Tag Archives: economic development

Federalism in the UK and how do we govern England

There is some talk in the press this week about the growing need for federalism within the government of the UK. The argument goes that, whatever the outcome of the forthcoming Scottish Referendum we will be moving towards a more federal approach of government.

The problem is that around 84 per cent of the UK population lives in England, and there is no appetite for an English Parliament. So what are the options, and what are the lessons?

Will it be Regions?

In his excellent book, Walter Menzies talks about the in-joke in Whitehall of TAFKAR – the areas formerly known as regions. In 2010, one of the first acts of the Coalition Government was to dismantle the regional bodies in England. Even the use of the word ‘region’ was abolished. Everything was now ‘local’. This policy move has been under-researched in my opinion, but my sense is that it was driven by some councillors who had a fundamental dislike of regional housing strategies and boards telling them what to do. This dislike was, I suspect, especially found in the more prosperous semi-rural council areas who resented being told what to do by the nearby urban centres. The new Localism policy tried to fill the void with some planning guidance and incentives for development, but the house building shortage is a measure of its lack of impact.

However, the previous Labour government also fumbled the ball on regions. The trend seemed to be unstoppable but then we had the no vote in the North East. At the heart of government someone got cold feet just before the vote, and overnight a promise was made to the media that the vote would be changed to ‘reduce bureaucracy’. The new question was, which would you prefer – counties or regions – but you cannot have both. OK, the people said, we’ll keep what we’ve got.

Will it be Mayors?

Another response that still has some supporters is for more elected mayors, even though some of the areas that have tried them have later voted to go back to traditional councillors. This policy has been more researched and commented on than regional governance, and for the most part is not seen now as a strong contender. For me, the idea of elected mayors tried to put personalities above structures, and confused the effectiveness of Mayors of London as individual politicians without taking account of their additional legal powers.

Will it be Cities?

The idea of city-regions, roughly based on the old metropolitan counties but with a strategic influence beyond, has been gaining ground for some time. The recent development of Combined Authorities has been led by Greater Manchester and is spreading out in subsequent years with Liverpool, Leeds and elsewhere. These are new local authorities, being additional to the existing cities and boroughs that sit within them. So far these new authorities could be called a tidying-up exercise of all the various joint boards and arrangements that had to be invented when the metropolitan counties were abolished in the 1980s. Their competences include transport, waste and economic development. However, the ambition is that they provide a ready-to-roll vehicle for any new powers and resources that might flow to the urban areas outside of London.

England within a Federal UK?

So, with 84 per cent of the population in England, let us try and imagine who sits around the table of a Federal UK meeting. The easy bit is – Scotland, Wales, Northern Ireland, and London.

And then we have – the ‘rest’, the ‘provinces’.

Us.

Curiously we are also the majority at the table, but you would not know that from the discussions so far, nor from the existing balance of powers. City-regions are now a strong contender for the other seats around the federal table, and in terms of population there is a strong democratic case. However, we need to remember another dynamic within the previous Labour government when the Countryside Alliance organised a mass march through London. Despite the fact that rural areas were more subsidised than urban areas, the government’s willingness to listen to the needs of cities chilled considerably.

This time around, as cities and urban areas we need to make sure we get our seats at the federal table. To do this effectively and to avoid being tackled to the ground we need to learn how, from the 1980s onwards, various hostile interests have got ahead of us and taken our rightful place. It is politics, so we should not be surprised. And not caught off-guard this time.

Finally, if anyone suggests that UK Federalism and fair city-region representation can be sorted by reforming the House of Lords, just think ‘long grass’.

Low-carbon economies and sustainable growth will require a new and different mix of services

How can local and national economies continue to grow in the years ahead without wrecking our planet?

A good part of the known answer is in low-carbon energy sources, and renewable energy sources will need to grow substantially. Another good part of the answer is in reducing demand for energy, especially by eliminating waste heat. And thirdly, we will need to switch over from manufacturing container loads of “stuff” to give more emphasis to services.

But which services?

The current preferred mix in the service sectors favours the expensive, costly areas of the economy such as finance and legal work. But while they are great for GVA (gross value added) figures, do they really add much to the sum total of human happiness and wellbeing? Of course, some aspects are essential, such as our child protection courts, or having loan bonds for public infrastructure. But we know there is a lot of expensive froth in the mix.

There is the apocryphal story of a married couple who, on their wedding anniversary each year as presents give each other cheques for a million pounds. A little bit of nonsense which cancels itself out. But in some economic models the GVA needles would fly off the scales.

So maybe the successful and sustainable economies of the future will be based on similar examples of low-carbon, low-resource exchange, albeit more sensible. The music singer who performs live outdoors to a small, paying crowd. The food grown locally and sold at a Saturday market. The evening class learning to speak Italian. Currently these forms of service work are seen as somewhat low in GVA, not quite the dizzying heights of international finance.

But maybe future local economies will be valued for having the best range of low-impact services. That in a sustainable city you can learn forty languages; and where you can choose between seven types of fresh celery; and as you stroll across town you can find every genre of music.

In summary, measuring the sustainable qualities of the value added as well as the quantity.

And to close, for the future I wonder if we will start to think that – by educating a good number or even most people in the arts – this shift will cause a lower carbon impact than by having as many people as now studying the sciences? Yes, medics and other scientists will always be essential, and I speak as a taught scientist myself, but the balance and privileges may alter in the years ahead.

Public Procurement and Local Benefits, part 3

The previous two posts here have outlined the permitted ways by which public bodies can include local equality outcomes within contracts.

In a nutshell, the practicalities revolve around the importance of the “core purpose” of each procurement exercise. The general principle is the difference between (a) ‘just’ procuring a new school and (b) procuring better education, skills and economic wellbeing in community X in which a new school will be built.

The recent report by the Joseph Rowntree Foundation is here – http://www.jrf.org.uk/media-centre/community-benefit-clauses-public-funding-and-procurement-contracts-%E2%80%98can-be-legal%E2%80%99

Also useful here, the Equality and Human Rights Commission produced a guide in 2013 to public procurement and equality benefits, called Buying Better Outcomes. A key extract is:

“Equality clauses may be introduced under these arrangements relating to the performance of the contract, but they must:

  • be compatible with EU rules (as determined by the Public Contract Regulations 2006 and any other related legislative requirements)
  • be relevant and related to the performance of the contract
  • not be a technical specification in disguise or used in the evaluation process
  • not discriminate (directly or indirectly) against any potential tenderer
  • be able to demonstrate that value for money is maintained, and that whole life costs are taken into account
  • be proportionate and quantifiable
  • be referred to in the contract notice or tender documentation, and
  • be clear and unambiguous, and understood by tenderers and contractors.”

Link: http://www.equalityhumanrights.com/uploaded_files/EqualityAct/PSED/buying_better_outcomes_final.pdf

As pointed out in the first article, it would be helpful now for Treasury Solicitors to produce guidance for public officials on the operational steps to achieve local and equality benefits using public procurement.

Tackling Poverty Through Public Procurement – details for practitioners

My previous post commented on the launch by the Joseph Rowntree Foundation (JRF) of their report on Tackling Poverty Through Public Procurement. That post looked at the policy implications of the report, and this post follows on with a discussion about the practicalities. The audience here is assumed to know the usual workings of public procurement in the UK. For those who don’t and are interested to know more, a useful free starting point is https://www.gov.uk/tendering-for-public-sector-contracts/the-procurement-process .

The key lesson from this JRF report is that it is possible to operate a public procurement call for bids where the successful contractor will have to work with a named list of local agencies in order to provide additional local impacts, including employment and training for people in the most disadvantaged areas and groups. To be lawful, this requirement must be advertised right at the start, such as in the Official Journal of the European Union (OJEU). This must be quantified, for example following the JRF target of 52 person-weeks of employment for the most disadvantaged residents for each £1 million of contract value.

This approach is compliant with the MEAT (most economically advantageous tender) criteria for scoring bids which by law can include environmental and social criteria as well as economic ones. All criteria used must be relevant to the nature of the contract and to the wider work of the purchasing client. One of the most powerful reasons for local employment and training is that any improvements in disadvantaged areas and groups will improve the value for money obtained by the wider public sector in lower costs to a range of departments and services, for example in lower requirements for out-of-work benefits.

It was noted at the launch event that these additional criteria are actually most frequently applied in the procurement of major construction projects, which is all well and good, but they now need to be taken further into contracts for services and supplies. These non-construction procurements actually are a much bigger slice of the cake.

Some of the typical concerns raised by some procurement practitioners are as follows:

1. Will it cost more?
No, the firms which are good at recruiting disadvantaged people are also good at their work generally, including cost control. The local benefit criteria is typically around 5% of the total score, so winning companies will also be very good at the other 95%.

2. Will it be a make-work scheme?
No, because successful firms want all of their staff to be as productive as possible so they will develop any previously-disadvantaged staff along with the rest of the workforce.

3. Will EU rules allow it?
Yes, and the details are in the JRF report. This applies both to the law about free mobility of labour and the law about firms in all EU countries being able to bid equally. It is equal because the local agencies will work with whoever wins the bid, wherever their head office is. And the local agencies will not discriminate against disadvantaged residents based on their nationality, directly or indirectly.

An interesting example of this work in practice was described at the launch event. Birmingham City Council has co-located a local employment officer within Network Rail in connection with the redevelopment of New Street rail station. As one result, 10 unemployed apprentices were recruited by a local demolition sub-contractor.

The presentation by Birmingham City Council outlined the following factors to ensure success:

– Make it policy.
– Get buy-in from partners, including the private sector.
– Embed the details within contracts
– Support businesses and train public sector procurement staff
– Agree the key performance indicators, otherwise it will drift into easy-to-do areas and groups
– Monitor the data, and use RAG ratings (red, amber, green) to trigger payments
– Celebrate successes
– Make it business as usual.

As one speaker said, you have to “bake in” the targets into the contracts, but don’t jump all over contractors or sub-contractors if they get a red RAG rating, but instead support them to find solutions. And, they added, it is better to give the opportunity to 10 people to change their lives than to list 100 people moving from one work programme to another.

A phrase that was used repeatedly at the launch event was that public procurement staff needed to know that they had permission to impact in the most disadvantaged areas and groups. Finally, within the presentations it was noted that in Birmingham the director of public health is now looking to copy the council’s approach into their own contracts, such as mental health support services.

Tackling Poverty Through Public Procurement

Today (28 April) saw the government’s launch requiring long-term unemployed people to sign on every day. Two bridges along the river from Parliament, today also saw the launch by the Joseph Rowntree Foundation (JRF) of their report on Tackling Poverty Through Public Procurement. In my view the JRF report may ultimately have a bigger impact on reducing poverty and changing lives. I would say that JRF is upstream of parliament certainly geographically but also in terms of policy.

In a nutshell, Richard Macfarlane explained how the report shows that is perfectly lawful for public bodies to specify a list of local agencies that must be worked with, whichever company wins the contract and wherever they come from in the EU or beyond. Equally the local agencies must re-affirm that will work with anyone who meets the criteria for being disadvantaged within their catchment area, regardless of their EU (or even non-EU) nationality.

A case study from Birmingham then looked at how the council has managed to include local employment clauses into major procurements with a programme of £7.9 billion and a pipeline of £0.9 billion of further work. The deal is that 60 person-weeks of employment or training is procured for every million pounds within any major contract. The council has tracked the impact of their work on the most disadvantaged localities and have seen significant reductions. Impressively, 17 homeless people in Birmingham are now in full-time employment because of better procurement. Lives have been changed.

The JRF launch was chaired by Chris White MP, the author of the Social Value Act 2012 and the vice-chair of the all-party group on poverty. The speakers were the authors of the report (Richard Macfarlane and Mark Cook), from Birmingham City Council (Shilpi Akbar, Assistant Director for Employment) and Carillion (Simon Dingle, Operations Director) with a case study in using procurement for stronger local impact. The JRF lead is with John Low, and the lead started out twelve years ago with Peter Marcus, now at Zenith Chambers. The first report in 2002 was called, Achieving Community Benefits Through Contracting.

So you might well ask, if it is plainly lawful and such an obviously good idea, what is the problem? Well, guess what — the governments of Wales and Scotland, and many English local authorities are on board, but bits of Whitehall remain stuck in the mud. Various suggestions were made at the launch event as to what to do with Whitehall. Perhaps some departments and agencies genuinely struggle to understand the ‘place impact’ of their procurement? They need help. Perhaps ministers are fearful of any new guidance or permission to civil servants looking like a new regulation, given the ‘one in, two out’ mandate to reduce regulation? They need reassurance.

This could well be a topic where local authorities involved in City Deal discussions with Whitehall take a lead, ideally in true partnership, but with muscular and co-ordinated persuasion if necessary. There may also be a role for the Core Cities and the Eurocities networks here.

JRF announced their plan to convene a network of interested organisations to take this agenda forward, to meet with politicians and with civil servants where possible, and to hold regional events. For my money, getting the Treasury Solicitors on board with explanatory guidance to colleagues would be a great impetus.

ERDF and Local Strategies

The general feedback being given to LEPs on their draft Local Strategies is that many of these have been too similar and generic, too much ‘of a type’. To some extent this is understandable. ERDF itself is quite prescriptive in terms of what is eligible for funding, so a local strategy that, say, focused on improving bus routes would not get very far at all.

Also, the strong focus for ERDF in 2014-2020 on SMEs, low carbon, and innovation sets down some new constraints. In my view this is good, in that it challenges areas of high unemployment not just to keep running the ‘same old’ projects, sometimes even for the ‘same old’ beneficiaries.

So, it seems too many of the local strategies have started out with some local statistics but then go on to suggest generic, boilerplate solutions.

CLES have usefully analysed and commented on a range of LEP strategies, and especially on the worrying degree to which there is a lack of social inclusion so far in quite a few of the strategies. As they comment, some strategies are purely economic and take the approach that ‘a rising tide will lift all boats’. Well, we know too well that some boats all too often get left behind, stuck and forgotten.

The Leader of Manchester City Council, in his last blog before the purdah of local elections, makes the point that the persistently high levels of unemployment in disadvantaged communities still needs more effort and solutions, especially for those people who are furthest from the labour market.

And in my view this points to a weakness in a lot of local strategies. It is very easy to focus on employment sites, rather than on communities. So, for example, a new supermarket is about to open, so there is joint working to ensure that as many jobs as possible go to local residents. Which is well and good, and we all pretty much know how to do this by now. We also know in our bones that, too often, many of the new quality jobs will miss local residents completely and get taken by commuters from, bluntly, the posher areas. Is there another way?

What is so much harder to do is to start with community X. Very few strategies actually know the details of the jobs that people already have in community X. Nearly all employment analysis we do is based either on very large travel-to-work or conurbation areas or is based on the workplace itself. The best source of community-based employment data is probably held by HMRC, which at the moment is mostly forbidden by law from sharing their data – even with other departments within government. HMRC consulted last year on how they might better share data, of course with strong ethical and privacy safeguards. That consultation gave a flavour of HMRC’s deep frustration with an example where they could not share data with the health authorities in Wales even though that could have reduced the number of winter deaths of elderly people.

HMRC data will be able to say, for any postcode, ward, output area, etc, — how many people who live here are working, where, doing what, for how long, and for how much. And it will only be by digging into this type of very local community-specific data that we can start to design and support those projects, interventions, which will make a difference.

However, we cannot wait for a change in the legal powers of HMRC, so we need to devise other cost-effective ways to collect rich knowledge on employment at the community level.

I think we are in for a few surprises. I hope so. I would love to find out that, for example, in Beswick or wherever there is a strong skills set in model making and repairing. Maybe this is clustered around a club of retired steelworks engineers who, along with an interested technology teacher, have passed on the skills and contacts to a new generation, who are now using the internet and post office to supply enthusiasts overseas.

And what they don’t need most from ERDF is a job trial at the local supermarket.