Regulaton & Policy
Procuring For Good – How The Social Value Act Is Used By UK Local Authorities

Social Enterprise UK is a membership organisation for social enterprise. “We offer business support, do research, develop policy, campaign, build networks, share knowledge and understanding, and raise awareness of social enterprise and what it can achieve”. Their recent report, Procuring For Good, written by James Butler, got answers to Freedom of Information questions from 306 local councils  to establish how they were using the Social Value Act to date. The Public Services (Social Value) Act was put in place in 2012 and requires local government contracting authorities to take social value into account when letting contracts.

The findings are a mix of positive and negative for those who support the policy of including social factors when selecting suppliers and awarding contracts. More councils than ever before are using the flexibilities that the 2012 Act affords.

“A third (33%) of all councils routinely consider social value in their procurement and commissioning. A further 45% of councils follow the letter of the Act and consider social value for contracts for services for local government above the Official Journal of the European Union (OJEU) threshold of €209,000.However, for this group, consideration of social value tends to be limited and weighting is conservative”.

The report suggests that councils fall into two groups that have responded in different ways to the Act.

“The first group has interpreted the Act as an empowering measure and has taken the recommendation in the revised Best Value Guidance to heart. Within this group we identify two categories: ‘embracers’, some of whom have taken a whole council approach to social value and are very likely to routinely consider social value to contracts; and ‘adopters’, which are actively using the Act but apply it relatively conservatively”.

So for these organisations, the Act is something to take seriously, although some are doing so in a more positive manner than others. But generally they are trying to consider Social Value and probably have some belief that it can be applied with positive results.  But the second group is responding to the fact that the Act means they have a ‘duty to consider’ securing economic, social or environmental benefits when buying services above the OJEU threshold – “but they have few or no tenders of this sort”.

They do the minimum possible, and “within this group we identify two categories: ‘compliers’, which have generally incorporated the Act in their commissioning and/or procurement strategy or similar document, but who have really not had much call to use the Act; and ‘bystanders’, which have no social value policy and no social value activity”.

Around a quarter (24%) of councils have a social value policy or similar document – a comparable number do not have a social value policy (26%). The rest mention it in procurement policy or other documents but do not have a specific policy statement. Of course, having a policy statement does not mean necessarily embracing the whole idea (or indeed vice versa). A policy might just be there to get the tick in the box and there could be little real implementation following from it.

The report identifies that perhaps not surprisingly, the smaller and more local District Councils rarely issue tenders over OJEU thresholds. They tend to take a minimal approach to Social Value compliance. Embracers and others, who tend to be the larger councils, have included Social Value in policy statements and are more likely to monitor the impact of their procurement spend.

But the report identifies a couple of fundamental issues, which are significant for any of us who are interested in seeing wider improvement in public procurement. As it says, “notably, not a single council has yet published a comprehensive result of the savings accrued from their use of the Social Value Act”.

We don’t know how many councils are even trying to measure the outcomes, costs or benefits of the policy, and this highlights what we do see often in the public procurement field. Policies are introduced because of political views or non-political ideas and theories. But there is often limited evidence driving the policy, and little measurement of the effect in order to establish whether it has achieved its goals.

The idea of considering “social value” as a factor at least in procurement seems sensible. But until we know how it works in terms of benefits versus costs, it will continue to be just a matter of belief rather than a proven approach. We will return to the report in part 2 and look at its recommendations and discuss this issue of evidence further. In the meantime, it is a well-written and useful report, which is free to read and download here.