Public Sector Focus

27.06.19

Dr Joshua Pritchard says social value is the answer to spending taxpayers’ money effectively

For decades, successive governments have sought to ensure taxpayers’ money is spent in the most effective and most efficient ways possible. Dr Joshua Pritchard, researcher at Reform - the independent public services think tank – talks social value and efficiency.

Shortly before Labour resoundingly won a second successive general election in June 2001, then-prime minister Tony Blair announced that: “We stand for sustained investment and far-reaching reform in our public services…investment is vital, but on its own is not enough. Investment must drive radical reform.”

Seventeen years later in June 2018, after a decade of budget cuts across the public sector, several changes in government, and a change in demand from citizens (particularly around digital services), David Lidington, minister for the Cabinet Office, argued that: “We want to see public services delivered with values at their heart, where the wider social benefits matter and are recognised.”

READ MORE: Social value: what is it and why?

Whilst much may have changed in the intervening period, the theme of both speeches remained the same: how does government ensure that taxpayers’ money is spent in the most effective and efficient ways possible? As was argued in my recent report for the independent think tank Reform, the answer to this question lies with social value.

Widely utilised by some local authorities since the early 2000s, social value as defined by the 2012 Public Services (Social Value) Act is the broader economic, social, and environmental impacts of goods, services, or the businesses providing them. This could range from ensuring that a construction company uses locally sourced materials, to asking a provider to employ individuals with disabilities or from minority groups. Social value aims to strengthen the relationship between provider and commissioner by looking beyond price and recognising the other types of value providers may bring to a contract, particularly voluntary, community and social enterprises.

Spurred on by the collapse of Carillion in January 2018, social value has become an increasingly integral part of public procurement and an effective means of ensuring that every pound spent by contracting authorities has a greater impact than it otherwise would. Croydon Council, for instance, has created a “Good Employer Charter,” which rewards local businesses that pay a London Living Wage, employ local people, buy local goods, and promote equality and diversity. In return, the businesses receive reduced business rates and a public accreditation.

The latest proposals from the Cabinet Office and the Department for Digital, Culture, Media and Sport would see social value given a 10% weighting in central government contracting decisions. A non-exhaustive list of some 28 different types of social value that contracting authorities could use to assess bids from suppliers has been proposed covering areas such as diversity, cyber security and environmental sustainability, and a public consultation has recently been launched aimed at gathering feedback on the proposed metrics.

READ MORE: Inspiring leadership in social value

However, whilst the new government proposals have great potential to drastically improve how public services are procured, it is imperative that the 10% weighting requirements are accompanied by clear and concise guidance. The risk otherwise is that having to demonstrate and measure social value in clear and quantifiable terms could prove to be a hindrance rather than a help to contracting authorities and providers, particularly given the challenges of comparing competing types of social value that providers may offer. How, for instance, would a bid offering five apprenticeships compare to one promising to use only local goods?

Several groups are therefore working towards making the measurement of social value easier and simpler, including Social Value UK, the Social Value Portal, and the Social Audit Network. To seize opportunities to create social value, the Cabinet Office must draw on their expertise and ensure that appropriate training and existing guidance is used to support the roll-out of the new requirements. Social value otherwise risks becoming nothing more than a tick-box exercise, and the chance to make investment in public services afford wider social benefits may disappear.

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