High Street

Local authorities slow to grasp benefits of Social Value Act

By: Guy Battle, Chief Executive, The Social Value Portal
Published: Friday, October 3, 2014 - 13:53 GMT Jump to Comments

With local authorities under severe financial pressure, it seems odd so few have seized the opportunity of the Social Value Act that came into effect 1 January 2013.

The Act places a responsibility on all public sector organisations to consider ‘social value’ in service contracts, or where there is a service element in goods or works contracts. What that means in practical terms is putting pressure on suppliers to demonstrate how some of the revenue they achieve through their contracts is delivered back as tangible benefits for the local area.

This may be through the employment of local people and training and apprenticeships, but it might also be through supporting, in cash or kind, local social enterprises and other parts of the voluntary sector. It could be by delivering some other local benefit, like a community centre, park or other facility.

The possibilities really are endless, and the benefits to localities very great. However, a survey conducted by the Social Value Portal in July 2014 shows that fewer than 30% of local authorities have a policy in place to guide procurement and contracting teams, and some are unaware of the Act altogether.

For those that are aware, there may be good reasons why they are moving slowly, with 80% asking for additional guidance on measurement, legal issues and procurement advice and over 75% believing that the business sector is not yet prepared to respond. 

Another reason may be the lack of ‘obligation’, as the Act requires Authorities only to ‘consider’. Also its flexibility, and the fact that the Act is not prescriptive but allows Public Authorities to create their own targets and strategies suited to their local needs. In this respect, The Act is unique and innovative - but perhaps this is also its weakness.

Procurement is, of course, at the sharp end of social value implementation, the lever that will deliver the social value back into local areas, particularly from large national and international businesses. Those bidding for contracts will need to include details of how they will deliver social value back to the community as part of their bid. The question is how can they do this?

The Social Value Portal is a service aimed at bridging this gap in our collective knowledge, to provide advice and support to both commissioners and bidders. The Portal provides a means of measuring and reporting social value in a way that makes sense, permits comparison between bids and is cost effective.

However, given the present debate around increased devolution to Local Government, it does seem strange that so many of our public authorities are not taking advantage of the new powers that The Act provides.

This is stranger still, given the fact that in a recent survey by The Sustainable Business Partnership and BITC, business - or at least big business - wants to engage and is looking for opportunities to work more closely with the public sector.

Some councils are starting to exhibit good practice. In June 2012, Birmingham City Council Leader’s Policy Statement committed the Council to produce a Birmingham Business Charter for Social Responsibility (BBC4SR) comprising six guiding principles to help foster the economic, environmental and social well-being of the City of Birmingham citizens.

From September 2013, the BBC4SR was included in the Council’s terms and conditions for contracts and grants, with the key principles of: Local Employment, Buy Birmingham First, Partners in Communities, Good Employer, Green and Sustainable and Ethical Procurement. Over 90 businesses are now accredited, many of whom are employers in the local economy.

Liverpool City Council, with leadership from the Mayor and elected members, have made a firm commitment to social value, above and beyond the current Public Service (Social Value) Act 2012. Liverpool are aiming to create a 'social value city', whereby social value is embedded into the very heart of the city to create a more robust local economy.

Key changes to the way in which the council procures goods and services have been implemented. This has required radical changes to the way in which commissioning and procurement interact as departments, and how the council engages with local markets.

In addition, new processes - including changes to PQQ - have been instigated to remove the barriers which often deter local suppliers from tendering. Fundamentally, raising awareness of the economic benefits of social value with the executive team has instilled a willingness to use social value as a key driver for change.

So what’s needed?

The most forward-thinking Local Authorities such as Liverpool City Council are leading from the top. Liverpool have appointed Councillor Rosie Jolly as their leader of Social Value. Councillor Jolly has already passed a motion in favour of ‘buy local’ and is in the process of a root and branch reform of how council officers are engaging with the delivery of The Act. A new Social Charter is being delivered at the end of September.

Most councils and government departments do not have a social value strategy in place. It seems strange to be asking whether a public sector body has a social (value) strategy, and in truth the vast majority already have one under a different title. What is needed is for these to be made readily available, with clear objectives and measurable targets for business to access in a form that makes it easy for them to respond.

Our survey showed that of the 28% of public sector bodies that actually had a social value strategy, only 60% had consulted with its business and community stakeholders. If the Act is to have any real impact, it seems essential that business (as the new social value providers) are consulted and that community needs are properly recognised and prioritised.

Procurement and commissioning officers are at the forefront of the tender process, and it is clear that they need much more guidance around measurement and metrics. Some use financial metrics (e.g. SROI) and others use non-financial information (e.g. narratives and case studies). For the sake of transparency, it is important that Public Authorities develop a clear list of needs, along with appropriate measures, otherwise business will struggle to respond.

If Social Value is to be worth anything, it needs to be in the contract. It must be deliverable, measurable and verifiable. This is perhaps the weakest link of The Act, with there being a clear ambiguity about the legality of demanding local sourcing. Indeed this is one issue that the big Service Providers are most likely to resist. Despite reputation, most large corporates are very supportive of The Act - but whilst business is broadly supportive they will inevitably challenge strategies that are not clearly thought through.

In summary, it is clear that The Social Value Act offers a unique opportunity to tap into the inherent goodwill of business and transform public sector procurement by maximising the link ups with the third sector and social enterprise. However, this opportunity is in danger of being missed by a Public Sector that seems to have not yet grasped its potential.

You can find links to take the survey (public sector organisations) or view results from the Social Value Portal.

The views and opinions expressed in this article are those of the author(s) and do not necessarily reflect the official policy or position of The Information Daily, its parent company or any associated businesses.

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