Buying Quality Performance

Whatever the enquiry finds, it is without doubt that Grenfell Tower went up like a dry stick because its refurbishment was procured at least in part on the basis of price.

If the same fire had started in one of the gleaming new blocks in London’s docklands, it would not have spread. The people buying those flats have the money to secure their safety.

The residents of Grenfell Tower are poor. They are dependent on public money to pay for their accommodation. That public money is not limitless. When we choose how to spend it, we attempt to get ‘value for money’. In this case, that had the appalling consequence of meaning the use of lethal, cheap materials and the decision not to install sprinklers.

The loss of so many wonderful lives rubs our noses in the harsh reality of our penny pinching and we don’t like it. The whole nation reeled with the shock of the tragedy. Almost without exception, we collectively agree that this is wrong and should not be allowed to happen again.

But this is no different to the way we routinely purchase public services targeted in the main at the poorest in society. And buying what seems cheapest over and over again destroys lives and ultimately costs more.

Our justice system, for example, is predominantly shaped by cost considerations. Our probation services were outsourced on the basis of price. Our prisons, whether public or private, are built and run as cheaply as possible. The direct consequence of this is that 75% of young men who go to prison once, will end up back there again within 12 months of release. Our cost-cutting exacerbates a cycle of crime that is criminally expensive on so many levels.

With the silent complicity of the ‘industry’, DWP have reduced spending on outsourced welfare to work from over £1 billion a year, to around £150 million. This tiny new budget is also to subsume assistance to people with disabilities or illnesses who are unemployed. The Work and Health Programme is, in fact, the last line of support for all unemployed people. This is the final hand of back-to-work assistance for those the Jobcentres cannot help.

The most socially excluded people are the ones who cost society most because they are most likely to have poor health, housing needs, underachieving children, family breakdown and some involvement in crime (as victim or perpetrator). They are also, of course, most likely to be long-term unemployed. I have been chairing a Social Impact Bond in Liverpool, delivered on the ground by Local Solutions. We deploy Intensive Mentors to work with young homeless people with particularly chaotic lives. These young people are probably the most expensive group of citizens in the city, even if they live on the streets.

Helping someone who is socially excluded and living in a mess of the causes and consequences of long-term unemployment is expensive. Our Intensive Mentors in Liverpool have caseloads of around 15 young people. Over the twelve-month programme, we spend up to £10,000 per participant.

If the socially excluded person can be turned into an included one, the cost savings are huge. The more excluded they were, the higher the savings. Local Solutions are helping over 90% of the young homeless people to move into accommodation, and nearly 50% are starting work.

The Work and Health Programme will not target the people who are furthest from work. It cannot afford to. As we saw under the current Work Programme, the contractors who secure the contracts do so because they offer to do it the cheapest. They then use diagnostic tools to identify those who are easiest to help. Jobseekers are RAG rated, with the ‘red’ being parked/ignored. With £150 million spread thinly across the country, the ‘amber’ must be written off too, including anyone in a rural area. Caseloads will grow even larger. There is no incentive, only risk, in any proactive engagement with the ‘hard to help’.

Procuring the cheapest possible welfare-to-work programme ignores the basic relationship between what you put into a service, and what you get out. It condemns the poorest in our society to crippling exclusion, which ultimately costs us all more. It also significantly reduces their life expectancy. In what way is this decision different to the one that puts cheap cladding on the tower block?