iNetwork hosted an event on Building Inclusive Economies through Public Procurement on 30 November 2021. This event focused on promoting social value within communities by utilising the power of procurement and the benefits and impact of the Real Living Wage. The promotion of social value is a key agenda for procurement and commissioning professionals and encourages us to consider how to best improve the outcomes for citizens.
The event was a session of two halves. The first part focused primarily on the topic of the Real Living Wage. The second part of the event focused on how public procurement can enhance social value and promote inclusive economies.
Part 1: The Real Living Wage
Part one consisted of three presentations. In the first session, delegates heard from Sophie Little, Living Wage Foundation, and Ravi Badat, GMCA, who discussed the Real Living Wage and its implementation, and how Greater Manchester is working towards the implementation of this. The second presentation was from Paul Murphy, Manchester City Council, who discussed the impact of the real living wage in Manchester. Tracey Harrison, Rochdale Council, then explored how the Real Living Wage has shaped Adult Social Care in Rochdale, in her presentation.
The Real Living Wage & GMCA
The Real Living Wage Foundation was founded 20 years ago in London, Sophie Little discussed how this has since expanded to include over 9000 accredited Living Wage Employers and has benefitted almost 300,000 workers. There are currently 16 local action groups and 10 recognised living wage places. One of these places is Greater Manchester.
In the image below, Sophie shared how the movement has also supported businesses to become more sustainable employers and how this has also improved their business models:
The implementation of the Real Living Wage has helped to improve staff retention and has increased interest in recruitment, staff are more motivated which in turn lends itself to a higher level of productivity within the organisation as workers are happier and more dedicated. 80% of the accredited businesses are SMEs.
Ravi Badat from GMCA discussed how they are working with the foundation to campaign and encourage employers within the region to pay staff at least the Real Living Wage (RLW), which is outlined in the Greater Manchester Mayor’s recent manifesto. This campaign aims to have 650 employers accredited with the Foundation by November 2024, the current number of employers currently accredited stands at 384, this is proposed to benefit 175,000 employees with the region. The seven action points consist of:
- – Anchor Institutions (including housing associations, education bodies, and local authorities)
- – Health and Social Care
- – Campaigns on the real Living Wage
- – Hospitality and Leisure
- – Large Private Sector Employers
- – Small and Medium Enterprises (SMEs)
- – Voluntary, Community, and Social Enterprise (VCSE) sector
This is being considered as part of a “holistic” consideration of employment practices, as outlined in the Good Employment Charter, with a recommendation from the recent Independent Inequalities Commission (IIC) for Greater Manchester to aim for 100% of employees to be paid the RLW by 2030. The characteristics of the Charter are outlined in the images below.
Within Greater Manchester, there is a drive to embed the RLW and Employment Charter within the procurement and commissioning practices as a practical way to affect change for citizens and the local economy. Within Greater Manchester, 76% of suppliers currently pay their staff the RLW and GMCA are working with STAR Procurement to establish a joint approach across Stockport, Tameside, Trafford and Rochdale to promote the implementation of the RLW within suppliers. Greater Manchester Police are now procuring explicitly for the RLW.
Implementing Real Living Wage in Manchester
Following on from Ravi and Sophie’s introduction to the RLW, Paul Murphy shared how this has been implemented within Manchester City Council and their procurement practices. This was initially a resolution of the council in March 2014, where it was agreed that the introduction and maintenance of a Living Wage would be included in all contracts for council staff and extended to the council’s sub contracts. The Living Wage Policy Statement in September 2015 further demonstrated the council’s commitment to address low pay amongst the city’s residents and those working within the city. In April 2016, the Our Manchester Strategy was introduced, which includes fifteen high level aims, including an aim to ‘Ensure everybody is paid at least a real living wage’. This aim is supported by a commitment to work with employers across the City to support the payment of a living wage and is promoted within the Ethical Procurement Policy in tender documents. Manchester City Council undertook the decision to apply for the Real Living Wage accredited status in 2019. You can find information about the requirements for accreditation in the local authority toolkit.
Despite the positive steps being undertaken in Manchester, there have been some challenges in implementing the RLW and there is more work required to fully embed this into practice. 25 per cent of Manchester residents, and 15 per cent of employees working in the city, are still not paid the Real Living Wage. There are also challenges within the social care sector, both within domiciliary care and residential care, in ensuring the RLW is paid and the monitoring of the existing contracts held by the council. Covid 19 has highlighted the impact of the RLW on the lower paid workers within the region and the inflationary pressures on contracts to attract and retain more staff throughout the pandemic.
Implementing Real Living Wage in Rochdale’s Social Care Sector
Tracey Harrison further explored how the RLW has shaped the social care sector, with her session “Adult Social Care Fees Consultation: Real Living Wage for Care Workers in Rochdale.” Currently, the majority of care staff are currently paid at the National Living Wage (NLW) of £8.72. The proposed rates will allow providers to pay staff at the RLW of £9.50 in 2021/22 representing an 8.9% year on year pay increase of 78p per hour, this will have an impact on the overall budgets and funding for adult social care within the borough. Within Rochdale, residential social care for adults is currently funded using ad hoc top-up requests via current social care budgets and is difficult to effectively forecast. Therefore, a banding structure is being introduced, with the placement costs being dependent on the level of care required by the individual and the care provided by the registered residential care placement. This means that financial forecasting is more accurate as well as there being transparency for the providers and still within budgets.
There continue to be some individual placements that require additional funding outside the proposed care rates, these tend to be for people who have significant health and social care needs that require specialist support above the contracted rate for the provider, for example individuals with severe Learning Disabilities or Dementia. These are funded on a specific individual agreement with the provider.
The introduction of the RLW within Adult Social Care in Rochdale has resulted in the council paying increased rates through a contract variation, to commissioned providers who have signed up to the agreement to pay staff the RLW. Should a provider(s) choose not to pay the RLW or choose not to accept the contract variation, payments will be reduced to reflect the legal obligation to pay staff at the National Living Wage rate. Since the RLW has been implemented, the sector has reported an increase in the number of applicants applying for jobs and the retention of staff has improved, alongside the ability to pay senior staff a rate of pay that reflects their skills and abilities. The level of sickness absence has reduced also.
Part 2: How Public Procurement Can Enhance Social Value and promote Inclusive Economies
In the second part of the session, the focus was on how public procurement can enhance social value and promote inclusive economies. Deborah Gaunt and Vicky McGhee spoke about how Calderdale Council have utilised this approach to encourage community wealth building within the Park and Warley Inclusive Growth Project. Park and Warley is one of the most deprived areas within the borough. By working closely with both the residents and local organisations, Calderdale is aiming to establish a skills and employment scheme within the local area, which is designed with the local community. Go4Growth is a programme designed specifically to help smaller organisations in any sector to enter or grow in the public sector marketplace. Calderdale Council has begun to utilise this programme to encourage the growth and promotion of local SMEs as part of their drive to enhance the community. At the present time, it is in the early stages, however the aim is to encourage local businesses to promote themselves and to support the local supply chain to get online. The procurement and frameworks are currently set up for bids over £200,000, the aim is to see an increase in the tender of local SMEs by 2024.
Finally, Tim Rudin from the Greater London Authority Group delivered the last presentation of the day. Tim discussed how social value is being promoted in London in his presentation on, Delivering Social Value through Responsible Procurement in Greater London. Tim outlined a number of challenges faced by the region, including: unemployment, poverty, inequality and air quality. By utilising the Responsible Procurement Strategy, the aim is to improve outcomes and quality of life for the residents of London. Specific actions, milestones and outcomes are considered and monitored, these are reported quarterly and there is a focus on collaboration across the GLA Group as well as with Boroughs and external and international organisations. To encourage fair and inclusive employment practices, suppliers are required to demonstrate their commitment to equality, diversity and inclusion, through diversity and inclusion action plans, ethnicity pay gap reporting, and specific action on underrepresented groups in their organisations. This also requires all workers on their contracts to be paid the London Living Wage with a focus on promoting “green” practices and jobs within the region, which is supporting London’s aims to be a zero-carbon city by 2030. In order to achieve this, Organisational Carbon Reduction Plans are required to be in place for all new contracts less than £5m. Tender questions are used to encourage bidders to reduce carbon emissions in line with London’s 2030 target and there is ongoing work with all suppliers to deliver carbon reductions.
For More Information
This event was delivered to iNetwork members as part of the Connected Procurement and Commissioning (CPC) Programme. For more information on iNetwork’s CPC programme, please get in touch with Hannah Gains, Stakeholder Engagement Manager at iNetwork, who is the programme lead for CPC.