Social Value Act

Nov 14, 2017

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Social Value Act should change commissioning

The Public Services (Social Value) Act came into effect in 2013. It requires people who commission public services to think about how they can also secure wider social, economic and environmental benefits.

Any contract with a value over £170,000 should not just go to the cheapest tender.

Instead, smaller, more local organisations which can offer other benefits than simply the lowest price, ought to have a better chance of securing the contract.

Notably, third sector organisations which have lost more than half the grant funding they used to receive from central government and would benefit from winning local contracts that help to replace that income, should find that the complex tendering process is made less disadvantageous to them.
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Getting more value out of public procurement

Before they start the procurement process, commissioners should think about whether the services they are going to buy, or the way they are going to buy them, could secure a wider range of benefits for their area or stakeholders.

The Act is a tool to help commissioners get more value for money out of procurement.

It is also intended to encourage purchasers to talk to local providers, in order to design better services, and perhaps find innovative solutions to difficult problems.

Click to go straight down to seven ways to improve the Social Value Act

Click to go straight down to more about the Social Value Act and NHS commissioning

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Workings of the Social Value Act reviewed, February 2015

A review of the Social Value Act, under the chairmanship of Lord Young, found that, where the Act is being used, it has a positive impact.

The variety (if not the number) of organisations that support the Act was described as “quite striking”.

They identified three main barriers that need to be overcome, in order to make the Social Value Act work as it could and should.

1. Inconsistent awareness and take-up of the Act

2. Lack of understanding of how to apply the Act can lead to variations in practice, in particular:

• knowing how to define social value, and how and when to include it during the procurement process

• applying social value within the legal framework and rules around procurement

• clarifying its use in pre-procurement

3. Measurement of social value is not yet fully developed

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A surprising range of benefits identified

The review found that, where it is being taken up, the Social Value Act is having a positive effect.

A range of benefits is being delivered by the Act – not just to local areas, but also delivering nationally accrued savings. And a surprisingly wide range of organisations – albeit across a relatively small sample size – recognise its potential. This is not just in the voluntary sector, but also amongst commissioners and businesses big and small.

One notable trend the review highlighted was commissioners using the Act to tackle cost pressures; reflecting the very real potential for the Act to secure value for money, if it is implemented well.

The panel recommended that another review be undertaken two years on, to see what progress had been made, particularly in measuring social value consistently.

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Further review promised, not yet delivered…

In December 2016, the House of Lords charity committee heard that the Act is either not referred to or is “an afterthought” in public sector commissioning.

In February 2017, minister for civil society Rob Wilson announced there would be a review of the Act.

Brexit and the unscheduled general election have intervened, and it isn’t clear when the review will actually take place.

Meanwhile, Power to Change, the charitable trust that supports community businesses, has come up with seven ways in which the Social Value Act could work better.

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Seven steps to more effective commissioning of public services

• Lower the threshold. Fairly obvious – currently, you are only required to consider social benefits if the contract has a value of around £170,000 or more. Many small local organisations’ services fall well below this figure.

• Make the Act applicable to goods, as well as services.

• Do more to help small community businesses navigate their way through the tendering process.

• Raise awareness of the act. Although it has been law for nearly five years, many on both sides of the commissioning process are unaware of it’s existence.

• Make it clearer how social value can be measured. Let organisations know what criteria they will be judged on.

• Encourage local authority commissioners to take risks in procurement, rather than sticking with the same roster of large, well-known providers they already know.

• Use the act as a driver for social change. The law only requires commissioners to “consider” social value: in fact, social value can be made a cornerstone of policy, as it has been by Oxfordshire county council and Somerset district council.

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FOI request in May 2017 shows many NHS commissioners failing to fully engage with the Social Value Act

National Voices and Social Enterprise UK submitted Freedom of Information requests to all 209 Clinical Commissioning Groups (CCGs) in England. 191 of them replied; a response rate of 91 per cent.

The resulting report, Healthy Commissioning, shows 57 per cent of respondents claimed that that their procurement policies are informed by the principles of the Act in some way.

The other 43 per cent either had no social value policy, were not aware of a policy; or had a policy in some stage of development.

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Only 13 per cent of CCGs are “highly committed” to using the Social Value Act

Just 13 per cent of CCGs demonstrated what the researchers defined as “highly committed, evidenced and active” use of the Act.

Even there, many commissioners gave little weighting – about 2 per cent – to social value considerations, when evaluating tenders.

The authors of the report have called for social value to be incorporated in NHS England’s Right Care programme, which helps CCGs with their commissioning.

NHS England, the Department of Health and Public Health England should issue joint guidance on implementation of the Social Value Act.

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Peter Holbrook, chief executive of Social Enterprise UK, said:

“This is the first research that confirms what we knew anecdotally: that outside of a small number of encouraging examples, the healthcare system’s uptake and application of the Social Value Act is currently very low.

“In this way, Clinical Commissioning Groups are lagging behind local authorities and housing associations in seizing the opportunity that the Act provides.

“The healthcare system needs to tap into the reach and knowledge of the social sector, to join up across services and agencies, and to maximise the value from each pound spent. The Social Value Act can help with each of these.

“It is now imperative that NHS England, Department of Health and Public Health England give clearer guidance to the system as a whole, and demonstrate social value principles in practice themselves.”

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Further reading and resources

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You can find out more about the work of Power to Change on their website

The national body for businesses with a social or community ethos is Social Enterprise UK

National Voices is a coalition of health and social care charities

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