Government at risk of breaking promise to diversify supply chain, says SEUK

The umbrella body says new figures show the number of social enterprises winning public sector contracts has fallen

Houses of Parliament
Houses of Parliament

The umbrella body Social Enterprise UK has warned that the government is at risk of breaking its promise to diversify public sector supply chains after figures showed the number of social enterprises winning contracts had fallen.

Analysis by the public data company Tussell for SEUK, the results of which are published today, found that just 0.3 per cent of all public sector contracts went to community interest companies in the second quarter of 2018, the lowest level for two years.

After the collapse of the construction company Carillion last year, the government announced a number of measures to diversify the market for public services, such as breaking down contracts into smaller parts and making moves to ensure more invoices were paid promptly.

In November, David Lidington, the Minister for the Cabinet Office, said in a speech that the government would do more to level the playing field for social enterprises and remove barriers to them winning contracts.

But SEUK said the figures gathered by Tussell showed that more needed to be done to realise this ambition.

Andrew O’Brien, director of external affairs at SEUK, said: "This data shows how far behind the government is in achieving its target of opening up more contracts to social enterprises and small businesses more broadly.

"Without further action it will break its promise to diversify supply chains in the wake of the Carillion collapse."

The data shows that between April and June of this year, just 41 community intereste companies won contracts, a fall of 28 per cent from 57 in the previous quarter. This is the lowest level since the same period in 2016, when just 32 CICs won public sector contracts, and is down from a high of 70 in quarter three of 2017.

Just 10 per cent of those contracts were awarded by national government, while 60 per cent came from local government.

The value of contracts awarded in quarter two of this year was £247m – a significant increase on the same period last year, when it was less than £50m – but the figures show that one health and social care contract accounted for 90 per cent of that figure.

Although only 20 per cent of social enterprises are registered CICs, Social Enterprise UK said the figures were indicative of the challenges reported by social enterprises across the country.

Only 11 per cent of contracts deemed suitable for voluntary, community and social enterprise organisations were won by them, down from 12 per cent in the previous quarter.

O’Brien said: "We welcome measures to embed social value more fully into central government procurement, but social value alone cannot do all the leg work.

"We also need more explicit direction for officials to buy social wherever possible building on the steps taken in the private sector. More and better data on public sector contracts would also help to identify weak spots."

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