Making the Private Sector Serve the Public Good
Author: Gary Wootton
It would not – as is increasingly clear – be tolerated if political decisions were made undemocratically. People have confidence, loosely, that decisions are made by agents empowered via public consent and concerned with the public interest. However, when so many decisions impacting upon people’s quality of life are in fact made by individuals within the private sector, this confidence is misplaced.
The state provides a semblance of a safety net, but still people’s pay and conditions, environment, parental-leave rights, pension values – and much more – are left to be determined by employers or other third-party private organisations. Broadly, the issue is that despite the prevailing narrative focused on state action or inaction, it is inarguable that the private sector has a huge impact on people’s health, wealth and happiness.
The question, then, is how those agents empowered to act in the public interest can leverage influence over the private sector to ensure people are best served, and the environment best protected. One of the means of doing this – at a local level – are Social Value Policies and a pursuit of progressive procurement practices. The thoughts and work below are broadly a product of working with the Labour Party in Hartlepool, who aim to incorporate this into a wide-reaching programme of reform, and are also in no small part indebted to the work already done by the Labour Party in Preston City Council.
How could they help?
- Local government spends lots of money, with lots of outside parties
- Those outside parties could do lots to help the communities spending that money
- They don’t presently do lots to help
- Local governments can give contracts preferentially to companies who start doing lots to help
- Local governments, therefore, should give contracts preferentially to those who help
If the council needs a big construction project doing, and has several viable options for who to contract the work out to, they should force those companies into a “bidding-war” (where they compete on the generation of social value, rather than on undercutting one another on price and quality!). They could all start taking on apprentices, and letting their finance officer do some pro-bono work for local schools’ governing bodies, and all start paying the Living Wage, and all commit to going Plastic Free within the year.
See the attached policy document, Social Value Policy and Framework for a broader, though still only indicative, list of things local governments could encourage, request, and reward. Local government can, through this policy, increase the employment rate, income, health, and living standards of the communities they serve. The benefits would be directed towards, and concentrated in, the neediest sections of those communities.
It also needn’t cost any more money. The construction jobs, IT contracts, catering & cleaning services all need procuring. They cost what they cost. But what this does do is make the private sector work in the public interest if it wants public money.
I’d certainly advocate for a fundamental and wholesale change to the UK’s economic system. Policy has for decades concentrated wealth in London and the South East, and even there, within a narrow sub-section. But given the national context is what it is, I think it vital that cash-starved councils do all they can to support the communities they serve. Progressive procurement practices, and the thorough application of social value policies, can help to do that.
The publisher is the Centre for Welfare Reform.
Making the Private Sector Serve the Public Good © Gary Wootton 2019.
All Rights Reserved. No part of this paper may be reproduced in any form without permission from the publisher except for the quotation of brief passages in reviews.