Written Statement: Approach to the Foundational Economy in Health and Social Services

Eluned Morgan MS, Minister for Health and Social Services

Vaughan Gething MS, Minister for Economy

We are committed to providing the best value for money and that value is found by investing in Wales. As confirmation of the cross-governmental theme outlined in a previous statement by Vaughan Gething, MS, Minister for Economy on supporting the Foundational Economy in Wales, we are pleased to launch our Foundational Economy in Health and Social Services 2021-22 programme.

Health and social services spend represents more than half of the Welsh Government’s

annual budget and we want to make that money work harder for Wales.

The programme focuses on three main areas:

• The direct goods and services we buy
• The workforce we directly employ
• How the location and co-location of our services has an impact on communities and their access to all services

Working together in this way has already seen commitments of over £900,000 into Health and Social Services for specific projects. One of those pilot projects has already helped Welsh suppliers win an additional £11 million-worth of healthcare contracts from April to October within this year. 

When making decisions about spending in the health and social services, just as in the wider public sector, the cheapest option often becomes a proxy for value for money. But low cost doesn’t always take into account where money is spent or what else it could achieve. If we spend money with a company wholly based outside Wales, for example, the only value to us in Wales, is the goods or services received – the money is no longer working to help people in Wales.

Through this programme, we want to prioritise spending Welsh public money in Wales, supporting Welsh companies wherever possible, which employ people and provide jobs and training in a local supply chain. When we spend Welsh taxpayers’ money it should support a local workforce and go into improving people’s lives and opportunities. In this way, that pound goes back into the Welsh economy and is spent in Welsh shops, on Welsh produce and on Welsh futures.

By recognising that value for money isn’t just the lowest cost of the bid but also the wider societal value of the companies we work with, we can use the buying and spending power of NHS Wales to improve the lives of people in Wales, as well as providing high-quality health and social care.

The foundational economy is the money that is spent by our anchor institutions – it includes food for hospitals, salaries of our workforce, new building works and renovations and so much more.

As an employer, the biggest impact we can have on a community is making sure that local people have opportunities to train and find work in NHS Wales and social care at all levels. Our Programme for Government commitment to deliver the real living wage for care workers is another example of cross-governmental priorities that will deliver both health and economic benefits.

When considering the value that our spending can add to communities in Wales, we can also make decisions about where services are based and how different services can be located together to make them even more accessible.

By valuing Wales in our spending we also help the environment. Shortening supply chains means not having to transport goods long distances. Shorter supply chains are also more resilient to global changes.

By changing how our foundational economy spends money in health and social care, we are looking to a future where every penny spent considers the real value of that money to people in Wales.

More information about the Foundational Economy in Health and Social Services 2021-22 programme can be found at https://gov.wales/healthier-wales-foundation-economy-programme