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.