A new approach to buying goods and services by Manchester City Council has led to the creation of jobs and wealth within the city, says Matthew Todd.
New findings from with the Centre for Local Economic Strategies (CLES) have revealed that Manchester City Council’s approach to procurement and social value is delivering more for local people.
The research is part of CLES’s deep collaborative Local Wealth Building work, a people-centred approach to local economic development.
The approach, driven at executive member level and delivered by officers, has shown that procurement is a key department that should not be seen simply as a means to balance the books.
Over the past 12 years, Manchester City Council, in collaboration with CLES has been at the forefront of UK wide progressive procurement policy and practice.
By progressive, we mean we have challenged an approach where the cost of buying the good or service is the only consideration.
Instead, working with Manchester City Council, we have introduced a robust process where the linkages between procurement and its supply chain makes an impact on wider economic, social and environmental issues.
This approach is vital in the face of deep cuts to council budgets, and with Manchester facing persistent challenges of deprivation (it is the fifth most deprived local authority area in England) and inequality.
Second, the approach develops and uses the skills of the procurement team – it has, for example, developed a new procurement policy and supported suppliers to deliver social value locally.
Third, one of the outcomes of the approach has been an increase in spending with Manchester businesses.
This has a ripple effect in the local economy, as these businesses employ local people and purchase from local suppliers.
Alongside ongoing advice on progressing the social value agenda, CLES has undertaken work annually to understand the impact of Manchester City Council’s procurement spend.
In this we have undertaken two activities.
First, we have taken figures for the council’s spend with its top 300 suppliers (by value of spend) and explored the geography of that spend (local, regional, and in areas of deprivation, the industrial sectors where money is spent, and the extent to which spend is with SMEs.
Second, we have explored in each year what happens to that procurement spend once it reaches the suppliers.
Through a survey we have explored the extent to which they re-spend back in the Manchester economy and also how they contribute to wider social value outcomes, such as creating jobs and apprenticeships and supporting the voluntary and community sector.
Key findings from the 2017/18 analysis include:
-The proportion of spend with organisations that are based in or have a branch in Manchester has increased from 51.5% in 2008/09 to 71.3% in 2017/18;
– The proportion of procurement spend with SMEs has increased from 46.6% in 2014/15 to 61.7% in 2017/18;
– An estimated 1,302 jobs have been created in Manchester;
– An estimated 158,591 hours of volunteering & community sector support activities offered;
– 79% of responding suppliers paid all staff an hourly rate above that advocated by the National Living Wage Foundation.
Over the last 12 year, there have been a number of strategic activities undertaken to achieve such results, these include:
– The corporate procurement department was formed in 2007, and has driven a consistent, progressive approach across the council. Prior to this, most procurements were undertaken by individual departments. This meant that different departments had different processes and protocols for purchasing goods and services, different documentation for gathering tenders and quotes from interested suppliers, different ways of awarding contracts, and in some cases different suppliers for the same products;
– To encourage more Greater Manchester based organisations and SMEs to bid for procurement opportunities, Manchester City Council has reduced the bureaucracy associated with tender documents;
– In 2014, Manchester City Council set up a Living Wage Task and Finish Group. Its purpose was to ensure that the City Council paid all of their staff the Living Wage Foundation’s recommended hourly rate and encourage their supply chain to follow suit;
– Since 2016 social value has been weighted as part of tender decision, currently at 20%, potential suppliers are required to demonstrate how they will deliver against the measures outlined in the Greater Manchester Social Value Framework;
– In 2018 the Council produced a social value toolkit which aims to support businesses to understand their approach to social value.
Our publication, the Power of Procurement 2 covers the first ten years of CLES and Manchester City Council collaboration around this agenda.
This work in Manchester is part of a wider Local Wealth Building movement taking place in dozens of areas.
Across the UK, councils and other public sector anchor organisations including hospitals and universities are now adopting progressive procurement activities alongside other aspects, including the harnessing of anchor land and property assets for local benefit and ensuring a greater local and democratisation of supply.
This extension of focus and adoption by other public bodies is seen as a means of deepening the impact of wealth and economic activity on local communities.
In Manchester, the success of the city council has been celebrated and they are showing the way for other anchors institutions in the city and beyond.
Moving forward, the push by Manchester City Council on this agenda, will no doubt see other anchor institutions deepening their progressive procurement and Local Wealth Building approaches.
Matthew Todd is senior researcher at CLES
