Public Services

Baroness Stedman-Scott Excerpts

Wednesday 12th December 2012 Lords Chamber

[Baroness Stedman-Scott]

My Lords, I thank the noble Lord, Lord Boateng, and congratulate him on securing this debate. I declare an interest as the chief executive of Tomorrow’s People and a trustee of New Philanthropy Capital.

The subject matter is important to our country, our communities and our Government. We need professional, effective and robust public services delivered by whoever can best do the job. Noble Lords will need no confirmation that I am completely committed to the voluntary sector and the role that it plays. That it has a role to play in the delivery of public services I have no doubt. However, there are real challenges for both government and the sector if this is to happen and if we are all to step up to the mark.

I hope that my contribution to this debate will be seen as challenging but helpful, ambitious but realistic. It is not a case simply of assuming that the sector can step up to the challenge; it will have to consider some significant issues. I have no desire to set the hares running, but while I know that the Work Programme is new and in its early stages, there are significant lessons that we can all learn from the process of becoming involved in it. That applies to the sector and to government. The sooner we learn those lessons for the benefit of the people we are all in business to serve, the better.

I will address my first remarks to the sector; I am talking to myself now, in the nicest possible way. There needs to be a maturity in measuring impact in a consistent way. This is crucial. It is not what we as a sector believe that we can do, it is what we know we can do, with evidence to back up what we know we can achieve. My second point concerns financial capacity and capability. The issue of working capital needs to be understood. The payment by results point made by the noble Lord, Lord Boateng, is critical. Nobody I have spoken to has a problem with being judged on their results, but it is no good going into these things believing you can achieve something if you cannot prove it. If the voluntary sector is going to come into public service in a serious way, we must face the issue of scaling up. Sometimes in scaling up, organisations lose the magic of what they can do. Sometimes in becoming too big, we lose something. We must not compromise mission for volume and vanity. Coco Chanel said: “Turnover is vanity, profit is reality and cash flow is sanity”. That applies also to the voluntary sector.

I turn now to the Government and say to the Minister that there needs to be maturity in the commissioning process. Progress has been made. This has been demonstrated by the DWP innovation fund. I am grateful to the Government for that, but some people have said to me: “If only the Government would commission what works rather than what can be traded at the lowest fiscal cost”. We may get value into that. I am the first to understand that we are in very difficult times and that cost is a major factor. However, sometimes we spoil the ship for a ha’porth of tar.

It never does any harm to remember the people we are in business to serve. We have to hold them at the heart of what we do. Can the sector step up to the mark? Of course it can—but with changes. I am sure that with government procurement changes we can all do a much better job.

Public Services (Social Value) Bill

Baroness Stedman-Scott Excerpts

Friday 27th January 2012 Lords Chamber

[Baroness Stedman-Scott]

My Lords, we have been debating some very substantive Bills in the House recently. When I have gone to pick them up, they have been pretty meaty and weighty. When I picked this one up, I saw how brief it was. Nevertheless, it is very powerful, and we should not let its size in any way detract from what we are trying to achieve. I congratulate the noble, Lord Newby, on bringing the Bill forward. I am pleased to support and endorse it.

I must also declare an interest in that I am the chief executive of the national employment charity Tomorrow's People, and a trustee of New Philanthropy Capital. The House does not need me to reinforce the difficult social and economic conditions that we face; they are sadly all too apparent. However, I will reinforce the timeliness of the Bill and the opportunities that it presents to help improve the social and economic situation that society, communities and individuals face.

First, in any procurement situation there is an undoubted imperative to drive costs down. Whoever delivers public, private or charitable services should all be focused on this. That is beyond question. The opportunity that the Bill gives to us is to give as much credence to social value as to cost; my noble friend Lord Wei articulated this very well. If we do not do this, then we end up knowing the cost of everything and the value of nothing. Experience of this was relevant in the recent issuing of a social impact bond for which, when the application went in, as many points—indeed, if not more—were given to policies and processes as were to cost.

Clause 1(3) states:

“The Authority must consider… how what is proposed to be procured might improve the economic, social and environmental well-being of the relevant area, and… how, in conducting the process of procurement, it might act with a view to securing that improvement”.

In other words, procurement is opened up to consider what other value can be brought to the service. To do this, it is important for us to understand what social value is. It is suggested that social value is,

“the additional benefit to the community from a commissioning/procurement process over and above the direct purchasing of goods, services and outcomes”.

Noble Lords must forgive me for using a direct example from my own sphere of work. To get somebody into work is a great thing; keeping them there is the real success. Securing a job is an output; keeping it is an outcome. The additional social value can be quantified in terms of benefit payments saved, tax receipts increased and a reduction in other costs such as health, crime and government administration. I would even go as far as to suggest that there can be multiple social values created by joining up and delivering across more than one sphere of service or contract.

The Bill creates an opportunity for the voluntary sector to play its rightful part in the delivery of public services, and to be taken seriously. This opportunity must only become a reality on the basis of a proven ability to deliver to the standards and outcomes required. It is not what is said, it is what is done. It is not what is promised, it is what is delivered. I am sure that the sector can step up to the mark and meet this challenge.

In many cases, the voluntary sector is having a very difficult time at the moment. The Bill would open up opportunities which would help the sector to develop a sustainable business model. I am not for one minute suggesting that the sector should be given the opportunity as a divine right. You will find that the sector is responsive to the needs of its clients, communities and service users. It is innovative in designing viable, sustainable and deliverable solutions, and flexible in the way that it can respond and adapt to the social issues that society faces. Indeed, the voluntary sector is commercial in its determination to do the best possible job.

If I may, I would like to take a moment to focus on the designation of the voluntary sector, Some call it voluntary; some call it the third sector. I would rather, in the case of this Bill, like to hear it referred to as the not-for-dividend sector. I think that my noble friend referred to the phrase “not for distribution”. There is nothing wrong with making money; it is what we do with it. If the social value were taken into account when contracts were awarded, or even considered, there would be a social as well as a fiscal margin which could be reinvested in the service. The not-for-dividend sector is ready to partner with the private and public sectors to maximise true social value. People in our country are ready to invest in social impact bonds if the social value is added, quantified and taken into account. In achieving social value, quality must not be compromised.

In summary, I hope that the Bill will open up markets and revenue streams, increase choice for individuals and encourage, support and deliver job creation, particularly for those who live on the margins of society. When Lend Lease built the Bluewater shopping development, there was a great fear that people would just transfer from Lakeside to take the jobs. In fact, the local authority and others worked together to put out a tender to make sure that local people got those jobs. As a result of that, 1,200 local people got jobs in Bluewater who probably would not have done so otherwise. I would like to do the sums and add up the savings in benefit and other savings that were made and the tax receipts that were gained from that. I also hope that the Bill will engender collaboration between the business sector and the public sector and generate margins for reinvestment which will further the cause of social value. However, there will be challenges; for example, in regard to working capital and measuring and demonstrating social impact. The sector and others will have to concentrate on maturing the way in which they collect data and prove their ability. I pay tribute to Pro Bono Economics, which provides its services to organisations free of charge so that they can play their rightful part in this area.

In a time when we see many challenges and difficulties, the Bill would certainly go some way to creating opportunity and hope for the people we are all in business to serve. I fully support the Bill and hope that it makes speedy progress.