Social Value — findings of the first government review (Feb 2015)

At the tail-end of 2014 the government announced that a cross-parliamentary team led by Lord Young would review implementation of the social value Act and publish a report. That report has just been published today (13/02/15). You can read it in full here.

Below we offer a synopsis of its key findings and some observations on what we feel to be the most important points.

Key findings

(1)  The report concludes that SV has had a positive impact so far in those instances where it has been taken up.

(2)  Local authorities and housing associations lead the way in using the new legislation but central government, health and SMEs lag behind. (Although it notes that while 60% of local authorities say they are considering SV, only 11% specifically mention the Act in their procurement strategy, and only 9% have developed a SV strategy or plan.)

The report therefore recommends specific work within Whitehall to raise awareness and understanding across government departments, work with Cabinet Office SME champions to help private sector businesses understand social value better, and the establishment of a social value steering group with NHS England and the NHS Sustainable Development Unit to ensure better progress on social value in health.

(3)  Partly due to low this awareness amongst some public authorities, partly to widely acknowledged difficulties in measuring and evidencing social value, and partly to there being an inadequate volume of ‘live’ contracts to enable a comprehensive analysis of what social value is currently achieving, the report concludes that it would be premature to recommend a mandatory extension of the Act. Basically, it says the Act should stay as it is currently, with the next phase continuing to focus on progress in implementation, with a further review within two years.

The report does specifically recommend, however, that the procurement threshold currently detailed in the Act (€134,400/£207,000) is not increased to the new OJEU level of €750,000. Lord Young has asked that provision be made to enable the current lower thresholds to be retained. (It should be noted that the Act has never precluded public authorities from applying the law to lower contract values or indeed to goods as well as services — both of which measures Birmingham City Council chose to adopt.)

(4)  The review also found that poor understanding amongst some public authorities has the potential to result in practices that are inconsistent and overly bureaucratic. Lord Young is especially keen to guard against this – and especially concerned that procedures are not put in place that result in an undue burden falling on the shoulders of smaller suppliers, and especially third sector organisations and social enterprises, as they are particularly vulnerable to additional burdens.

(5)  Annex A includes best practice guidance on implementation for commissioners and procurers. This covers:

» Knowing how to define SV and when to include it in procurement;

» Applying SV within a legal framework;

» Clarifying the use of SV in pre-procurement;

» Writing SV outcomes into contract specifications;

» Understanding what is legally permissible;

» Pre-procurement engagement and consultation with users to find out what they need from services, and with the market to ensure that providers understand the additional SV outcomes sought.