm2 Non-local firm Round 1£ 72,000£ 120,000 Round 2 £ 57,600£ 20,400 Round 3 £ 24,980£ 6,760 Total £ 154,580£ 147,160 LM32.151.23 The local multiplier (LM3) effect

15. nef (the new economics foundation) What is co-production Produce: means - to make something or bring something into existence Co: means - together; with in relation to services active relationship between staff and service users as co-workers in relation to communities engaging the assets that exist within communities to grow the core economy

16. nef (the new economics foundation) What is co-production Investing in strategies that develop the emotional intelligence and capacity of local communities Devolving real responsibility, leadership and authority to ‘users’, and encouraging self- organisation rather than direction from above Offering participants a range of incentives which help to embed the key elements of reciprocity and mutuality

17. nef (the new economics foundation) What isn’t co-production Service user consultation Informing people who use services Service user involvement in service design Representation on service boards and panels Service users involvement in assessing services

18. nef (the new economics foundation) What is co-production Professional designed Professional delivered Service user designed Service user delivered User self-help group Traditional services Expert Patient Programme

19. nef (the new economics foundation) Reviewing Roles Professionals as sole service planner Service users/ community & professionals as co-planners No professional input into service planning Professionals as sole service delivers Traditional professional service provision Professional service provision - users and communities involved in planning and design Professionals/ users/ communities as co-deliverers User co-delivery of professionally designed services Full user/ professional/ community co- production User/ community delivery of services with little formal/ professional planning or design Users/ communities as sole deliverers User/ community delivery of professionally planned services User/ community delivery of co- planned or co- designed services Self-organised community provision

20. nef (the new economics foundation) What is co-production Reducing or blurring the distinction between those who deliver and those who receive services, by reconfiguring the ways in which services are developed and delivered: services can be most effective when people get to act in both roles – as givers as well as receivers Allowing public service agencies to become catalysts and facilitators rather than simply providers

21. nef (the new economics foundation) Getting impact in to the procurement process

22. nef (the new economics foundation) Ask the right questions What role would you envisage for service users’ in the development and delivery of your service? How does your service identify and mobilise service users strengths? How would the contribution of service users, carers, family, peer group, neighbours and the wider community be measured or rewarded?

23. nef (the new economics foundation) Guiding principles Recognising people as assets Valuing work differently Promoting reciprocity Building social networks

24. nef (the new economics foundation) How to do it: Community Benefit Clauses "You can say in a contract that x% of jobs must go to the long-term unemployed, or new entrants to the labour market, or people needing vocational training. But you can't say that jobs must go to local people. That is the key… In reality, most - if not all - the jobs will go to local people or those from the surrounding area. Mark Cook, Anthony Collins Solicitors

25. nef (the new economics foundation) Raploch Urban Regeneration Company Renewing deprived outer-city estate in Stirling Demolishing 450 houses and building 900 new homes, new roads & public squares 10% of jobs to go to local people, with a target of 225 jobs Contractors legally-bound to provide 5 apprenticeships, 10 jobs for semi-skilled operatives & 10 training places per year

26. nef (the new economics foundation) Sustainable Communities Act Local authorities are charged under the Sustainable Communities Act to find new ways to support local enterprises to develop their capacity to provide sub- regional economic growth in respect to: –Local jobs and production within a 30 mile area; –More local and organic food; –Green energy within a 50 mile regional radius; –Provision of local services (eg. health, housing, banking, public eating places, etc.) –Measures to increase mutual aid and community projects; –Measures to increase community health and well-being.

27. nef (the new economics foundation) www.procurementcupboard.org.uk

28. nef (the new economics foundation) Further information josh.ryan-collins@neweconomics.org www.neweconomics.org.uk Fools Gold: How the 2012 Olympics is selling East London short, and a 10 point plan for a more positive local legacy Unintended Consequences: How the efficiency agenda erodes public services and a new public benefit model to restore them Public Spending for Public Benefit Plugging the Leaks &The Money Trail A Better Return: Setting the foundations for intelligent commissioning to achieve value for money – I&DeA & OTS Third Sector Commissioning Programme Coproduction Manifesto