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Value evolution

Source: Public Sector Executive Mar/Apr 12

Social Enterprise UK’s chief executive Peter Holbrook talks to PSE about the ways in which the Social Value Act will change the face of procurement.

It’s rare for a private member’s bill to be afforded debate, let alone make it to the statute book, but this is exactly what happened when Chris White MP (pictured below) raised the idea to promote a more responsible capitalism for public sector bodies when awarding contracts.

The Public Services (Social Enterprises and Social Value) Act, usually just called the Social Value Act, will apply to all local authorities, NHS bodies, housing associations and government departments and requires consideration of environmental and social impacts on an area as well as the traditional economic gains, when commissioning or procuring services.

Peter Holbrook of Social Enterprise UK described the Act as a “fantastic opportunity”, and one that Social Enterprise UK had been aspiring to see for some time.

He told PSE: “What has been seen as good practice in some is much more likely to become part of the norm. I think it will rapidly develop the good practice that’s already going on around the country, make that approach much more mainstream and ensure taxpayers get much more bang for their buck.”

Creative commissioning

Holbrook continued: “It really helps to incentivise the private sector to be innovative and creative in its thinking about how it can deliver services that not only represent good value for money but that can also contribute to an area’s other priorities.

“It’s changing the culture of commissioning and procurement so we’re not only focused on getting the cheapest price but looking at absolutely getting the best value for our taxpayer money. Sometimes that will mean that organisations will have to explicitly commit to whatever a local area’s priorities are.”

This could include tackling youth unemployment, reducing waste to landfill, or pollution by using electrically-powered transportation in delivering goods and services. The shift would give a “green light” to commissioners and procurement managers to think more broadly about how they can contribute to wider social need, something which Holbrook suggests is already on their agenda.

An opportunity to work more creatively in the way they commission and procure goods, which has previously been lacking, or even challenged, would “let them do what they know is right”, he added.

He reiterated that promoting social value is all about understanding a local community’s priorities and identifying how procurement can contribute towards those.

“Sometimes that will still be about getting jobs done at the lowest price,” Holbrook acknowledged, “but wherever possible it will be about asking ‘how can we creatively deliver services to contribute towards tackling major issues’, like youth unemployment. This gives a huge opportunity for commissioners to contribute much more fully through the decisions they make to their local communities.”

Generating good practice

To help public sector bodies to adjust, Social Enterprise UK has published guidance which brings together current good practice, and will be working closely with Government to produce direction for the new Act.

That will enable the body “to see how we can provide the mechanics, the understanding and the cultural shift to make sure that this piece of legislation has the greatest impact,” Holbrook explained.

In a time of financial stringency, some would argue that moving away from a model of procurement that focuses solely on price is a mistake. Holbrook strongly contests this and highlights that the consequences of this approach can be severely detrimental, even if they cannot be priced in the traditional manner.

He said: “We need to recognise that sometimes the cheapest option creates a false economy and we shift costs around the system elsewhere into other people’s budgets. We should be taking a much more ‘whole community’ focused approach to the decisions we take; ultimately it should mean better value for money for taxpayers. I think it’s exactly what’s needed in these difficult times.”

Evolution of an Act

The Act is part of a longer-term approach that has been evolving for some time, according to Social Enterprise UK. It seems such a sensible proposition to make, it’s difficult to comprehend why it has taken so long to be incorporated into legislation.

Holbrook answered: “Things do take time and people need to have confidence in changes that occur, particularly when you’re talking about the spending of public money. We have only just begun to appreciate that in economically challenging times taxpayers’ money has to work much harder.

“It does seem incredibly like common sense. But the conversation about understanding social value has been evolving; it’s required that conversation and that understanding of what we’re talking about before we can actually legislate to ensure it is taken into account.”

If this has been an evolution, is there still more that should be done in the future?

“No. We need to apply more thinking in the arena of creating comparable social impact measurements; how do we effectively and efficiently assess the wider social, cultural and economic benefits that are created when we spend taxpayer money.”

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