Social value - excerpts from a UK guide
The Public Services (Social Value Act)
The Public Services (Social Value Act) was passed at the end of February 2012. This is a brief guide to how it is likely to change things and how it should work in practice. It will be followed by more guidance and help as we get nearer to the Bill being implemented. If you would like more legal information please contact mailto://email@example.com
Under the Public Services (Social Value) Act, for the first time, all public bodies in England and Wales are required to consider how the services they commission and procure might improve the economic, social and environmental well-being of the area. We hope it will transform the way public bodies choose to buy services.
“Social value” is a way of thinking about how scarce resources are allocated and used. It involves looking beyond the price of each individual contract and looking at what the collective benefit to a community is when a public body chooses to award a contract. Social value asks the question: ‘If £1 is spent on the delivery of services, can that same £1 be used, to also produce a wider benefit to the community?’
What does that mean in practice?
- It could mean that a mental health service is delivered by an organisation that actively employs people with a history of mental health problems to help deliver the service. The social value of commissioning these services comes through the person with mental health problems having a job where they may otherwise have been unemployed, their becoming more socially included, and having a say in how mental health services are run. It also means a local job for a local person.
- A housing Arms Length Management Organisation (ALMO) contracts a private sector company to undertake repair work on their properties. As part of the contract the private company states that they will provide greater social value by promoting careers in construction and trades to local schools, and they commit to employing young people and the long term unemployed. The social value comes through local jobs for local people and raising the aspirations of local pupils.
- It could mean that an NHS trust commissions a patient group to plan and run a series of consultation events. The patient group can then use its profits to increase its beneficial activities in the local community, rather than an events company that doesn’t have local roots using the profit elsewhere or giving it to their shareholders.
Why is it important?
When times are tough economically it is more important than ever that we get the most value from all our public spending. Commissioning and procuring for social value can change the way we think about things so that more taxpayers’ money is being directed towards improving people’s lives, opportunities, and the environment.
Think of it like this: if a public body needs to do something, it probably needs to do it quickly, effectively and cheaply. It can also do it quickly, effectively, cheaply and in the way that most benefits society. This Bill asks public bodies, by law for the first time, to consider the ways that it most benefits society as part of each decision.
Commissioning and procuring for social value can help join up all the strategic aims of a public body. For example – every local authority has a duty to improve the economic well-being of an area. Commissioning for social value can ensure that the local authority uses its own purchasing power to do this. This is no longer just the role of the authority’s economic development department or a local enterprise partnership. It is now the role of all the people who are commissioning services.
Where does it apply?
All English and some Welsh bodies will have to comply with the new law, including local authorities, government departments, NHS Trusts, PCTs, fire and rescue services, and housing associations.
To what sort of contracts does it apply
It applies to all public services contracts and those public services contracts with only an element of goods or works. It doesn’t apply to public work contracts or public supply (goods) contracts. However, there is widespread approval for public bodies considering social value in all forms of contracts including support from Nick Hurd, Minister for the Cabinet Office.
How does it fit with wider procurement law?
The Public Services (Social Value) Act sits alongside other procurement laws. Value for money is the over-riding factor that determines all public sector procurement decisions. But there is a growing understanding of how value for money is calculated, and how “the whole-life cycle requirements” can include social and economic requirements. The new legislation reinforces the best practice of what can already take place but too often doesn’t. For local authorities, under their duty to achieve best value they must already consider social, economic and environmental value¹.
The recent consolidation of EU procurement framework also makes it clear that social requirements can be fully embraced in procurement practice providing certain criteria are met. These criteria are:
- Social requirements should reflect policy adopted by the public body
- Social requirements should be capable of being measured in terms of performance
- Social requirements drafted in the specification become part of the contract
- Social requirements should be defined in ways that do not discriminate against any bidders across the European Union
To summarise – this new legislation complements existing procurement legislation rather than replacing it.
The Public Services (Social Value Act) 2112 - A Brief Guide, Social Enterprise UK, 2012 - http://www.socialenterprise.org.uk/uploads/files/2012/03/public_services_act_2012_a_brief_guide_web_version_final.pdf
Author: Mark Cook, Anthony Collins Solicitors LLP, mailto://firstname.lastname@example.org