Legislating for social value

The Public Services (Social Value) Bill was passed by the House of Lords yesterday. This follows its earlier passage through the House of Commons and it will now become law. This is big news for social enterprises and for the social enterprise movement.

The operative part of the Bill, introduced by Conservative MP Chris White with support from MPs of all parties, is subsection 1 (3) which stipulates that when public sector bodies in England are commissioning public services:

“(3) The authority must consider—
(a) how what is proposed to be procured might improve the economic, social and environmental well-being of the relevant area, and
(b) how, in conducting the process of procurement, it might act with a view to securing that improvement.

As discussed previously, the Bill was originally known as the Public Services (Social Enterprise and Social Value) Bill and included a definition of ‘a social enterprise’ as a vehicle for delivering social value. Specific references to social enterprise and social enterprises were removed from the Bill as a condition of government support – without which it had no chance of becoming law. Despite that disappointment, the fact this Bill has made it through parliament is a triumph for the social enterprise lobby and they’re justifiably very happy about it.

The Bill won’t, in itself, transform the landscape of public sector commissioning and procurement in England. Commissioners can and will interpret the obligation to consider how they might improve economic, social and environmental wellbeing in a wide variety of ways. What the Bill does do is both provide a starting point important for questions to be asked of commissioners – it’s no longer acceptable to simply ignore the wider social impact of commissioning and just  seek the cheapest options – and also provide clear backing for those commissioners who have be keen to prioritise wider social value but have been scared of being criticised for doing so (particularly if that meant spending slightly more).

As Social Enterprise UK chief executive, Peter Holbrook, hints at, it also focuses attention on commissioning decisions taken at a high level within central government: “Without this legislation, the market would remain skewed in favour of larger private firms. We’ve seen this happen with the Work Programme, where few social enterprises and charities were commissioned despite them having a strong track record. We expect to see social enterprises delivering far more public sector contracts with this new Act in place.

While I partially buy the argument that commissioners within local councils and the bodies formerly known as PCTs might have been frightened to commission for social value rather than lowest cost, that clearly isn’t the reason why work and pensions secretary, Iain Duncan Smith, chose to set-up the Work Programme in the way that he did.

The model is primarily designed to save the government money (in the short term) but if Mr Duncan Smith had wanted to design it in a way that would have priortised positive social change, rather than delivering profits for rich individuals while temporary shifting costs of the government balance sheet, he could’ve done so. Even so, accepting that reality still means the Bill is valuable as a means of holding the government to account.

Particularly as the government strongly supports commissioning for social value in theory. Cabinet Office minister, Francis Maude, said last year: “We want services to be run and delivered by mutuals, social enterprises and small businesses; and we want the talented people who are enthusiastic about what they do to be freed up to deliver services in the way that they think is best.

The reality at the moment is that around 11% of spending on public services not delivered directly by the public sector goes to charities and social enterprises. Most major contracts go to large private sector businesses. Ensuring consideration of social value in commissioning doesn’t automatically mean more contracts for social enterprises – social enterprises should be under the same obligation as any other businesses to explain and demonstrate how they deliver social value – but it does at least decrease the likelihood that public contracts will just be dished out to the biggest and cheapest.


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5 responses to “Legislating for social value

  1. A national strategy. Now that takes me back almost 8 years:

    “Traditional capitalism is an insufficient economic model allowing monetary outcomes as the bottom line with little regard to social needs. Bottom line must be taken one step further by at least some companies, past profit, to people. How profits are used is equally as important as creation of profits. Where profits can be brought to bear by willing individuals and companies to social benefit, so much the better. Moreover, this activity must be recognized and supported at government policy level as a badly needed, essential, and entirely legitimate enterprise activity.”

    The crony culture in local government has been a particular obstacle in our case. 2 years ago, I was told in response to a public question, that they had no policy to engage social enterprise suppliers but did have a policy to procure from local business. There was a row going on at the time about a healthcare SET in which councillors were involved borrowing from council tax funds.


    For the sake of brevity, I’ll just say that what was said about local procurement has since been disproved. Even involvement in a voluntary capacity has been obstructed.

    Our council is now dealing with a barrage of complaints over the introduction of ‘stealth taxes’ like parking charges. A 5 person cabinet has until now ruled the roost.

    Where support is needed for social enterprise most of all is in seeing that procurement from social enterprise is open and transparent. Replacing it with a crony social enterprise culture is clearly not the way to go when others are being shut out.


  2. Nice words. When will we see the actions?

    I saw someone suggest that this has to be included in council Sustainable Communities Strategies. My local council has adopted a strategy until 2026. Can they ignore social enterprise until 2026 or do they have to amend it any time sooner?


  3. Beanbags admin

    The stuff related to strategies – originally councils were going to have produce one – was removed from the bill as a condition of government support.

    That’s not a bad thing. Council’s spent far too much time drawing up strategies that rarely get read by the other people who work in the office where they were written – let alone by anyone else within the council or in the outside world.

    You’re right, actions are what’s important – and this Bill doesn’t make positive actions inevitable but it provides a good basis to demand them.


  4. Pingback: 2nd March: Transition Institute’s Weekly Roundup!

  5. It could be that the perfect storm for a confrontation in Gloucestershire where activists have taken over an environmental education centre. Their demand is that the Wilderness Centre in the Forest of Dean should be managed on behalf of the community. They will vacate on condition that the county council commit to sell only to Friends of the Wilderness Centre or a similar environmental education organisation.

    At a public meeting on Wednesday there was a general consensus that the centre should take a cooperative form, with the Cooperative Group promising support should that be the direction taken.

    In contrast, Gloucestershire County Council is a private corporation with Freemasons among its councillors. They also have the allegiance of the Gloucester Citizen. Northcliffe Media has a monopoly in the Forest of Dean where they publish both local newspapers.


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