Social Value -A History: Where has it come from and where is it going?

At Thrive, we’ve talked many times about what social value is, how it should be measured and reported on, and how businesses can win more public contracts by understanding it better. 

But until now our blogs have touched little upon the history of social value or it’s roots, how it’s changed over the years, and where it’s heading to. So it’s about time we corrected that!

 

The Public Services (Social Value) Act 2012

 

2022 has seen plenty of celebration around the tenth anniversary of the “Social Value Act” – or to give it its full name, the Public Services (Social Value) Act 2012

It began life as a Private Member’s Bill brought forward in 2010 by MP Chris White, who, as a councillor, had seen how successful community-focused initiatives were unable to compete in contract processes that were usually decided on price. 

Professor White (as he now is) succeeded in building cross-party support for his reforms by keeping things simple, open to wide interpretation, and short (just 1,151 words!)

The key subclauses are as follows. In awarding certain contracts: 

1.3 The authority must consider—

  • how what is proposed to be procured might improve the economic, social and environmental well-being of the relevant area, and
  • how, in conducting the process of procurement, it might act with a view to securing that improvement.

Speaking in March 2022, Professor White explained: 

“What is now known as the Social Value Act was about cultural change. By allowing all public bodies to consider the added social, economic and environmental wellbeing that could be created through commissioning services, public bodies could take a much broader view of how they spend their money.”

 

The 2015 Young Review

 

In February 2015, the former Cabinet Minister Lord Young published a comprehensive review of the Act’s performance to date. Its executive summary stated:

“We found that, where the Act is being used, it has a positive impact and that the variety (if not yet the number) of organisations that support the Act is quite striking.”

However, it also noted three barriers to taking social value further at the time:

  • Awareness and take-up of the Act is a mixed picture. 
  • Varying understanding of how to apply the Act can lead to inconsistent practice, particularly around: 
  •  knowing how to define social value and how and when to include it during the procurement process 
  • applying social value within a legal framework and procurement rules 
  • clarifying its use in pre-procurement. 
  • Measurement of social value is not yet fully developed. 

 

At the time, social value was largely being measured in terms of Social Return on Investment (SROI) – an earlier framework commissioned by the Office of the Third Sector within the Cabinet Office. 

One important consequence of the Young Review was the decoupling of the social value consideration duty from the thresholds for listing contracts in the Official Journal of the European Union (OJEU), which was soon set to rise dramatically. This was enshrined in the Public Contracts Regulations 2015. 

When Professor White conducted a second review in 2017 (entitled “Our Money, Our Future”), £25 billion of public spending was influenced by the Social Value Act

 

PPN 06/20 and The Social Value Model

 

By 2022, that figure had risen to around £100 billion according to Social Enterprise UK

Why?

Surely the biggest single factor since the Act itself was the introduction of one Procurement Policy Note in September 2020: PPN 06/20

As we’ve discussed at length in other blogs, PPN 06/20 dramatically changed the way that central government bodies, their executive agencies and NDPBs were required to think about social value. Rather than simply being asked to “consider” it:

“Application of the model will be mandatory … A minimum weighting of 10% of the total score for social value should be applied in the procurement to ensure that it carries a heavy enough score to be a differentiating factor in bid evaluation; a higher weighting can be applied if justified.”

 

The Social Value Model in question followed in December 2020, spelling out in detail just how the system should work and how social value should be understood across five themes. We’ve written blogs explaining fully each of the five themes and how to apply them :

At the same time, the government published a Green Paper, entitled “Transforming Public Procurement”, setting out how procurement would be reformed further in the light of the UK’s departure from the EU earlier in 2020. 

 

The Procurement Bill, Social Value 2032, and Beyond

 

2022 has seen two major developments in the social value story, but it’s not clear whether they point in the same direction for the future. 

The first is the launch of Social Value 2032, an initiative led by Chris White, Social Enterprise UK, PWC, Siemens, Suez, and the Shaw Trust. 

Its goal is to drive forward the social value agenda, so that in 10 years’ time, it covers all public procurement and large private businesses as well: 

“This would see social value cover over £400 billion of procurement spend in the UK every year, equivalent to 20% of UK GDP, providing us with a base to transform our economy, our public services and to protect and enhance the environment.”

 

That’s highly ambitious. As Social Value 2032 admits – alongside accelerating private sector uptake – “this would mean doubling the rate of adoption in the public sector over the next decade.”

Is that likely?

That depends on this year’s other major development: the Procurement Bill

The Procurement Bill currently making its way through Parliament is the latest evolution of the ideas set out in the Green Paper and the government’s response to consultations on it. 

Brexit is one of the driving factors behind the Bill. It aims to replace the EU’s four separate systems with one, unified procurement regime for the UK (although it explicitly excludes Scotland, which will produce its own legislation). 

This promises to be a major simplification, which will make public procurement more accessible. 

It also adds a lot of new provisions for transparency in awarding and advertising contracts, and for powers to exclude contractors with bad track records from future competitions. 

But … the Procurement Bill does not include the words “social value” anywhere in its 122 pages. 

It certainly alludes to it. One significant section of the Bill proposes to replace the PCR 2015’s insistence upon the “most economically advantageous tender” with a more social value-friendly phrasing: “most advantageous tender”. 

This change of wording should help give commissioning authorities more leeway to award contracts to bids that prioritise social Value. 

There’s still a long way to go in the Parliamentary process, but if all goes according to plan:

  • The Bill is expected to come into force in 2023
  • Much of the detail will be set out in secondary legislation to follow the Bill’s entry into law
  • When it does take effect, there will be a 6-month transition period to allow stakeholders to adapt

Some organisations – like NCVO – are fighting to have “social value” acknowledged explicitly in the new law.

But as Social Value 2032 declares: “Social value isn’t going anywhere”.

Chris White’s achievement has been to transform the culture of public procurement to a point where – perhaps – the importance of “social value” can finally be taken for granted. 

 

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