Jon Tabbush, Senior Researcher, Centre for London
Jon, tell us a bit about yourself.
I've been at the Centre for London for about a year and a half. I work on a broad portfolio of research projects, from transport to planning, to housing. Recently, I've been working a lot on local government issues, and that's where this report started.
Can you give us a brief overview of the report, how it came about, and how well it has been received?
The report came out of the context of community wealth building and other such programs that are gaining momentum across the UK - we found that around half of London Boroughs have a substantive community wealth building program or something similar. We wanted to address the particular problems of doing community wealth building in London, where people operate in multiple boroughs and geographies at once, and there are very complicated government structures; central government, the Greater London Authority and the mayor and 32 local authorities in the same place.
We have been looking at how community wealth-building-style programs have been working in London so far, how they can work better, how various stakeholders and experts have been seeing that progress and whether or not it can be improved. We formed a partnership with four local authorities: Lewisham, Kensington and Chelsea, Hounslow and Newham, all of which have some variety of program and interviewed many of their officers and councillors on their experiences with community asset approaches. We also ran focus groups with their residents to explore how they’d like to be involved in decisions about local authority assets.
The report has had a really good reception, and we’re currently having conversations with London policy stakeholders about taking our recommendations forward.
Photo By: Benjamin Davies on Unsplash
In the report, you mentioned that ‘local authorities would benefit from a clear strategy that defines what they aim to achieve with social value activities.’ Whose responsibility do you think this is?
It’s worth explaining that we made this recommendation because we found that local authorities were being offered things through the social value process, particularly in procurement, that didn't really match up with their policy objectives.
We found a case of a group of pensioners on an estate being offered CV writing lessons, which is a bit of a mismatch! So that's where the recommendation came from.
In terms of whose responsibile, we think there's plenty central government can be doing, but our rule of thumb for projects is, ‘is there a lever within London that can be pulled?’ ‘Is there a local lever?’ On this, we concluded that it’s very much something local authorities can do by making sure that their social value asks or what they will accept, is always aligned with their policy objectives.
Whether in their council plan or locally set priorities, making sure those two things line up is within their gift. It must be something that’s run from the corporate centre initially. For example, an area with high youth unemployment deciding that that’s a priority for policy should also feed through to what is set out in social value policy.
One recommendation is that local authorities define their social value priorities in a published document. Why do you think some local authorities haven’t done this already?
It’s often seen as a ‘nice to have’; there’s a large contract, and a ‘nice to have’ is some extra social value on the side, but we’re getting to the point now in the maturity of social value as a market where it’s going to make the difference between choosing one supplier over another.
It’s going to be a deciding important factor. A Procurement Officer we spoke with mentioned that even if you don’t see it in a monetarised way, social value should be seen as important as price, quality and delivery as a key factor when marking tenders.
So, we think the reason why it’s not happening more broadly is it’s sometimes not been prioritised enough or more often, it's a resource question because we found lots of procurement teams where they simply didn't have the staff to be chasing up contracts and carrying out strategic reviews.
We also think it's about the whole life cycle of the process, whether it's in the definition of what councils want or enforcement. It's partially a question of lack of priority and partially a question of lack of resource. Whether it'll pay off will vary between context, but we broadly think that it's worth the investment when you have a system that's mostly automated, for example, as Hounslow has.
Hounslow has a data monitoring system that automatically takes raw inputs from social value and feeds that up into reading information for leadership. That took investment to set up, but it means you can track what you're being offered and what's delivered much more effectively. So we think that that investment in resource is worth it.
What do you think stops local authorities within the London area from working with each other, and what can be done to break down these barriers?
There's a big question here of ‘small p’ and ‘big P’ politics because, with political barriers, it's often difficult to run shared services across boroughs.
Then there are also different risk appetites; some boroughs are willing to take risks by wanting to go the extra mile to help small suppliers, not in the sense that they're doing anything wrong, just in the sense of their approach to risk management and switching contractors.
So, the problem with sharing these responsibilities across boroughs is that you bump up against these different risk appetites as well as these already existing relationships with suppliers
We think that the first step has to be light touch collaboration, for example, having model contracts that local authorities could choose to use if they wanted to, or even just having a data sharing system for case studies, particularly successful social value local procurement contracts.
We think that sharing information is a way to begin building those relationships. After that, we can begin to talk about buying at scale and getting more social value by sharing resources and finances.
You talk about the challenges local government pension schemes face when investing in place-based impact projects. Why do you think these challenges exist, and who can influence a change? The UK government’s white paper ‘levelling up the UK’ talks about 5% investment in place-based projects. Is enough being done to help achieve this target?
It's a really important question, and pointing out the scale of this is vital because the Levelling Up fund, when I last checked, was £4.8 billion, so that £16 billion could be completely transformational and begin to move towards a properly sized levelling up package.
Now, in terms of the challenges, a lot of it is about risk appetites because pension funds look for very particular kinds of assets that are generally long-dated and have reliable returns. They're not looking to exit quickly, so moving into purchasing place-based impact investments - for example, investing in social housing - is tricky when risk appetites are so much lower in UK pension funds than elsewhere.
I would say that we found many examples of this occurring outside of the UK. In the Netherlands, it's common for pension funds to invest in this way and in the US. There are some fantastic examples in the UK, and I'd urge readers to check out the report and read in particular about Greater Manchester's Pension Fund and Clwyd Pension Fund, two innovative funds investing in UK infrastructure.
Moving on to what we can do to fix this is pooling. Pension funds are all beginning to pool slowly. They're already doing a lot of it. And when you pool on a bigger geographical scale, like when London funds pool into the London Collective Investment Vehicle, then that removes a lot of those concerns about being procyclical if you’re just investing into your own area or risking undue political interference.
This is a time of massive need for liquidity after the big blow-up last week, so this agenda has to take a brief pause, but we think it's a long-term agenda that the government is fully behind, and given it's in the Levelling Up white paper we would also like to see some more guarantees from the government. We recommend that the Department for Levelling up Housing and Communities issues guidance, not only condoning but encouraging funds to make these kinds of investments, for which there's a good legal precedent.
What three things would you like people to get from the report?
The first one is a real sense of optimism - there's massive potential for collaboration within the London sphere, particularly around procurement, and there were loads of appetite among offices and councillors. There are significant low-hanging fruits to be picked, efficiencies around training, sharing costs, around even just sharing successful projects.
That has the potential to be beneficial to the industry as well as to contractors. Having more standardised approaches and harmonised approaches would massively help contractors who are bidding across multiple boroughs. London local authorities are fully on board with this, it seems.
Second, in our focus groups, we found that social value property uses were by far the area residents were most interested in being involved in and, optimistically, not just as veto points.
If you had an empty council-owned library at the end of your road, we found pretty much unanimous consent from focus group participants saying that's something I'd want to be involved in, in shaping the future of their locality.
A third is, as I said earlier, if social value's going to start deciding contract bids if it's going to start being the difference between deciding the supplier of a multimillion-pound contract, then enforcement and delivery need serious investment, but that will repay itself in the end.
Having a proper data system that's able to track all of your inputs and outputs and this being fed up to the political leaders to make sure that delivery is happening is vital and will repay the investment.
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