The Raven's Blog

12.11.18

Social value in public procurement

Source: PSE Oct/Nov 2018

Rose Lasko-Skinner, researcher at Reform, is currently working on a paper looking at choice and competition in the public sector and has written on how failure to understand risk makes for poor procurement practices. Here, she discusses the importance of social value.

The “state of crisis” declared in HM Prison Birmingham in August was yet another indication of the challenges government faces when managing procurement contracts. Fortunately, this summer David Lidington MP announced the government would take action to improve the process. This includes extending the Social Value Act (SVA) to ensure all major procurement contracts explicitly evaluate social value, rather than just consider it.

The SVA was created in 2012 to incentivise commissioners to consider social, economic and environmental wellbeing when procuring services. However, thus far it has had little impact. Recent research revealed that in overall outsourcing spend, less than £1 in every £10 is spent on social value.

This is inadequate. Social value is an indispensable part of procuring public services, primarily because it is about ensuring services have a meaningful and positive impact on people’s wellbeing. In practice, it shifts the focus in procurement from processes to outcomes. This enables procurement contracts to go further than inputs and outputs, i.e. how many appointments a job centre provides, by evaluating the goals of services, i.e. long-term employment rates.

Croydon Works’ scheme, the ‘Good Employer Charter’ (GEC), is exemplar. It incentivises employers to pay a London Living Wage, employ people locally, buy local goods, and promote equality and diversity, with one-off business rates and the GEC accreditation – thereby having the potential to boost local productivity and long-term employment rates.

Changing legislation, however, is only one piece of the puzzle. Government should also take practical steps to help commissioners embed social value in procurement.

Clear guidance on how to measure social value is an essential step forward. Measuring outcomes has been a perennial problem for the public sector, but nonetheless is vital to maximising social value. It is often argued that contracts focus on inputs and outputs because they are easier to measure. However, there is a diverse set of methodologies available. For example, patient segmentation in the NHS uses pre-collected data to help evaluate specific populations in more detail and evaluate whether specific diseases, such as diabetes, are being well-treated. 

In some cases, qualitative methods can also be used to measure social value. The London Homelessness Social Impact Bond, for example, conducted 182 interviews with key stakeholders to assess user satisfaction. Specifically, how users felt about their new home, e.g. whether it was furnished to a good quality or if furnishings met their specific needs. Guidance should therefore include diverse methods, from qualitative to quantitative, to evaluate social value.

More long-term change might be necessary. To these ends, Brexit could be an opportunity. Without the Official Journal of the European Union (OJEU), the UK will have to rewrite its procurement guidelines. At local level this could be particularly valuable, as current OJEU rules mean SMEs can be undercut by larger European competitors who provide services at a cheaper price. The ramifications include local authorities being hindered from building good relationships with local vendors, and vendors being less likely to provide services that understand and adequately cater to locally-specific needs.

Nonetheless, it should be noted that the European Procurement Directives have tried to embed social value and legislatively protect SMEs from economies of scale. This, however, has failed to manifest in meaningful change. Leaving the EU could therefore mean the UK is able to effectively devolve the procurement process, and ultimately make more radical changes to procurement policy, mindset and practice.

There is an undeniable need to improve procurement practices. Since 2010, there has been a succession of contracting disasters, Carillion’s collapse being the posterchild. Bottom line, the amendment to the SVA is good news, demonstrating government is committed to reforming procurement practices. However, without clear guidance and further institutional change, putting the legislation into practice will be difficult.

 

Enjoying PSE? Subscribe here to receive our weekly news updates or click here to receive a copy of the magazine!

Comments

There are no comments. Why not be the first?

Add your comment

 

public sector executive tv

more videos >

latest public sector news

Government backs Northamptonshire unitary authorities with one-year delay and separate children’s services trust

15/05/2019Government backs Northamptonshire unitary authorities with one-year delay and separate children’s services trust

The government has formally approved the formation of two new unitary councils in Northamptonshire in 2021, a year later than first planned, also... more >
Introduce ‘smart bins’ and hand out tax cuts to drive up recycling, urges think tank

13/05/2019Introduce ‘smart bins’ and hand out tax cuts to drive up recycling, urges think tank

Local authorities should use a new generation of “smart bins” and council tax cuts to drive up household recycling rates, a think tan... more >
Councils to be placed under legal duty to house victims of domestic abuse

13/05/2019Councils to be placed under legal duty to house victims of domestic abuse

Councils are to be given a legal duty to provide “safe houses” for victims of domestic abuse and their children, under new plans anno... more >

editor's comment

25/10/2017Take a moment to celebrate

Devolution, restructuring and widespread service reform: from a journalist’s perspective, it’s never been a more exciting time to report on the public sector. That’s why I could not be more thrilled to be taking over the reins at PSE at this key juncture. There could not be a feature that more perfectly encapsulates this... read more >

last word

The importance of openness after Grenfell

The importance of openness after Grenfell

Following the recent Grenfell Tower tragedy, Lord Porter, chairman of the LGA, argues that if the public are going to have faith in the safety testing process then everything must be out in the o... more > more last word articles >

the raven's daily blog

Empower your reader, choose print

07/05/2019Empower your reader, choose print

We are on a digital rollercoaster, swirling and twirling through a variety of different online advertising platforms – have we forgotten about traditional marketing platforms such as print? The UK is currently the global leader in advertising, generating £6 for every £1 spent on advertising to the economy. This year, UK ... more >
read more blog posts from 'the raven' >

comment

Cities as places of opportunity

29/04/2019Cities as places of opportunity

Andrew Carter, chief executive of Centre for Cities, asks: if cities are places of opportunity for the low skilled, why are so many struggling? ... more >
Shaping healthy places with district councils

29/04/2019Shaping healthy places with district councils

District councils are achieving excellent outcomes by shifting health solutions from clinical settings to community ones. They have a significant... more >
The road more taken: delivering future connectivity and mobility

29/04/2019The road more taken: delivering future connectivity and mobility

Localis chief executive Jonathan Werran outlines the challenges to delivering future connectivity and mobility, and asks what policy shifts to ho... more >
The state of the Spring Statement

29/04/2019The state of the Spring Statement

Ben Zaranko, research economist at the Institute for Fiscal Studies (IFS), analyses this year’s Spring Statement and looks ahead to the Spe... more >

interviews

Artificial intelligence: the devil is in the data

17/12/2018Artificial intelligence: the devil is in the data

It’s no secret that the public sector and its service providers need to invest in technology to help make better use of their resources. Bu... more >
Digital innovation in the public sector: The future is now

17/12/2018Digital innovation in the public sector: The future is now

One of the public sector’s key technology partners has recently welcomed a new member to its team. Matt Spencer, O2’s head of public ... more >
New Dorset Councils CEO on the creation of a new unitary: ‘This is going to be the right decision for Dorset’

05/11/2018New Dorset Councils CEO on the creation of a new unitary: ‘This is going to be the right decision for Dorset’

The new chief executive of one of the new unitary authorities in Dorset has outlined his approach to culture and work with employees, arguing tha... more >
Keeping the momentum of the Northern Powerhouse

15/10/2018Keeping the momentum of the Northern Powerhouse

On 6 September, the biggest decision-makers of the north joined forces to celebrate and debate how to drive innovation and improvement through th... more >

public sector focus

View all News