Gains from the Social Value Act 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 as a body of good practice grows, many local authorities are waiting to see what social-value-led procurement strategies look like and how much more it will cost before they will commit to taking it up.
The Act, a private member’s bill by Tory MP Chris White which passed in 2012 with all party support, allows those in charge of public procurement to prefer tenders from organisations which contribute to communities – through apprenticeships, recycling, volunteering, whatever – over those which do less.
In short, the Act allows (but does not require) public sector commissioners of services, principally local authorities, to maximise the social value that contracts can deliver to communities over and above what is specified in a particular contract. It encourages organisations submitting tenders to examine their own contributions to society in creating community capacity, resilience and cohesion. It applies to suppliers of services, not goods, subject to European procurement thresholds.
The Act does not specifically put 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 will undoubtedly benefit 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. In Birmingham all prospective providers must sign up to a responsible business compact. This is good: so what’s my concern?
The Act is a year old and studies clearly regard it as off to a good start. But a new European procurement directive is expected to raise the social value threshold significantly: when it does, some smaller contracts which today could be subject 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 o analyse its entire supply chain of almost 800 companies, mostly SMEs. Assessing 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. If this were the case then the procurement of all services above the threshold, anywhere in the economy, could enhance communities, human dignity and environmental sustainability. They may all be candles in the dark when it comes to tacking society’s problems: but the more flickering candles, the less darkness.
Companies are increasingly aware of the public’s 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, which survived an inordinately long gestation in parliament, my two proposals could and should command all-party support and mark natural progress – from where we are now towards where, surely, we all want to go.
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Tom Levitt is a former member of parliament and author of Partners for Good: Business, Government and the Third Sector. He tweets at @sector4focus
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