The Public Services (Social Value) Bill is about to become law. For third sector organisations it could be ground-breaking, so long as they can demonstrate the social value they create
A piece of legislation passed quietly through the Lords in the past week, as people’s attention was focused elsewhere, on the welfare reform and health and social care bills. Chris White MP's private member's bill - the Public Services (Social Value) Bill - is now set to become law by the summer after it was ratified by the Lords without so much as a quibble.
The Bill requires local authorities, government departments, NHS bodies and other public commissioning authorities to 'consider how what is proposed to be procured might improve the economic, social and environmental well-being of the relevant area.'
In other words, when these bodies award a public service contract, they cannot just consider price: they also have to look at bidders' 'social value' - for example if they recruit the long term unemployed in the area, have waste reduction strategies, and so on. The Bill does not place a duty on procurement bodies to award contracts to organisations demonstrating social value, but it does require them to take it into account when making contracting decisions.
This has caused great excitement among social enterprises and charities, whose social value credentials are often much stronger than their commercial counterparts who often win procurement contracts based on price. At a time when the 'privatisation' of the NHS, the Work Programme and the police are subject to criticism, and the awarding of large contracts to multi-national private firms is under scrutiny, such non-profit friendly legislation couldn't come at a better time.
But will it fulfil its potential? Chris White MP says he drafted the Bill to 'level the playing field for smaller organisations to take on bigger corporations' and it has been described as 'A bill designed to make it easier for charities and social enterprises to win public sector contracts'. But this may prove premature. In order to bid for new social value friendly contracts, an organisation will have to demonstrate and prove their social value. And for the pickier commissioners, they may well have to quantify it. This is easier said than done.
The fact is, demonstrating social value can be a difficult and resource intensive process. An organisation has to describe a variety of soft outcomes – it is not simply good enough to say how many hours of volunteering one's employees undertook in the last year: social value is about demonstrating what that volunteering achieved. Unsurprisingly, not all small organisations are able to articulate and quantify their social value, even when they are doing outstanding work. Demos research of a random sample of 30 social enterprises and charities in 2010 found very few were able to evidence the social outcomes they achieved - so whilst many were doing good things for their local community and environment, not many were able to prove it.
This could be the Bill's undoing. Because if commissioners want to give evidence about social value as much weight and validity as other factors they take into account when awarding contracts - i.e. price and quality - then only larger charities who invest in Social Return on Investment type analysis will be able to provide it. And, somewhat ironically, it will also be private companies who can meet the challenge. Many private companies have developed sophisticated analytics to measure their ethical and corporate social responsibility activities, with triple bottom line reporting, for example. So we may see a situation where contracts are not awarded to organisations which have the greatest social value, but the ones who are best at quantifying and articulating this to commissioners.
This is some way from the level playing field Chris White hoped to achieve. The solution? Prompted by a tight financial environment, charities are continually improving ways of measuring their impact in order to secure grants. But at some point, all organisations find that the benefit of having this evidence is outweighed by the resources needed to gather it. So, commissioners will not only have to consider social value - they will have to learn to recognise it in organisations which may not be able to provide the level of information they are accustomed to. This is the big challenge of the Social Value Bill, but the rewards – getting more bang for the commissioning buck, properly connecting with local communities and gaining public trust – are well worth it.
