Social ventures could deliver £5bn health and social care contracts each year in UK by 2025 – new report

Health and social care contracts present the biggest growth potential for social enterprises and voluntary sector organisations, finds independent analysis, but they’re held back by a digital skills gap and overcomplicated processes.

As much as £5bn-worth of health and social care contracts could be delivered by social enterprises and voluntary sector organisations each year by the middle of this decade, according to an independent report commissioned by the UK government. 

The research, The role of Voluntary, Community, and Social Enterprise (VCSE) organisations in public procurement, published last week, is intended to support efforts to “harness £300bn of government spend each year” for social ventures.

Public procurement accounts for a large part of social ventures’ trading activity, according to the report’s figures. Of the 250,000 voluntary, community and social enterprise organisations (VCSEs) currently active in the UK, between 9,200 and 12,500 (up to 5%) engage in government contracting each year. 

The report highlights Social Enterprise UK data that shows nearly one in five (19%) social enterprises report that their main source of income is from trading with the public sector.

This market is likely to grow substantially given wider demographics, and health and social care pressures

The research identifies health and social care as the sector with the biggest potential for growth. This is already the largest market for social enterprises and voluntary sector organisations in absolute terms with £11.6bn-worth of contracts awarded between 2016 and 2020, and health and social care services are likely to face growing demand due to wider demographic trends such as an ageing population, the report suggests.

Following current growth trends, the value of health and social care contracts awarded to social enterprises and voluntary sector organisations could exceed £5bn per year by the mid-2020s – a quarter of the total procurement market for this sector – the researchers estimate.

“Health and social care is likely to be both a core market for VCSEs… as well as an opportunity for growth,” the report states. “This market is likely to grow substantially given wider demographics, and [health and social care] pressures.”

The study was conducted by consultancy firm Perspective Economics with an aim to support the sustainability of the VCSE sector in the UK and maximise social value in public procurement. The researchers analysed existing data and conducted nearly 30 interviews with relevant policymakers, civil society leaders and academics.
 

Claire Dove

In a foreword to the report, VCSE crown representative Claire Dove (pictured) said: “The voluntary, community and social enterprise sectors and the social value they create play a crucial role in our journey of transforming how the government delivers smarter, more thoughtful and effective public services that meet the needs of people across the country.”

She added: “This report offers a critical base on which to build our collective efforts going forward, harnessing £300bn of government spend each year to truly benefit our VCSE sectors and the communities they serve.”

 

10 years of the Social Value Act

The research was published as the Social Value Act celebrates its 10-year anniversary this year. The law aimed to ensure that public bodies choosing a provider of services would consider not only the price but also the provider’s economic, environmental and social impact on the community, putting social enterprises in a better position to win public contracts.

The Act helped transform the debate on what we can achieve through public spending

In the report’s foreword, Dove said: “The Act helped transform the debate on what we can achieve through public spending… We are committed to awarding contracts not just on price, but on the long-term benefits they deliver for our society.”

The impact of the Social Value Act has however been under scrutiny in recent months. In an analysis on the past decade of public spend, Social Enterprise UK found that the UK public sector is “only realising a fraction of the benefits that could be generated through greater embedding of social value”.

In May, a report claimed that £56bn a year in social value could be squeezed out of public sector contracts and used to “level up the country”, tackle carbon emissions and strengthen communities across the country.

A new procurement bill is currently making its way through parliament, with campaigners hoping that it will include a strong consideration of social value in public procurement.

 

Local impact

The report also highlights the local impact of social enterprises and voluntary organisations, which backs arguments that they are well-placed to deliver the government’s “levelling up” agenda that aims to reduce geographical inequalities. 

Local government is already the biggest client of social enterprises and voluntary organisations when it comes to procurement: 68% of contracts awarded to social enterprises and voluntary organisations currently come from local authorities, meaning that growth in their participation in procurement is most likely to happen at a local level, according to the report.

And more than 75% of social enterprises and voluntary organisations deliver public services in their area, “with strong links to that locality”, Dove said.

She added: “Their place-based solutions can create a greater impact for those most in need, who are hard for the traditional public sector to reach.”

 

Digital skills gap

Barriers remain, in particular for smaller social ventures that tend to lack capacity to bid for and deliver public procurement contracts, the research shows.

In particular, the report identifies a “digital skills gap” that hinders the sector’s participation in procurement. As tendering processes have largely moved online, social ventures struggle to keep up with the different platforms advertising contract opportunities, for example.

“The number of different portals… We don’t know where to find them [contracts], or the [tender] criteria,” said a community interest company quoted in the report.

A recent survey referred to in the study found that less than half the organisations in the sector rated their digital skills as “good”, and the researchers warn that social ventures might not be able to upskill their workforce as quickly as competitors, putting them at a disadvantage as most services are now digitised. 

Whilst much good work has been happening, much work remains ahead

Generally, the lack of capacity and experience in bidding for contracts are an obstacle for many social ventures that face complex and resource-consuming application processes. Minimum requirements for delivery also often go beyond what smaller social enterprises and voluntary organisations can provide in terms of scale and scope, thereby excluding them from certain opportunities.

The report recommends simplified and standardised tendering processes to make it simpler for social enterprises and voluntary organisations to bid, and suggests ring-fenced funding could be used to enable small social ventures to become “procurement ready”, similar to blended finance programmes delivered for example by the Access Foundation.

Dove said: “Whilst acknowledging efforts and progress over the last decade, I also want to challenge us to go further, and emphasise that the government cannot do this alone… [The report] shows that whilst much good work has been happening, much work remains ahead.”

 

Top picture: DCStudio.

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