Port Talbot crisis makes case for extending the Social Value Act
In recent weeks the town of Port Talbot in South Wales has hit the headlines as it has been announced that Tata Steel is selling up. Port Talbot is home to Britain’s biggest steelworks meaning that Tata’s announcement puts around 4,000 jobs at risk.
Andrew O'Brien from the Charity Finance Group explains why the government needs to use the social value tools in its box better in order to avoid a similar fate for communities elsewhere in the UK.
There has been a lot written about the steel crisis so far, but one thing that has come to the fore is the belated attempts by the government to use the buying power of the public sector to better achieve social, economic and environmental benefits.
As the business secretary continued to grapple with the fallout of the potential closure of Port Talbot he made an announcement about the steps that the UK government had taken to help the steel industry including, “new procurement rules to ensure public steel contracts consider the wider social and community impacts of steel in all major procurement projects – making British steel more competitive.”
This sounds like a good idea, and it is. But the fact is that we’ve already had it.
In January 2013, when the Social Value Act came into force it asked public sector contractors to consider how “what is proposed to be procured might improve…economic, social and environmental well-being”.
However, even the Act wasn’t the originator. It followed in the wake of Best Value guidance from the government and European Directives which have encouraged this approach for years. The point is that governments of all colours and stripes have been talking about improving commissioning and procurement to achieve social outcomes for some time, but haven’t done so.
The backstory of the Social Value Act is also interesting in this regard. When it was first proposed by Chris White MP, the Act would have covered goods (e.g. steel) and works (e.g. constructing railways). There was even a debate at the time about whether it could have helped train maker Bombardier which had recently lost out on a contract to foreign competition. But the then Minister, Nick Hurd MP, passed an amendment to narrow the Act just to apply for services. In his words:
“By focusing on services, the legislation rightly focuses on the types of contract with the greatest direct impact on individuals and communities, and consequently where wider value is likely to be most relevant. I stress that it is not the Government’s intention to suggest that there would not be benefits in considering wider value in other forms of contract, but we do not believe that they warrant legislation at this time.”
He further clarified that the government was doing this in order to“strike a proper balance between our objective to encourage more commissioners to think about wider values, such as social and environmental values, in their considerations, and our determination to try to streamline the process and to reduce the number of additional duties on commissioners”.
For the layman, the government was worried that the Act would be too much ‘red tape’ and wanted to limit it to that area where it thought it would have most impact – service contracts (e.g. social care, youth work etc.).
It sounds like a no-brainer, because it is
This was criticised at the time. Surely it would be more burdensome to have two types of commissioning: services (social value) and goods/works (non-social value)? Of course, as the government said at the time, public bodies could choose to apply the Act more widely to goods and works if they wanted to, but the whole reason behind the Act was that commissioners weren’t doing this because they didn’t feel they had ‘legislative cover’.
On the ground social value has sometimes been adopted in goods as well as works. But covering goods and works has reduced the benefits of the Act and slowed progress. In Social Enterprise UK’s 2015 State of Social Enterprise survey, around half of respondents said that they hadn’t seen social value translated into tender documents. If the Act had covered goods and works, more bodies would be using it and we’d be closer to generating that ‘critical mass’ which turns social value from something some people do, to something everyone does.
As I referenced in an article for Pioneers Post a couple of months ago, basic things such as guidance from central government on the Social Value Act have not been done. The Government has also not put its money where its mouth is and invested in developing skills, resources and support for commissioners to carry develop effective social value commissioning strategies.
A couple of million pounds investment, in a body like a Centre for Social Value, could have a massive impact across the hundreds of billions that the government spends on procuring goods and services every year. It sounds like a no-brainer, because it is.
In his review, Lord Young said that the Act shouldn’t be extended until awareness and engagement in the Act had improved. I would argue that the most effective way to do this would be to extend it to goods and works as well as strengthening it so that local councils had to not just consider but account for social value when it came to procurement.
This would make all public bodies sit up and take notice in the same way that the introduction of the Act did back in 2013.
The ‘first phase’ of the Act has been relatively successful. It has got social value on the agenda and legitimised it as an approach across the public sector. But now the challenge is to get it working across board so that we can truly maximise value for money. Not only would this help the Port Talbots of the UK but would also help social enterprises and charities to deliver better outcomes as well.
Something to stick in the next Queen’s Speech, Sajid?