What is ethical commissioning and why does it matter?

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The National Care Service (Scotland) Bill, discussed in detail in this SPICe blog, sets out the requirement for care boards’ strategic plans to include an “ethical commissioning” strategy.

The policy intent will likely be well received, with the social care sector calling for wide-scale reform of commissioning and procurement processes.

This blog explores why reform is said to be needed and if this legislation can drive these changes.

What do we mean by commissioning and procurement?

Commissioning and procurement are part of the same process.

Commissioning comes first. It’s the strategic way organisations decide what services are needed. For example, determining more care at home services are needed in a local area.

Procurement is how organisations buy those services. This involves a tendering process, where a notice is put out seeking suppliers and the contract is awarded based on factors like value for money.

Ethical commissioning aims to embed ethical standards in the commissioning and procurement process. In the Bill these standards refer to the principles set out in Part 1.

What is the problem?

There are well-known issues with the provision and delivery of social care in Scotland. This blog focuses on two key areas connected to commissioning: the money, and how services are valued.

The money

Very simplistically, in a standard economic model of supply and demand, goods are produced and bought at the lowest price to meet demand. This encourages competition and, in theory, innovation. Within health economics, though, there’s an additional dimension around moral and social responsibility. It’s about equity and quality, not just efficiency and cost.

The Scottish approach to procurement recognises this. The Procurement Reform (Scotland) Act 2014, introduced a sustainable procurement duty on public authorities to improve outcomes for society and reduce inequality. The provisions also remove the obligation to award contracts through competition.

The challenge within social care lies when budgets, and therefore price, become the driving factor for purchasing services. This increases competition, which cyclically then drives down the price further. This can leave providers struggling to provide a quality service for the rate offered.

Many providers find that local authority commissioning rates are not enough to deliver residential, personal, and nursing care, and pay expenses such as staff, training, overheads, and other costs. Voluntary sector providers report having to withdraw from tendering processes or hand back contracts due to financial constraints.

It has been argued that this issue has led to private sector dominance in social care with voluntary sector providers unable to compete in tenders, despite often demonstrating higher-quality services. In its recent report into social care, Audit Scotland too notes the focus on cost rather than quality, and competition rather than collaboration in social care commissioning.

This normally happens when budgets are tight. Over the last decade, local authority funding has reduced, while the need for social care has increased.

How services are valued

Another issue is the (non-monetary) value of social care; how the work, the workers and the sector are regarded more generally.

Many have reported that social care and social workers historically have been, and continue to be, undervalued. The Fair Work Convention report noted that social care workers don’t feel valued by Scottish Government or the public.

Workers are low paid, overworked and largely unseen and often pay is more competitive in jobs in less demanding sectors, which means it’s hard to recruit to positions, and there aren’t enough workers or services to meet the current need. The mixed economy of providers also means there is no standardisation of pay or terms and conditions across social care roles. With such pressures on the workforce and services, small and medium sized organisations also often struggle to engage, given the complexity and time required to tender.

The Scottish Council for Voluntary Organisations reported a trend towards marginalisation of the voluntary sector, with procurement processes favouring private sector contractors. The Coalition of Care and Support Providers Scotland (CCPS), found only 17% of providers were involved in collaborative commissioning practices and determining local need.

The question remains whether these workers and services, who are often closer to communities and the needs of local areas, are involved in decision-making about what and how services are delivered?

Where do we go from here?

The Feeley Review, an independent review of adult social care, set out the need for an ethical approach to commissioning for all services across the country. In its conclusions, the review highlighted that services need to be commissioned for public good instead of just being good for budgets.

The National Care Service (Scotland) Bill

In direct response to the Feeley review’s recommendations, the National Care Service (Scotland) Bill (‘the Bill’) includes provisions on ethical commissioning and ethical procurement.

Under the National Care Service, newly established care boards will have responsibility for most social care procurement. The Bill would put a duty on care boards to develop strategic plans, which must include an ethical commissioning strategy. The Bill’s Policy Memorandum also sets out ethical procurement which will translate the principles of ethical commissioning into reality.

The Policy Memorandum states commissioning needs to be based on human rights and focus on ensuring the delivery of high-quality, preventative care. It accentuates fair work, valuing the workforce and the need for a shared accountability between all partners and stakeholders involved in delivery. It also sets out that people with lived experience should be involved in designing services.

Will the legislation have the transformative effect on social care that people argue is needed?

Intent and reality

The challenge for care boards lies in putting ethical commissioning strategies into practice and making sure they’re working as intended.

There can be an implementation gap between the policy intent of legislation and what happens in real life, unpicked in more detail in this SPICe blog. In the context of social care, the gap is perhaps most notably observed within Self Directed Support (SDS).

The principles behind SDS should mean individuals requiring care and support are involved in decisions about that care and how they receive care and support. However, evidence to the Health and Sport Committee suggests that there have been problems with implementation, delays, and bureaucracy. And that the focus is on the system, rather than outcomes for the individual.

How will the Scottish Government make sure this isn’t repeated in National Care Service commissioning?

Voluntary organisations have long advocated engaging with and ensuring the voice of lived experience is at the heart of policy and decision making. As part of its commissioning and procurement programme, CCPS take this concept further, exploring different approaches. Much of this involves commissioners and providers working together to both design and deliver services; engaging with and co-designing services with not only the public, but the organisations and the workforce, that deliver the care.

Herein lies the tension over competitive procurement, with organisations arguing that current tendering processes promote competition instead of these principles of co-design and collaboration.

The Feeley Review recommends the development of “mutually supportive provider networks” to be involved in procurement processes. The Scottish Government accepts the Feeley Review recommendations around procurement reform. Annie Gunner-Logan, former CEO of CCPS has argued that the Government’s response to the Feeley review was weak compared to what was recommended:.

“It was much more about incremental change and tinkering with things. If you take commissioning and procurement, it talks about carrying on doing competitive tendering – just doing it ethically – whereas, I think, what Feeley understood was competitive tendering is in itself unethical and you have to do something else.”

Part 3 of the National Care Service Bill would amend the Public Contracts (Scotland) Regulations 2015 to allow contracts to be reserved for certain types of organisations, such as voluntary organisations. However, the “the call for competition” set out in the policy memorandum shows competitive tendering is still very much in the mix.

Collaboration, competitive tendering, the form ethical commissioning should take, and how it will be funded in the future will no doubt form part of the scrutiny of the Bill as it progresses through Parliament.

However, big questions remain on whether the Scottish Government plans to meaningfully engage with service providers (as part of its process to set out secondary regulations), whether that engagement and collaboration will be required of care boards, and how such a process could be supported.

Susan Brown, Researcher, Health and Social Care