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The Public Services (Social Value) Act came into force on 31 January 2013. It requires people who commission public services to think about how they can also secure wider social, economic and environmental benefits.
Before they start the procurement process, commissioners should think about whether the services they are going to buy, or the way they are going to buy them, could secure these benefits for their area or stakeholders.
The Act is a tool to help commissioners get more value for money out of procurement. It also encourages commissioners to talk to their local provider market or community to design better services, often finding new and innovative solutions to difficult problems.
Government published guidance in December 2012 supporting the Act here
In June 2018, central government announced it would go further and explicitly evaluate social value when awarding most major contracts [footnote 1]. Government departments will be expected to report on the social impact of their major contracts.
To help departments implement this change and following a public consultation, Cabinet Office and DCMS have worked with departmental commercial and policy teams and supplier representative bodies to develop a Social Value Model. Government has defined social value through a series of priority themes and policy outcomes which are important to deliver through government’s commercial activities.
The Social Value Model provides a consistent approach for departments and suppliers, and will help streamline and standardise the procurement process. The Model has been designed to fit easily into existing processes, minimising the impact for commercial teams and suppliers and provides a clear, systematic way to evaluate these policies in the award of a contract.
Social value will be evaluated based on qualitative responses from bidders, and not on volumes. This means that larger suppliers are not able to win on scale alone; all bidders must set out what they will deliver and how they will deliver it and it is this information that will be scored in bid evaluations. The minimum weighting that should be applied to social value is 10%.
Cabinet Office has created guidance on how to use the Social Value Model here and it must be applied to all new procurement activity from January 1st 2021.
3.1 The VCSE Crown Representative
To champion the Social Value Act and an improvement in commissioning practices, the VCSE Crown Representative, Claire Dove CBE acts as an intermediary between the government and the voluntary and social enterprise sectors. More information here.
Government is training four thousand commercial buyers across government to take account of social value and procure successfully from all types and sizes of businesses and organisations including charities and social enterprises.
The VCSE Crown Representative has hosted a series of contract readiness webinars to highlight opportunities the Social Value Model holds for VCSE organisations as well as providing the latest information and opportunities from central government and hearing from key external speakers championing social value in their organisations.
3.3 Case studies
A number of helpful case studies can be found in Lord Young’s review of the Social Value Act. Two examples from the report are included below.
Value for money: Circle Housing
Circle Housing’s repairs and maintenance service is on track to realise around £80 million worth of cost saving over 10 years, subject to market conditions and fluctuations. They have rationalised their contracts whilst mandating social objectives within their procurement model, for example, securing 1 apprenticeship for every £0.5 million worth of contract. This has led to social value being created through the supply chain and funded by the supplier, which would have otherwise been funded by Circle Housing.
Circle Housing also used monetary values or financial proxies from the HM Treasury Green Book to calculate their social return on investment (SROI).
For 1 of their 80 employment and skills programmes, they have calculated an SROI of £5.40 (£75,470 divided by £14,000 gives a ratio of 1 to 5.4):
- input: £14,000 (£10,000 fund plus £4,000 staff costs)
- output: £12,000 from Job Centre Plus to support programme; 80 people supported
- outcome: 10 into employment including 3 NEETs, 22 put through accredited training, 13 into further education, 25 into volunteering/work placements, 30 increased confidence in their abilities
- impact: £29,141 jobseekers allowance savings, £16,500 for young people who are not in employment, education or training (NEETs), £5,131 for NVQ level 1 accreditation, £12,698 reduced NHS cost for depression (identified at start)
Innovative provision: Lambeth Council
Lambeth Council had £20,000 to spend on youth offending services. Instead of taking the traditional approach of buying in a youth offending service, they decided to bring together young offenders to work with the council on a grant fund. The young people decided the outcomes for the grant, evaluated bids, and selected the winner – a project that would involve the whole community in a talent competition.