Increasing the importance of social value could help alleviate pressure on other areas, such as policing © Photo by Vuk Valcic/SOPA Images/LightRocket via Getty Images
Increasing the importance of social value could help alleviate pressure on other areas, such as policing © Photo by Vuk Valcic/SOPA Images/LightRocket via Getty Images

Fears 'vague wording' in UK Procurement Bill will leave social value overlooked

12 September 2022

A charity think tank has raised fears the new UK Procurement Bill does not explicitly mention social value and it will be reduced to a tick-box exercise.

The bill is currently passing through the House of Lords but Theo Clay, policy manager at New Philanthropy Capital (NPC), says it focuses on value for money without explicitly referring to social value, which risks being overlooked through “vague wording”.

Clay told Supply Management: “Social value is not explicitly mentioned at all in the Procurement Bill at the moment, though it is in committee stage in the Lords and amendments are being discussed at the moment which may try and tackle this issue. The bill instead focuses on ‘value for money’ including a clause around ‘public benefit’ but we believe that this vague wording will not be sufficient to encourage better working practices between government and charities which delivers actual social value.

“The danger is that without more explicit encouragement or mandatory scoring of contracts against it, social value remains a tick-box exercise as it is in many contracts at the moment, where local government only have to report on if they have considered social value, rather than actually scoring a contract based on their best estimates for how it will deliver social value for a community.

“We believe that by defining ‘value-for money’ in the bill as including social value, as well as wider cost savings for a community (for example for the NHS or police), then we can move to a situation where real social value is delivered for communities around the country, as well as saving the public purse money.

“Some of this could come in secondary legislation, but by including it in the bill itself it has the best opportunity of delivering value for the community and avoiding a situation where it remains a tick-box exercise.”

A report by NPC found two-thirds of charities aren’t being paid enough to cover their costs in public procurement contracts. The report said the value charities bring cannot be quantified in purely monetary terms, hence the need to recognise social value as an important facet of public procurement.

Clay said the Social Value Act, which requires all major public procurements to consider social value, applies to central government but not local government – another change NPC is calling for.

“[The act] also focuses on social value as 'additional value', a definition which works for businesses but does not take into account the inherent social value which a charity brings in their work,” Clay explained.

“Therefore another change is we want the Procurement Bill to have specific guidance on what inherent benefit charities can bring to contracts and how government should work with them as a result.”

Current policy gives a minimum 10% weighting to social value when assessing bids for central government contracts.

The report said the voluntary, community and social enterprise sector was held back by “unsustainable procurement frameworks which undermine its potential”. However charities, community groups and social enterprises have “huge potential” to help deliver public services, which are under pressure as inflation intensifies.

NPC’s recommendations for the Procurement Bill include:

  • Defining “value for money” to recognise social value and cost savings from reducing demand on other public services;
  • Mandating commissioners to score contracts against this definition;
  • Detailed guidance and legislation on how to approach social value;
  • Scrutiny on how far social value is being achieved and how commissioners evaluate contracts on social benefits;
  • Local authorities should implement the above definition of “value for money”  by co-designing with charities, civil society and businesses in their area to reflect local needs.

A government spokesperson said: “The Procurement Bill will require public sector procurers to have regard to the priorities set out in the National Procurement Policy Statement, including in relation to social value. Our procurement reforms will bring in a simpler and more accessible system, which delivers positive social value for broader society.”

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