Reducing unemployment through public procurement

The public sector must use more contracts that create opportunities for people from disadvantaged groups, says Richard Macfarlane.

A new report published by JRF shows what can be achieved when public sector projects or contracts specifically recruit workers from deprived communities and marginalised groups. Welfare costs can be reduced, people can learn new skills and become more ‘employable’ and local employers can benefit from a higher-quality workforce. But it also shows we need stronger political leadership to ‘scale-up’ the process to create tens of thousands of additional opportunities every year.

Following the 2002 report Achieving community benefits through contracts by myself and Mark Cook, larger local authorities in Britain have included recruitment and training requirements in their contracts – almost exclusively in the construction sector.

The approach has also been taken up by the governments in Edinburgh and Cardiff which funded pilots, commissioned good-practice reports and set up training and support for procurement teams.

The new report uses case studies from all parts of the UK to demonstrate what has been achieved. But it also argues for a more comprehensive use – across many more contracts, in services as well as in projects – and a focus on providing job-with-training opportunities for young and marginalised job-seekers.

The aim is to ensure that these groups do not have to ‘stand in line’ behind skilled and experienced workers before they get the chance to obtain the in-work training and experience that will enable them to compete in the labour market. This is expressed as ‘the one in a £1m challenge’ – there should be one year of work-with-training for a young or marginalised person for every £1m in contract value.

The case studies show that this is an achievable aspiration and that if the market is ‘tweaked’ in this way, contractors will develop the capacity to respond. By linking employers to existing training and job-search providers there should be little impact on costs. The case studies include Glasgow Housing Association where more than 1,100 apprentices and trainees have been recruited to work in housing refurbishment, the new Southern General Infirmary in Glasgow where over 250 new trainees have been recruited, and the Peace Bridge in Londonderry where the city council helped secure traineeships for long-term unemployed people from across the communities.

The most significant local authority experience is drawn from Birmingham where the city council adopted a mandatory procurement policy for jobs and skills that has to be applied by all procurement teams where contract values are above a minimum level. This is changing practice across the council – the contractor for the iconic Library of Birmingham delivered more than 250 local opportunities, including 80 apprenticeships.

With nearly one million 18 to 24-year-olds being out of work and many more in ‘dead-end’ jobs, the public sector’s use of market pressure to generate many more opportunities for these young people is a necessary ‘game-changer’. Otherwise we will continue to see increased poverty and social exclusion and declining levels of social mobility.