The chancellor’s self-styled 'devolution revolution' now means that local councils will be able to retain the £26bn raised each year from business rates.
In all the debate and in some cases celebration around this change the potential contribution made by businesses which are temporary anchor organisations in local communities is still regularly overlooked and poorly understood.
An organisation likes ours - a building contractor – is a case in point. As a main contractor delivering, for example, a new school, hospital or infrastructure project, we are a significant but transient presence in the local community.
In our way of working we are able to provide elements of the social, economic and environmental wellbeing for the communities where we operate.
This happens best and most effectively through early stage engagement – discussing what’s needed in an area, and what social value looks like in any given area.
On one level the value we add in local communities is about training opportunities, jobs and contracts in the local supply chain. On another, we need a chance to be imaginative about how we can use our skills and resources to achieve the required objective of community benefit.
To get more from organisations like ours there’s an obvious need for a braver and more creative use of the procurement process. It does sometimes happen now.
We were, for example, approached by a council earlier this year which was particularly anxious to address two long term problem - higher than average rates of teenage pregnancies, plus an increasing number of children entering care.
In reaching out to us and other businesses with whom it contracts services the council gave us an opportunity to think about the problems and suggest some practical ways we could help. In phase one, these included some funding support for a teenage pregnancy charity. In phase two, it was offers work experience, mentoring and inspiration programmes for the same young people who have benefited from phase one of the programme.
Programmes like this can have a positive impact on teenage pregnancy, the number of children entering care and a reduction in welfare budget by creating opportunities for young people to become self-sufficient over time.
There should be many more conversations like this between the public and private sector. There’s enlightened self-interest here on all sides: the more progressive businesses which are willing to help create enhanced social and economic wellbeing will find themselves in better position to compete for work. The communities, in turn, will get more targeted support from businesses operating in their areas.
The Social Value Act, in conjunction with the OJEU procurement directive, is a powerful tool that harnesses more value through major procurement activities and can help bridge these gaps.
Yet the government’s own review of the Act, led by Lord Young and published in February this year, found that implementation is low and there is 'inconsistent practice' among public bodies about how to apply the act.
These changes are important but coming up to three years in, local authorities can revisit the whole area of social value with temporary and permanent anchor organisations operating in their communities.
One interpretation of the change to business rates and, in fact, the wider devolution agenda is that this tool can better support the social economy and may soon become an essential part of how local councils bridge funding gaps. There’s a scenario where as result of gaining control over business rates councils lose other subsidies which have helped them provide services. The momentum is towards self-sufficiency in funding.
These changes are important and local authorities need to revisit the whole area of social value.
Louise Townsend, sustainable business director, Morgan Sindall
