Widen the reach of social value act, new research says

The social value act in its current form is too narrow to allow community businesses to compete, says Ailbhe McNabola

Earlier this year, then minister for civil society Rob Wilson pledged to look at how the social value act might be improved.

The act ‘can help us to improve the quality of public services, achieve wider benefits for the community, and get the greatest value for every pound of public money,’ Wilson said.

The promised government review hasn’t materialised yet – like so much else, it was put firmly to one side when the snap election was called – but our new research at Power to Change is calling on officials to widen the reach of the social value act and allow more groups to benefit from contracts.

Councils spend millions every year commissioning local services, and the social value act gives them scope to commission for social as well as economic value. This means that commissioners can take into account the social value that an organisation delivers when deciding who to offer a contract.

‘Lowering the threshold would signal to community

businesses that they are a part of national future plans’

The idea is to level the playing field between private firms and those in the voluntary and community sector, so that contracts are in principle opened up to the latter, even when the private sector has a financial advantage.

The social value act requires local authorities to consider the social impact of their commissioning choices on contracts above a certain value (about £170,000), rather than simply rewarding the lowest bidders. In this way it invites councils to work with a greater variety of providers – including charities, social enterprises, or community businesses – who can deliver local growth and community good to compete with the big private companies.

How can community businesses add social value?
Community businesses run to a model that builds up their local economy (as successful businesses which turn a profit) and make a positive social contribution to the places where they are located (by re-investing some of those profits in social good for the area). Local authorities, meanwhile, care about creating good places with a healthy local economy.

The potential for the social value act to help connect these aims is clear.

For example, a community business like New Wortley Community Centre in Leeds or Glamis Hall near Northampton collaborate with other institutions, like local schools or healthcare workers. They have the trust of people who use their services, are ideally placed to deliver support to those people, and they plough some of the income they earn back into the community.

If government wants to create better places, it simply doesn’t make sense to freeze out community businesses like these.

Lower the threshold
In our research people told us that the act could be tweaked to make it more effective. The community businesses consulted as part of this research were universally positive about the aims and principles of the SVA.

Their views on the act itself was much more mixed, however. Some saw it as tokenistic, with little practical impact on how councils commissioned or from whom. Yet some told us that the commissioning landscape would be ‘much bleaker’ without the act to nudge councils into considering social value.

It is true that the social value act has done little to influence community businesses in tendering for local contracts, though. Those which looked to work with local authorities said they would have done so whether the act was there or not.

This view is echoed by a number of earlier reviews and studies of the progress of the act – most recently, when the House of Lords shared similar concerns last year about the degree to which the social value act has influenced commissioning to date.

So what could happen to make the act more relevant to more community businesses (and indeed other providers)?

The report rightly celebrates the collaborations and new relationships community businesses form in the interests of local people.

Power to Change believes that, when the government’s review is finally released, it should bring down that £170,000 threshold. Only a minority of community businesses operate at that scale, despite being committed to local networks, smart trading models and social good. A new threshold could bring them into play, possibly as prime providers or – more likely – as contracted partners.

Lowering the threshold – along with some of our other recommendations to government – would usefully signal to community businesses that they are a part of national future plans.

The social value act was a forward-thinking piece of legislation, and has already delivered much benefit – we want to see its implementation go even further than it has to date.