Social Clauses in Northern Ireland
This report, on how to maximise the social value and community benefit of social clauses in Northern Ireland, was commissioned by the Centre for Economic Empowerment and was carried out by RSM McClure Watters.
Terms of Reference
The terms of reference outlined the following requirements:
• Robust research on the difficulties experienced in implementing social clauses;
• Commentary on the monitoring systems and procedures regarding the implementation of social clauses; and
• Development of real examples to influence government on the use of social clauses.(Source: Terms of Reference November 2012).
The methodology involved a review of the policy context for public sector procurement and social clauses in Northern Ireland. Consultations were undertaken with key stakeholders to identify difficulties experienced in implementing social clauses. The consultation list included procurement officials, the community and voluntary sector, the construction sector and trade union officials. Based on the findings and in conjunction with the CEE a small selection of ‘live’ service, supply and construction contracts were selected and recommendations for incorporating and monitoring social clauses in public sector procurement were developed.
Conclusions and Recommendations
Northern Ireland has made considerable progress in implementing social clauses. This is due to the work of Central Procurement Directorate (CPD) working mainly with the construction sector and getting agreement on a model for including apprenticeships and Steps to Work placements as part of all construction contracts. Progress to date is also due to the work of the two Social Clause Forums facilitated by Derry City Council (DCC) and the Department for Employment and Learning (DEL), and the work of Strategic Investment Board Limited (SIB). Progress has also been made on the supplies and services contracts. Notably, DEL has provided the support needed to help companies find StW participants and this has kept the costs low and practical for contractors.
However, in order to maximise the impact to be gained from including social clauses in contracts, there needs to be a focus on the actual outcomes rather than the level of activity being generated. Social clauses needs to move to a new phase of development and there should be a strategy developed which sets out the social needs across Northern Ireland and how social clauses could be utilised to address these, whilst delivering the goods, services and capital works that need to be procured.
The strategy should detail the types of issues and outcomes that could be delivered for Northern Ireland. For example, the Northern Ireland Executive aims to eradicate child poverty by 2020, and all Departments are working to deliver on this target. Commissioners and procurement officials should review the social needs relevant to their projects as part of an early needs assessment process, resulting in the design of outcome indicators that can be built into the procurement process.
The Public Services (Social Value) Act 2012 in England and Wales sets out a framework and approach which should be considered in Northern Ireland. It places a requirement on commissioners to consider the social, economic, and environmental (or sustainability) benefit of their procurement before that activity is started. It applies to the pre-procurement stage because that is where articulation of social value can have the greatest impact. The Act, which came into force on 31 January 2013, seeks to simplify the way commissioners think about procurement in two respects:
- They are asked to consider 'commissioning sustainability', which means looking at the commissioning process and how sustainable impacts can be achieved. The Act does not prescribe how the results of considerations should shape procurement, but it does enable users' and communities' perspectives on certain services to be taken into account in developing outcomes. Commissioning is therefore intended to lead to more innovation and cost-effectiveness.
- Social value is discussed with regard to the delivery of community outcomes. 'Communities' is meant in a broad sense to include all sectors of an area touched by commissioning, whether that is people in certain groups, social enterprises, or businesses. By using social value to describe community benefits, commissioners can specify measurable outcomes that can be used as evaluation criteria in the procurement process, and as part of contract compliance.
A Social Value Strategy should be developed, setting out how commissioners and procurement officials should use social clauses to further the social, environmental and economic goals of the Northern Ireland Executive.
Commissioners and procurement officials should be encouraged to consider social clauses at the preprocurement stage, i.e. development of the business case, and where possible to include them in the award criteria.
Major contracts should be informed by a social needs assessment, with consideration given to how social clauses can help address those needs. Assessments should be conducted in conjunction with key stakeholders, including members of the public as appropriate.
The Social Value Strategy should promote more innovative use of social clauses to deliver positive social benefits. Trade apprenticeships and StW placements should still be utilised in construction, but other apprenticeships and StW placements should also be considered, linked to the priority skills sectors for Northern Ireland. The Strategic Investment Board’s, Social Clause Toolkit should be published to help inform thinking on integrating social clauses into public contracts and to develop a Social Value Strategy.
Commissioners in conjunction with procurement officials should set up monitoring and evaluation frameworks for the delivery of social clauses at the start of the contract and these should be included in the tender documents. Monitoring systems should measure the outcomes achieved through the inclusion of social clauses, in addition to activities and outputs. Any cost implications for companies should be considered as part of the contract value.
 Although this is the first time public sector organisations have been required to consider these issues, the underpinning duties have been in place for some time. Part 1 of the Local Government Act (2000) "gives local authorities powers to take any steps which they consider are likely to promote the well-being of their area or their inhabitants. It also places authorities under a duty to develop community strategies, together with other local bodies, for this purpose. These provisions are intended to give local authorities increased opportunities to improve the quality of life of their local communities." In addition, under Best Value Statutory Guidance (CLG, 2011), local authorities must already consider social, economic, and environmental value.
This report is part of a series of research on the Northern Ireland economy. You can see the rest of our reports here.
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