Social Value Act: A worthy act of defiance

As our survey When the going gets tough found out, times are especially hard for charities and social enterprises competing to deliver public services. Commissioners, under pressure to reduce spending fast, are focussing on cutting costs. For many, this means letting big contracts and seeking low unit costs, to the benefit of large outsourcing companies and the detriment of charities and social enterprises (as the Work Programme has shown). Charities and social enterprises are concerned, even angered, by this direction of travel—not just for themselves but for their beneficiaries too.

However, the Social Value Act, which comes into force today, is a worthy act of defiance against this overall trend. The brainchild of Social Enterprise UK (SEUK), the Act introduces a new requirement for ‘public authorities to have regard to economic, social and environmental well-being in connection with public services contracts.’ The precise ways in which this should be observed are not set out in the Act, but SEUK’s guidance says commissioners should consider how social value policies can be reflected in the procurement in the following ways:

• In the specification for those services;
• By asking about the bidders’ track record in delivering the services; and
• By determining the criteria to be adopted for determining the winning tender.

Essentially, commissioners will need to be able to show how they ‘have regard’ for social value in the procurement process. So, the Act should push issues of impact, value and service quality up commissioners’ agenda at a time when their focus is too often on cost.

The Act should also be a driver for charities and social enterprises to think about and prove their social impact. Sector leaders often talk about the added value that charities can bring to public services, such as a focus on users and links with the local community. But the sector often struggles to show how these USPs translate into a  tangible impact on local people and communities, or tangible benefits for the state (eg, reduced use of services). The Social Value Act should encourage more charities to build a robust case for the impact and benefits of their work.

So the Act is timely and important. However, there are three strong reasons to believe that it won’t dramatically change commissioning practices:

• The countervailing pressure to focus on cost over social value is likely to be more powerful given the state of public finances;
• Existing legislation (eg, 1999 Best Value Act) includes similar provisions, so a lack of legislation may not be the main problem—nor the best solution—to improving commissioning practices; and
• It will probably be hard to mount a legal challenge to commissioning decisions, though it is likely to be easier to challenge commissioning processes.

Given all this, we think the onus is on charities and social enterprises to ensure that the Act is really being used. This means cajoling and lobbying commissioners to implement the Act, and also taking big strides to improve the way they measure their own social value.

Caveats aside, the Social Value Act should be welcomed by anyone who wants public money to do the most good for society. It represents a voice of sanity in a harsh commissioning environment. Now its over to charities and social enterprises to make sure that commissioners take it seriously.