UK Social Value Act one year on: the Good, the Bad and the Ugly
“I remember hearing about the Social Value Act and thinking that it was a great opportunity for us to differentiate ourselves from other providers,” says Sonia Ramanah, CEO of StreetVibes Youth, a small black and minority ethnic led organisation that uses a combination of music and media-making activities to work with disaffected young people.
"Now, at the most proving our social value comes down to a question in the bid. Our work is appreciated but our inherent social value – our employment of NEETs, a high proportion of 16 to 25 year olds and our apprenticeship programme are not accounted for," she says.
The Act called on local authorities to “consider" some fundamental issues: firstly, "how what is proposed to be procured might improve the economic, social and environmental well-being of the relevant area" and, secondly, "how, in conducting the process of procurement, it might act with a view to securing that improvement”.
So, as the UK's 'radical' legislation celebrates its first anniversary, what changes have we witnessed in the way public bodies procure our services?
Price still main focus
Research by Social Enterprise UK, the umbrella body for social enterprises in Britain, suggests an impressive level of confidence among commissioners about the application of the Act.
The survey of 52 commissioning and procurement staff, 65 provider organisations and 63 other stakeholders found that over 80 per cent of commissioners said their organisation had taken steps to identify their social value priorities, and more than 75 per cent said their organisation had issued tenders using social value criteria.
But SEUK said in a statement that anecdotal evidence suggested these figures were on the optimistic side.
Paul Winyard, policy officer at the National Council for Voluntary Organisations – the UK's main representative body for charities – agrees that while the Act has put social value on the agenda for many local councils and public bodies, “we’re still hearing from our members that price tends to be the driving force of commissioning, although of course, it has only been in a place for a year”.
One of the main problems, he says, is that although the Act puts an obligation on local authorities to consider social value, there’s no obligation for them to monitor whether they are actually doing so. This was a key potential weakness that was identified when the legislation was passed.
“There needs to be mechanisms put in place to monitor what is being done on the ground,” says Winyard, adding that there also need to be better training of commissioners and procurement professionals so that they can commission more effectively.
Lack of understanding of social enterprise
Others point to a continued lack of understanding among commissioners of the value that charities or social enterprises could add by providing a service.
“At the moment the market is still completely skewed towards the private sector,” says Julian Blake, partner at Bates Wells Braithwaite, the leading law firm in the charity and social enterprise arena. “There is a lot of prejudice against social enterprise, and a belief that they are inefficient because they don't make profit.”
In this respect, commissioners and investors are not dissimilar, in that both need to develop and share their understanding of social value, says Seb Elsworth, director of partnerships and communications at the Social Investment Business (SIB), one of the UK's biggest social investors. “Just as investors go on a journey of really understanding risk, commissioners need to do the same thing,” he says. “They shouldn't put in place arbitrary turnover requirements based on expecting to contract from Serco.”
Others have started to see evidence of some improvement here though. Mark Goodman, senior partner at Common Places, a social enterprise that works to develop resilient and sustainable communities, says that it has started to notice a subtle difference with commissioning over the last year compared to two years ago.
“When you get to the panel interview part of the process there seems to be much more knowledge among commissioners about social value,” he says. “You get a sense that they now know what social enterprise is in general. Two years ago they didn’t really understand what it was.”
Strong social sector contenders
Some commentators claim that for real change to occur, both public authorities and social purpose organisations need to put in more effort. And where social purpose organisations have been making an effort to step up their game in order to win contracts, there has been evidence of success. So called 'spin-outs' – organisations that have “transitioned out of a public sector body to become an independent public service provider, often under an initial contract with their parent authority” – for example, are faring well in the current climate, and have on average won more contracts over the past year.
A wave of spin-outs formed in 2011, and secured an average of six contracts at launch, which has since grown to nine according to research published by Social Enterprise UK in the summer of 2013.
"They have an inside edge, know what the commissioner might be looking for because their parentage is from the same place, and they've been able to be quite competitive,” says Scott Darraugh, CEO of Social adVentures, an NHS spin–out, which wins around two in five of the contracts it bids for.
However, many contracts are still out of reach for smaller organisations because the Act has been applied exclusively to central government and NHS contracts worth more than £113,057 and local government contracts worth more than £173,934, says Winyard. “There are a great deal of small contracts that remain outside of that,” he says, adding that the NCVO would like to see a removal of this clause in the Act.
While it is in place, however, the reaction within the civil society and social enterprise space has been to mobilise as consortia, pool resources and expertise to bid for larger contracts. Social adVentures put a bid together last year with seven other social enterprises and beat the local authority and the Salford Royal NHS Foundation Trust.
Stephen Bubb, CEO of the Association of Chief Executives of Voluntary Organisations (ACEVO), which represents the UK's civil society bosses, says although consortia are small scale, they are a “growing phenomena”.
More clarity needed
The SEUK research also found an appetite for more support and guidance on the Act, with 31 per cent of commissioning and procurement staff and 51 per cent of providers saying there was a lack of clear guidance.
Others agree that it would be helpful for there to be a more coherent set of principles and approaches that would become the orthodoxy for complying with the Act. A spokeswoman for the Social Enterprise Mark, a quality accreditation for UK social enterprises, says that one problem with the Act over the last year has been the huge variety in the way people are interpreting it. “We’ve found that a lot of social enterprises are calling for greater clarity in what they have to do in order to respond to the Act,” she says. “There’s more work to be done around best practice, such as more guidance in the pre-procurement stage.”
Many local authorities, however, are not waiting for a social value infrastructure to be put in place and are already shaping their own, most notably in cities, including Birmingham and Liverpool.
“Areas where it’s happening have leadership from the top and have set out a clear strategy with their priorities which can be understood by the voluntary sector and the wider community,” says Rachel Rhodes, policy and research officer at the National Association for Voluntary and Community Action.
But even within councils that have lead the way on this, there is still a belief that local authorities should not have to be the ones to invent the tools to embed social value commitments both into contractual documentation itself and the management of those contracts. “There should be a machinery that can be embedded into organisations,” says Adam Jacobs, Liverpool Council’s head of procurement.
Elsewhere though, there is a lack of even the drive to find these tools. “It's a bit of a postcode lottery in terms of how progressive the commissioners are,” says Darraugh. Particular service areas are also accused of being less advanced than others. “The health service has done sweet FA,” claims Bubb.
Evidence on the ground suggests this is true. A business development manager at a social enterprise based in South West England, who does not want to be named, says that social value has not been a “common theme” in tendering for public health services over the past year with local councils.
“I’ve probably seen less focus on social value over the last year than previously,” she says. “They are much more focused on cost-effectiveness and only very occasionally mention social value. We’ve definitely seen that their focus is on a high quality, low cost service.”
While Bubb emphasises that the health sector is not necessarily backward in terms of thinking about commissioning, he says "they are behind in their understanding of the Social Value Act," adding that “CCGs [Clinical Commissioning Groups] probably don't even know that they should be taking account of social value".
Carrot and stick
Though there are signs of a process of evolution, Bubb believes both a carrot and a stick are needed to drive the implementation of the Social Value Act.
"With the Equal Opportunities Act you had laws around discrimination, whether it was disability or gender – but what really drove it was when people realised that they were going to lose employment tribunals and that they were going to be sued,” he says.
“It wouldn’t come as a surprise if there were a case [on social value] at some stage. And we would certainly be behind any of our members that decided that the outcome of a particular tender had ignored considerations of social value."
Another scenario is that leadership at the top will be matched by an impetus coming from within, as individual offices within public authorities begin to voice their frustration with a system that is preventing them from doing more to create social value in their communties.
"We are engaging with a group of local officials to see about how we can improve things from within," says BWB's Julian Blake, indicating that 'social intrapreneurs' – individuals seeking to change systems from the inside – are organising within public authorities and seeking support.
For a 10-minute digest of what the legislation means, take a look at the Pioneers Post Quick Guide to the Social Value Act