The Social Value Act – Valuing the ‘Social’ in Social Enterprise

Thanks to our partners at Social Enterprise Network we are able to provide you with up to date legislation changes as they occur. This blog is all about the Social Value Act and what it means for you.

To much fanfare the Public Services (Social Value) Act has finally arrived, coming into effect as it did on Thursday 31st January 2013. The Act has been greeted as a welcome addition to the legislature by many in the social enterprise movement, including Peter Holbrook, Chief Executive of Social Enterprise UK, who has spoken for many in the social enterprise movement saying ‘The social value act has the potential to create a more level playing field for social enterprises and charities’.

So what does the Act actually entail? The Act requires commissioners of public services to ‘consider how they might use public service contracts to improve the economic, social and environmental well-being of our communities.’

Taking this statement at face value, it would seem reasonable to assume that the Act will provide social enterprises with- if not a competitive advantage- at least a step closer to the fabled ‘level playing field’ in the commissioning of public services. However, as Tim West Editor of Pioneers Post, points out- the word ‘consider’ should be viewed as a worrying inclusion in the wording of the Act.

This weasel word peppers the Act and opens up considerable wriggle room for commissioners that are either reluctant or unable to take the time to consult with communities and incorporate social value into the commissioning process.

What effect the inclusion of the word ‘consider’ will have in the day-to-day practice of commissioning remains to be seen, however a number of Local Authorities, with particular credit due to Liverpool City Council, have already made a conscious effort to embed ‘social value’ into their commissioning processes. The Act however, is not without its limitations. In particular, the Act will apply to contracts for goods and services- but not to contracts for goods alone. Additionally the Act will only apply to central government and NHS contracts worth more than £113,057 and local government contracts worth more than £173,934. Clearly it is not a panacea for all of the problems that social enterprises face when bidding for public service contracts…

Despite these limitations, the Act still holds the potential to lift the horizons of commissioners and force them to move away from reductive considerations of value and take a wider view that may lead to more efficient and effective services in the long term. Implementation is not without challenges for both commissioning teams and the social enterprise movement though:

  • The Act is open to considerable interpretation.
  • The Act is unlikely to be applied consistently and equally (at least initially).
  • How will a commissioner be expected to interpret social value? Is there an objective definition or set of principles?
  • How will commissioners differentiate between tender submissions when it comes to assessment of social value?
  • How are you supposed to effectively consult with communities on social value?
  • What weighting do you apply to the social value element of a tender?
  • The onus is on the social enterprise sector to lobby commissioners for the effective implementation of the Act.
  • Social enterprises (and commissioners) also need to think about how the private sector is likely to respond to the demands of the Act (i.e. a large private sector organisation may be able to afford £20,000 for a full SROI of their services- but can many social enterprises?)- For clarity, the Act does not include any explicit requirement for social impact measurement tools to be used in the assessment of social value.
  • …and much more to be taken into consideration!

But with the public service market currently worth £82bn (and predicted to rise to £140bn by 2014 as a result of government supply-side reforms) the Act is a necessary attempt to ensure that public service markets do not become monopolised by large private sector providers. The Act is far from perfect, but it may make commissioners think twice before simply opting for the lowest priced bid.

As budget pressures increase dramatically and combine with increasing demands for public services over the coming years, it will be up to the social enterprise movement to push for the full and proper implementation of the Public Services (Social Value) Act. It seems unlikely that the Act will sound the death knell for balance-sheet based commissioning, but it may usher in a culture-shift whereby commissioners are more able to ‘value the social in social enterprise’.

For any more information regarding the Social Value Act please feel free to visit the SEN website.

 

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