Building on the Social Value Act

Gains from the Social Value Act (SVA) are already being put at risk and opportunities are being missed: this is my reading of the impact of the first year of this otherwise very creative piece of legislation. As assessments are published on the Act’s impact by both the Cabinet Office and Social Enterprise UK, and a body of good practice is being built up, many local authorities are still waiting to see what a social-value-led procurement strategy looks like and how much more it will cost before they will commit to taking it up.

In short, the Act allows (but does not require) public sector commissioners of services, principally local authorities, to maximise the social value potential that contracts can deliver to communities over and above those contained in a particular contract. It encourages those submitting tenders to examine their own contributions to society, whether that be through excellent environmental practices, promoting apprenticeships and skills, employee volunteering or other measures to create community capacity, resilience and cohesion. It does not apply to suppliers of goods, only services, and it is subject to European procurement thresholds.

The Act is not specifically aimed at putting business the way of social enterprises – it encourages all potential tenderers to consider their claims to be corporate citizens – but service providers which are social enterprises, charities and Community Interest Companies have undoubtedly already benefited from it.

In areas such as Birmingham, Croydon and Oldham local authorities have taken the Act to heart and are seeking to maximise the social value so obtained. So what’s the concern?

The SVA is a year old and both studies clearly regard it as off to a good start. But European procurement thresholds are expected to rise significantly: when they do, some smaller contracts which today could be subjected to the social value process will no longer be covered by it – which is a move in the wrong direction.

The IT giant Fujitsu recently utilised the services of a new promoter of social value, the Trading for Good web site, to carry out a social impact analysis of its entire supply chain of almost 800 companies, mostly SMEs. Analysing social impact is but a step away from delivering social value and, given that the Act promotes voluntary take up rather than requiring it, there is no reason whatsoever for it not to apply in future to service procurement by private sector commissioners.

Companies are increasingly becoming aware of the public’s genuine and legitimate expectation that they should behave responsibly and ethically, engage positively and generally contribute to society. The good news is that companies increasingly want to do this and be seen to do so, and that a superficial CSR programme based on ticking boxes does not achieve those goals. As the Act is at its heart voluntary it cannot be said to impose unjustifiable regulatory burdens.

As with the Act itself, private member’s legislation which survived an inordinately long gestation in Parliament, my proposals (uncoupling SVA from EU procurement rules and extending it to private sector commissioning) could and should command all-party support and mark natural progress – from where we are now towards where, surely, we all want to go.