Making the social value act work for society

The enactment of Chris White MP’s private members bill as the social value act in 2012 triggered much optimism across the social sector, as well as within progressive public bodies.

The act provides licence for the public sector to take social, economic and environmental factors into account when letting ‘public service’ contracts. It specifically excluded ‘goods’, and was drafted within the context of the European Union public procurement regulations.

In my experience the act, which has few (and even then, pretty blunt) teeth, has allowed those who want to procure on a more socially-sophisticated basis than the pursuit of the lowest tender price to be more ambitious. It also allows advocacy groups and the social sectors to challenge public bodies that have tended to be more traditional in their procurement practices.

There are some in these sectors who had naively hoped that the act would lead to ‘all’ public sector service contracts being awarded to them rather than to businesses. However, this was never the intention or the legal competence of the act. Indeed, businesses are and should be able to demonstrate their ability to add social value when they deliver public services.

The key to making the act work was and remains threefold. Specifically: how can public sector bodies define the social value that they are seeking; how can they measure it so as to evaluate providers’ bids; and then, post-contract, how can they hold successful bidders to account. It is more important to define social value for specific projects than to become obsessed with measuring impact.

There are examples of public bodies using the

act effectively but these examples remain the exception

Introducing this act during a period of severe austerity and public expenditure cuts and pressures was always going to be challenging. It is too tempting for procurement officials and their bosses to say: ‘social value is a great idea but we have to save money’. Sadly, and all too often, the default remains to seek the lowest price without due consideration to the impact on other services, the creation of additional public expenditure demands, and service quality.

There are examples of public bodies, especially local authorities, using the act effectively and enabling the creation of social value – but these examples remain the exception. This has to change.

Last year, the government commissioned a review of the social value act led by Conservative peer Lord Young. The review’s report was published by the Cabinet Office last month.

It recognises the contribution that the act has made to changing thinking, behaviour and practice. It calls for more promotion and explanation of the potential benefits of applying the act, and calls on public sector leaders and practitioners to embrace it with enthusiasm.

I feel that the report places too much emphasis on (and faith in) central government issuing yet more guidance to local government, the police, the fire and rescue services and the NHS. Further, whilst there is very little in the report to find fault with, my main disappointment is to do with what has not been recommended.

This review was an opportunity to demonstrate how the act has been used to great effect by a number of public bodies; explain how they have done this; and promote and share good practice. So far, so good. However, it was also an opportunity to press for further advances – and this is where I feel it has come up short.

My hopes for the review had included:

• Proposals to extend the act to the procurement of goods
• Strengthening the duties for public bodies that take social, economic and environment outcomes into consideration when procuring goods and services
• Proposals to require public bodies to publish annual social value plans and reports; and for these reports to be subject to independent audit and verification
• A recognition that the public sector can and usually does generate social value when it directly delivers services, and that the spirit of the act should apply to ‘in-house’ services as well as those provided by external suppliers
• Advice to public bodies on how they should consider collaborative arrangements with providers from the social sectors, which avoid competitive tendering, and instead use grants and similar payment systems
• Promotion of the concept of place-based, cross-agency approaches to social value
• Stronger advocacy of the inclusion of citizens, providers (from all sectors) and user and community advocacy organisations in determining local social value policies, strategies, and implementation plans, including the means of evaluating bids and measuring of impact which are not generic but specific to each procurement
• A wider review of public procurement policy and legislation to facilitate the implementation of the social value act including:
• Proposals for mechanisms to allow for challenges to procurement and commissioning decisions, when it is felt that social value has not been adequately taken into account
• Proposals to strengthen public bodies ability to take providers’ employment standards, remuneration practice, tax policies, ownership and governance models and similar business related issues into account when procuring
• Encouragement to the public sector to consider procurement and related decisions holistically – for example, taking into account the net local economic impact, consequences for equality and anti-poverty policies, community capacity and small business growth

The measures noted above would, I believe, enable the ambition and optimism that accompanied the enactment of Chris White’s bill to be more fully realised. They would also enable public bodies to differentiate their policies and practices between various services. Social care and children’s services are very different from infrastructure and ICT – and commissioning, procurement and delivery should reflect these differences.

Despite my critique, Lord Young and his colleagues have produced a good and worthy report, and I very much hope that it will spur the various political parties to commit to a stronger social value act early in the new parliament. Meanwhile local authorities and others can and ‘should’ push the boundaries until stopped – most of them have much ground yet to cover!