Labour pledges exclusive public contracts to social enterprises
UK social enterprises will get exclusive opportunities to deliver public service contracts under proposals revealed today by the Labour Party.
Speaking at an event in London, Labour MP and shadow Cabinet Office minister Chi Onwurah (pictured) announced Labour's plans to reserve some public service contracts for social enterprises in order to break the hold big corporate suppliers have on public procurement.
Labour will use new EU procurement laws to make it easier for social enterprises to win government contracts by making some procurement tenders exclusively available to not-for-profit, community-focused organisations "in the pursuit of a public service mission".
At the event on the future of social enterprise in public service delivery, hosted by Collaborate and E3M, Onwurah said: "Many public service sectors are now dominated by the same big companies. We want to make it easier for not-for-profit, community-focused organisations to win Government contracts. And to help drive this, a Labour Government in 2015 will enable departments to offer some contracts exclusively for organisations 'in the pursuit of a public service mission'."
Rooted in their communities, social enterprises can identify new, effective and enterprising ways of delivering public services.
The Shadow Minister also told the group of social enterprise leaders including the Social Economy Alliance: "We want to draw on the innovation of social enterprises. Rooted in their communities, social enterprises can identify new, effective and enterprising ways of delivering public services."
Julian Blake, a partner at leading charity and social enterprise law firm Bates Wells Braithwaite (BWB), who attended the event, said Onwurah's policy presentation "was aligning a modern version of traditional Labour values with modern social enterprise values – and promoting purpose driven community benefit enterprises as an effective and efficient means of delivering a broad range of public services and connected social benefits".
However, there is still some uncertainty regarding exactly how an organisation "in the pursuit of a public service mission" will be defined. Luke Fletcher, another partner at BWB, said: "Will this mean only certain legal forms or organisations with charitable status? Or will ordinary commercial organisations be able to take steps to satisfy these criteria?"
Labour's announcement comes 18 months after the Social Value Act 2013 was introduced. The Act requires local authorities to “consider" important social issues when deciding the allocation of public service contracts. The legislation asks firstly, "How what is proposed to be procured might improve the economic, social and environmental well-being of the relevant area" and, secondly: "How, in conducting the process of procurement, it might act with a view to securing that improvement.”
Labour's latest election promise essentially takes the powers of the Act further by making some public sector contracts exclusive to social enterprises, rather than just instructing local authorities to consider social value issues when allocating contracts.
The announcement has been welcomed by the 450 members of the campaign group Social Economy Alliance. Celia Richardson, director of the Alliance, said: "Social enterprises and their supporters will be delighted by this announcement. We campaigned long and hard for the new Social Value Act, and for changes to EU rules, so that local, socially-driven organisations can win in public service markets."
It seems that only a temporary preference for charities and social enterprises is being contemplated.
However, there is one element of the announcement which seems to have been overlooked by its supporters from the social enterprise sector. The proposed contracts to be reserved through the powers of the EU Directive on procurement will apparently still need to go out to open procurement after three years. Luke Fletcher of BWB said: "It seems that only a temporary preference for charities and social enterprises is being contemplated."
Fletcher added: "Personally, I would like to see whole public service markets being reserved for charities and social enterprises where there are vulnerable beneficiaries being served – such as mental health, social services, fostering, residential care and similar public service markets. I think there are strong policy arguments for saying 'You can only participate in this market if your legal structure makes it clear that you consider the wellbeing of the beneficiaries or clients you serve more important than profit'. It is common sense and it would be popular and there are good legal arguments for doing it – so why not?"
Photo credit: Policy Exchange, Flickr