Agenda item

            The Committee considered the undernoted report:

 

“1.0  Purpose of report

 

1.1   The purpose of this report is to:

·        Update members on progress to date with the inclusion of social clauses in council contracts using the interim policy position of CIFNI criterion

·        Seek members feedback and direction on a draft council policy

·        Agree to the extent of data capture for compliance verification

·        Agree a partnership approach to the development of a third party delivery model for social clauses associated with employment

 

2.0   Relevant Background Information

 

2.1   As part of the £150 million Investment Programme (IP), members asked for the introduction, where appropriate, of social clauses and community benefit clauses into council tenders.  On 4 July 2012, the Northern Ireland Assembly passed legislation that enables Councils to take account of certain non-commercial matters in the award of public works contracts. Such criteria were previously considered as ineligible. 

 

2.2   The legislation introduced in July 2012 now enables councils to consider the use of social clauses as contractual conditions, requiring contractors, for example, to provide employment opportunities for the unemployed. These conditions must be incorporated in such a way that they do not infringe the general principles of EU law and also ensure that they remain compliant equality obligations.

 

2.3   The adoption of social clauses within the Northern Ireland public sector has primarily focused on delivering employability-related benefits. These are through the provision of apprenticeships and employment/work placements for students and the long-term unemployed.  Whilst social clauses with an employability focus have been most high profile to date, a wider range of commercial, environmental and community-focused clauses exist.

 

2.4   Minimum standards for social clauses within construction works contracts have been agreed by CIFNI (Construction Industry Forum for Northern Ireland) and CPD. (Central Procurement Directorate) Similar standards are being developed for construction services as well as for goods and services contracts. To be legally admissible these clauses must be relevant  to the subject matter of the contract 

 

2.5   Whilst these standards are a useful benchmark, they don’t necessarily maximise the economic return, nor do they allow for local economic and social conditions to be taken into account.

 

2.6   Members will also be aware that two motions in Council were adopted which impact on the development of the Councils policy formation. These were the inclusion of the living wage as a contract condition and a motion targeting the long term unemployed (‘Real Jobs’ motion). . Appendix A contains the wording of these motions.

 

3.0   Progress To Date

 

3.1   At the 23 October 2013 meeting of the Strategic Policy & Resources Committee, members were advised that this work had commenced.  As an interim measure, they agreed that all council contracts with minimum labour values of £250,000 and contract duration of 6 months would be screened for the inclusion of social clauses.  In the absence of a social clause policy, members also agreed to adopt the minimum social clause standards as agreed by CPD and CIFNI.

 

3.2   All internally administered council tenders are now screened against the agreed criteria and in conjunction with Legal Services, Economic Initiatives and agreement with other stakeholders, such as funders, to consider incorporating appropriate contract clauses seeking social benefit.

 

3.3   Appendix B outlines those current contracts which have been captured by the agreed criteria. In total there are 11 contracts with Social Clauses included and a further 8 tender opportunities identified with the programme of tenders and capital works programme for their inclusion. Both the works contracts at Woodvale and Dunville Parks had provision for social clauses but as these were applied respectively and were voluntary thus had only limited success.

 

3.4   Experience to date has identified the importance of engaging with local businesses and residents to support social clause delivery and maximise local benefit.  For example to facilitate delivery of the social clauses for the Girdwood Community Hub project, extensive engagement has taken place with local community groups and training providers to promote employment and work placement opportunities available through this contract.  Working through the Girdwood Community Forum a subgroup has been created to provide a conduit between council, the appointed contractors and community representatives to engage and inform residents and businesses of employment and supply chain opportunities arising through the social clauses.   This engagement included the other non council contractors on this site and provides a joined up approach for social clause delivery across the Girdwood Park site. Although somewhat effective to date, this approach is very resource intensive and would be a challenge to deliver, at this level/ scale, in considering the number of contracts expected to be delivered in the forthcoming months across the capital programme.

 

3.5   Ongoing work is taking place with Department of Culture, Arts and Leisure (DCAL) regarding the social clauses included within the Windsor Park and Casement Park Stadia developments.  Council is working in partnership with DCAL and Department of Employment and Learning (DEL) to engage with local communities and businesses to increase their accessibility to employment and supply chain opportunities arising from the social clauses in these projects. In addition officers have been working with DCAL officials on both Olympia and Andersonstown contracts incorporating, as part of the funding condition, an agreed set of social clauses.  Whilst these clauses are broadly aligned to those adopted by council, the most notable difference requires contractors to employ new apprentices, in addition to a 5% of workforce industry standard agreed by industry and CPD.  As outlined below clauses relating to apprenticeships present specific challenges for council.

 

4.0   Key  Issues

 

4.1   Experience to date of integrating social clauses into council contracts has identified a number of challenges for council, these include:

·        The integration of social clauses within council contracts requires legal consideration on a per contract basis. 

 

To minimise risk of non-compliance, significant resources will be required to support contractors to deliver upon these clauses in order to manage this risk.

 

·        To effectively manage social clause delivery, resources will also be required to collect performance data and then collate this information to provide an overview of the collective impact of the clauses.

 

·        The most frequently used social clauses are employability related, with options available to employ the long term unemployed, apprenticeships and/or student placements amongst others.

 

4.2   The nature of these types of clauses provide challenges for council including:

1.     The scale of council contracts in terms of value and duration may make it impracticable for suppliers to deliver longer-term employability benefits such as apprenticeships, the duration of which is expected to be longer than the timescale of the council’s contract.

 

2.     Social clauses, are restricted to the timescale of the contract to which they apply, creating potentially unsustainable employment.  Whilst Council can try to encourage Contractors to provide sustainable employment, this cannot be enforced or managed by council post contract delivery.

 

3.     Resources are available through DEL to assist contractors to source long term unemployed people for employment opportunities, work placements or apprenticeships.  However this is an advisory and signposting service only; it is still the responsibility of the contractor to find the candidates to fulfil employment related social clause requirements, which is unsatisfactory for number of reasons.  Without a coherent policy position across the public sector in terms of a pipeline of projects and serious economic development support to source, skill and support people needing jobs, the impact of social clause will be piecemeal and limited.

 

4.3   Experience has shown through the development of the Girdwood social clauses that policy and contractual clauses should only be regarded as a means to an end, as it is more important that all the stakeholders including the contractors embrace the spirit of the policy.

 

4.4   The draft policy for consultation, see Appendix C, attempts to capture an evolving understanding of what it is possible to achieve within current council resources. It allows for the continuation of the existing industry standard criteria and will be accompanied by a guidance document which is still to be drafted. The policy is intended to lay a foundation for a more progressive solution as both the industry and the council attunes itself.  It has attempted to capture the IP commitments as well as the subsequent motions adopted by the council by targeting long term unemployed and creating apprenticeships.

 

4.5   On 6 January 2014 a notice of motion was adopted by Council calling for a ‘real jobs’ contract clause.  Specifically it asked that:

 

         ‘The ‘Real Jobs’ clause will guarantee ring fenced, fully paid jobs and apprenticeships for the long-term unemployed (12+ months).’

 

         This has been captured within the policy in the form of employment weeks for the long term unemployed as it prevents unscrupulous contractors creating ‘one day’ jobs. It is constrained by being only applicable for the duration of that specific contract. 

 

4.6   Following the adoption of the ‘living wage’ motion officers held discussions with CEF. Their view is the impact of the Living Wage motion is unlikely to impact on construction contracts as allowances already exceed the Living Wage. However when we attempted to apply these to service contracts we have been advised following European case law tests that legal opinion suggests that the Living Wage may not always be legally permissible, because in certain circumstances it could be seen to disadvantage Contractors from other member states.

 

5.0   Monitoring and Reporting

 

         Clauses have the potential to span a number of areas including employability, promotion of supply chain opportunities, environmental benefits and/or project specific community and regeneration benefits.  Therefore the data collection issues alone mean that there is a need to consider how this information is gathered on a contract by contract basis and then brought together to give an overview of the collective impact of the clauses.  To minimise the risk of non-compliance, a streamlined reporting process needs to be established through which contractors would report upon progress against social clause requirements.  Members should be aware that there is no existing capacity within current staff resources to undertake this dedicated role and this would need to be addressed.

 

5.1   A reporting template is available through CIFNI and this has been used by the council.  This template requires contractors to report against social clause requirements on a monthly /quarterly basis in order to validate contractual obligations. The existing template requires the reporting of personal data on the individuals benefiting from employability-related clauses.  Due to the transfer of personal data, this may have data protection implications for council.

 

5.2   It is proposed that some amendments would be made to the template to simplify the information requested from the contractor, removing the need to capture personal data.  Instead, the postcode of the apprentice/work placement candidate would be recorded, as well as the number of weeks employment/work placement weeks achieved. 

 

5.3   This will help confirm how many apprentices/work placements were from the council area. It would also ensure that the wider social clause requirements in terms of apprentice/work placement numbers and duration of employment were available for recording.  In order to provide assurances to the council that there was no double counting, we intend to ask contractors to provide the last three digits of the candidate’s national insurance number and we could compare these across all the reports received. However it will not be possible to use the DEL verification process to check the information.

 

 

6.0   Potential Collaborative Model for Apprenticeships

 

6.1   Alluded to previously the Council is limited in what it can achieve when acting on this matter in isolation from others with similar contract clauses.  Potential exists to work in partnership with others in the city leading key investment projects such as the University of Ulster Belfast campus development and SIB, to create a pool of public sector contracts with social clauses included.  Collectively the scale and duration of these individual contracts, would create the potential for much larger economic returns and would accommodate longer term employment opportunities such as apprenticeships.

 

6.2   Good practice examples, See Appendix D, highlights that these third party models, which feed off a collective pipeline of contracts, has been successful in both Greater Manchester and Liverpool. In both these examples social enterprises act as a delivery vehicle for the fulfilment of the contractual obligations for contractors, across a number of contracts from a range of public sector organisations. This particular model which has operated under a different legislative framework for some time has additional advantages in that it can quite legitimately be focused at a local level.

 

6.3   The set up costs of such a model are not insignificant and would be required to be shared amongst those wishing to avail of it. Whilst there have been some discussions with the relevant organisations no firm commitment has been given to the collaborative apprenticeship model.  Likewise, any potential operator of such a scheme would need to be assured of a pipeline of opportunities to order to make the commitment to recruiting the apprentices and ensuring that they would be able to complete their full apprenticeship programme.

 

6.4   Corporate Management Team is in discussion with the Chief Executive of Centre of Economic and Social  Inclusion as well as the Director of skills Employment at New Economy Manchester to:

·        Identify how other local authorities in the UK have played an active role in local employability and skills strategies

·        Understand how other local authorities have moved away from multiple delivery agents towards a more targeted and streamlined approach

·        Understand how economic competitiveness can be maximised while ensuring that those further from the labour market have the opportunity to build their skills and avail of employment opportunities

 

         A further report will be brought back to members.”

 

            After discussion, the Committee adopted the recommendations and noted a request for a Party Briefing on the matter by the Social Democratic and Labour Party.