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Society, Politics & Law

Social value must be a priority for those who spend public money

Updated Thursday, 12th June 2014

Commissioners of public services should be using legislation to ensure contractors meet social aims from paying decent wages to tackling unemployment, writes Peter Holbrook.

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A cartoon depicting the commissioners of public services as 'The rock n' roll gods of public service'. Creative commons image Icon Catherine Pain under Creative-Commons license

It's over a year since the Social Value Act came into force. The act places a duty on councils, the NHS and other public bodies in England and Wales to consider how they might improve the economic, social and environmental wellbeing – the "social value" – of a relevant area when they buy and commission goods and services. During the year, I've raised many eyebrows with my belief that the act has made commissioning and procurement staff the new rock'n'roll gods of public service. But I am deadly serious. It is ground-breaking legislation. If properly implemented, it can unleash billions of pounds' worth of public spending power to benefit whole communities.

It marks a shift in how value is assessed in public service markets. Traditionally, the immediate financial cost of services has been the focus – added social cost or benefit has been factored out. Many argue this has led to a perverse situation, where the lowest bidders win contracts and they are often companies that degrade the quality of services and, in some cases, fuel further social problems. The crumbling care markets are a prime example. Private firms plunge workers into poverty and spread costs to other parts of the public purse, which must foot the bill with in-work benefits just to sustain the workforce.

The political will that ensured cross-party backing for the legislation arose in the midst of repeated scandals where large outsourcing firms failed at delivery on a grand scale, but still received giant sums of public money. Naturally, the act was greeted cautiously by some. Within local government, many were wary of one more thing to do. And the fact that it came with few guidelines, has left some people wondering what to do with it.

But there are many public bodies – often local authorities – that have capitalised on its design to give them freedom to spend in socially shrewd ways. In Durham, for example, council leaders have launched a Social Value Task Force. They are designing contracted council services to include mechanisms for tackling youth unemployment – a chronic problem in the area. Others, such as Liverpool city council, have included criteria such as payment of the living wage as a basic requirement for any organisation and its suppliers that are bidding to run a council service, in order to tackle inequalities.

In a recent survey carried out by Social Enterprise UK, 81% of commissioners had taken steps to identify social value criteria and more than 75% said their organisation has issued tenders that include social value criteria. Given that the act is still in its infancy, these are encouraging signs, even allowing for the fact that the sample was a self-selecting group who are probably more enthusiastic champions of the act than is the norm.

But smaller providers – particularly charities and social enterprises – still struggle to access and win contracts even though they can bring social value. Our survey identified a lack of pre-procurement collaboration between commissioners and providers. The public bodies that report most success with the act work with their local community sector to identify needs and resources, and how contracts can tackle and take advantage of these. Yet our survey found that fewer than one in five community organisations had been involved in a consultation.

The success of the act will largely rely on a shift in attitude by the commissioners yet to embrace it. So what should those commissioners be doing?

They should outline clear social value priorities that match their core objectives, in collaboration with local communities, social enterprises and voluntary organisations.

Failure to change the status quo is a real and growing risk. In the current climate, commissioners who don't realise the savings and local growth that a genuine social value approach to commissioning services creates are running a huge risk.

The article was first published in the Guardian and is reproduced here with kind permission.

This blog post is part of Society Matters. The blog seeks to inform, stimulate and challenge our understanding of this changing world and of our humbling role within it. Find out more about the blog and the team.
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