The recent announcement of a review of the Social Value Act is both very welcome and very timely. The Act has already had ‘some’ positive impact, establishing principles that should underpin all aspects of government and public service – including specifically placing public benefit ahead of private gain when public expenditure is paying for public services.
The Social Value Act, which was introduced by Conservative MP Chris White, was a compromise between advocates of strong social value legislation and the Government. I am delighted to detect signs that the Coalition Government and the other major political parties are now prepared to strengthen the Act. If the Government review leads to a stronger Act, with more powerful regulatory teeth, this will most surely be applauded by many within the charity, voluntary and community, and social sectors. Given the right revisions and additions, an enhanced Act will also be good news for public service users, their communities and those employed in public service delivery.
The current Act was pioneering and has undoubtedly made a difference, but sadly has little legal force behind it. It is nevertheless important, because it has both allowed those who wish to be bold in their public service procurements to put social outcomes ahead of simple lowest-price considerations; and enabled politicians and public sector executives to challenge traditional narrow-minded public procurement processes and executives. It has also strengthened the opportunity for charities, voluntary and community groups and social enterprise organisations to compete more effectively for public service contracts (although only when the procurement and contracting processes have been aligned with the spirit of the Act).
Whilst it would be inappropriate to argue for over-bureaucratic and prescriptive approaches to applying the Act, there is a strong case for greater regulatory duties on all public sector bodies to procure services and goods (the current Act only applies to services) in ways that take social value into account ‘without exception’. Precisely how this is done must be the responsibility and choice of the procuring body in order that local circumstances and needs are addressed. There can and should not be a national ‘social value’ template but there could and probably should be a national framework underpinned by some statutory requirements.
Personally, I would apply the following statutory duties for every public sector body that procures from external providers and suppliers, to:
· adopt and regularly review, with effective stakeholder consultation and engagement, a social value policy
· consult, in advance of any procurement process and in the light of strategic commissioning and political policy determinations, on the social value objectives for the procurement plus an indication of how these will be measured and contracted for (this to be done in such a manner as to allow bidders to demonstrate their commitment and to innovate)
· publish the social value objectives and measures for every contract; and how these are to be enforced
· undertake and publish pre-procurement a holistic economic, social, equalities and environmental impact assessment of all major outsourcing and supply contracts taking into account factors such as the net impact of any proposal on local employment, local economic activity/spend, etc
· require suppliers to contractually report on the social value impact and to publish details of performance against measurable targets
· include employment terms and conditions in every contract – eg the Living Wage; training and development opportunities; equality targets; pension rights; and no ‘two tier’ employment conditions throughout the supply chain
· include in every contract sustainability targets and requirements appropriate and proportionate to the contract
· take into account a bidder’s track record on employment practice, social and environmental impact, tax policy and payment, remuneration practices across the organisation, social responsibility practice and its ownership model
· collaborate with other local public bodies to co-ordinate a place-based approach to social value
· publish an annual report on the impact of the body’s approach to social value
· apply the Act to contracts for goods over a certain size in addition to service contracts
Many public bodies, especially local authorities, could go much further and actively encourage charities, voluntary and community groups and social enterprises to bid for services. They could invest in the infrastructure and support services necessary to build the capacity and capability of these sectors. They could pro-actively involve these sectors in policy and strategic commissioning deliberations prior to any formal procurement process (and note that they can do this within the current EU and domestic procurement laws.
They should also consider how they can maximise social value together with value for money through practices such as co-design and co-production with individual service users and communities.
Public bodies can also decide to work collaboratively with charities, voluntary and community groups and social enterprises, and use partnership arrangements and grants to avoid expensive and often divisive competitive procurement processes. Social value driven programmes and projects should see these sectors as complementing and not competing with the public sector.
The Government review of the Social Value Act will hopefully address these issues and provide comfort and opportunity for those public bodies that wish to pursue socially based collaboration rather than market-driven competitive tendering. The review should consider what the boundaries actually are within EU legalisation for such an approach – since, in my experience, they tend to be much greater than traditional risk-averse lawyers and public procurement officers would have us believe. It should also identify those aspects of UK and national procurement legislation and practice that need reforming.
It would be good if public bodies applied the principles of an enhanced Social Value Act to their own ‘in-house’ services and all their activities. The driver should be how best to use public money and public action to secure public, social, economic and environmental goals irrespective of who supplies the services or the goods. In a period of austerity, this is more important and relevant than ever.
The Social Value Act has made its mark. We now have the opportunity to build on Chris White’s legislation to ensure the billions of pounds of public expenditure spent through procurement of goods and services add genuine social value and enhance the social and economic well-being of people, communities and places.