Local authorities looking to increase spending in their local economies must have procurement leaders in place to drive cultural change, according to a firm of consultants.
Last week, a study by Centre for Local Economic Strategies (CLES) found Manchester City Council (MCC) had increased the proportion it spends in the city’s economy by 20 percentage points in the last 10 years, from 51% in 2008-09 to 71.1% in 2016-17.
CLES has been working with MCC since 2008 to improve its procurement process and increase the social value of its contracts.
The study said the increase in local spend represented £132m.
In total, the study found the council had spent £446m with its top 300 suppliers in 2016-17.
Speaking to SM, Matthew Jackson, deputy chief executive of CLES, said the results were the result of a 10-year collaboration between CLES and MCC, which started with Ian Brown, MCC's head of corporate procurement, wanting to increase the social and environmental value of contracts.
“He said, ‘We have a procurement spend of £900m – where does that money go? Where does it go geographically, in terms of sectors and where does it go in terms of spending with SMEs?’” said Jackson.
“He wanted his procurement officers to start thinking about social value and he wanted to know how the supply chain can deliver better outcomes than just providing a service.”
Jackson said to do that, CLES undertook annual spend analysis, not only looking at the where the council was choosing to spend its money but also looking down the supply chain at how suppliers were re-spending their money in the Manchester economy.
“We wanted to know how they were contributing to other outcomes, such as job creation, apprenticeship creation, what they are doing in the volunteer and community sector, whether they have environmental management strategies and what they are doing in terms of carbon emissions,” he said.
He said the analysis CLES gathered had led MCC procurement officers to think more about social responsibility and some of the issues the city faced, rather that just cost and quality, when considering suppliers.
He said it also led the council to introduce a 20% social value weighting on all procurement contracts.
“So now at the procurement stage there are questions they are asking about social value and they are weighting on a minimum 20% regardless of whether it’s a construction contract or whether they are purchasing pens,” he said.
He said the key to the procurement function changing its behaviour is having leaders who are all committed to driving cultural change throughout the council.
“There are two tiers of leadership – there’s the political leadership, which comes from the leader of the council and the cabinet, where the 20% social value weight was driven because they wanted to use procurement more effectively for the city,” he said.
“Then in the procurement function, you need that leadership, not necessarily to take risks but to try and lead a cultural change for their officers. I think procurement is one of those functions that has always been quite risk averse so there is a need for those leaders to say, ‘We can start thinking about these wider social benefits and we can start thinking about embedding social and environmental clauses into procurement’ – you need that kind of leadership and everything else will follow.”
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