'Here to stay' – the rising prominence of social value in public procurement

Billed as the holy grail that can save public money as well as improving outcomes, social value has been a formal part of public sector procurement for a decade, but what do new procurement rules mean for its future?
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By Tim Gibson

09 Jun 2023

Keen observers of parliamentary process will no doubt be following with interest the passage of the procurement bill through the House. Those who are keener still may even have engaged with the Public Bill Committee debates about it that started at the end of January.

If so, they’ll have noticed a nuanced discussion concerning the language of the bill. It involved Labour MP Florence Eshalomi making the case for “social value” to receive clear signposting. She proposed an amendment that would make specific mention of the Public Services (Social Value) Act 2012 alongside the bill’s existing reference to “public benefit”.

Eshalomi’s proposal reflects an ongoing feature of discussion about the procurement bill. In its original drafting, the government didn’t include the language of “social value”, but the House of Lords asserted that it should be there – a suggestion not taken up for the bill’s second reading. Even after Eshalomi’s intervention, it remains absent. The Noes had it.  

But readers who share the member for Vauxhall’s enthusiasm for social value need not fret. The Cabinet Office has made it clear to CSW that the new bill sits alongside existing legislation and guidance for public sector procurement managers, ensuring all central government buying decisions take due account of the wider social and environmental benefits of a tender as a matter of course. 

As Professor Chris White, who proposed the Social Value Act as a private member’s bill during his time in the Commons, notes: “If social value isn’t explicitly referenced in the procurement bill, that’s because it’s now so firmly embedded it doesn’t need further mention.”

A decade of social value

White’s is a good perspective with which to begin a survey of the decade since the Social Value Act was enacted. He left parliament in 2017 and now serves as director of the Industrial Policy Research Centre at Loughborough University. He describes himself as “optimistic” about the impact of the act he devised – and, indeed, about its future. 

“The purpose of the act was to be light-touch legislation to drive cultural change in government procurement processes,” he says. “The original bill was only eight pages in length, including covers. It didn’t contain strategies or definitions, but it’s had an undoubted impact.”

White points to the fact that social value is now “pervasive” in the tendering process. In 2017, he says social value influenced around £25bn of public spending. “That figure is now approximately £100bn and set to grow, which shows that social value is now generally adopted and well understood.”
Just in case you don’t share such understanding, it’s helpful to consider the definition of social value included in the act. It comes in section 3, and says the “[procurer] must consider how what is proposed to be procured might improve the economic, social and environmental wellbeing of the relevant area.”

“If social value is properly embedded in contracts, it actually saves the government money by enhancing the quality of public services” Andrew O’Brien

In other words, social value is about driving wider benefit from the award of a government contract. Examples include creating apprenticeship schemes for local people when a ship-building contract is awarded; pursuing an accelerated net-zero target upon the award of a construction project; or investing in community groups to skill-up local people as part of a tech bid. As White explains: “Social value is about improving the environment, enhancing social mobility, or working with communities.”

A key feature of the concept is that it can be hard to define, but people tend to grasp what it’s about when they see examples in practice. That makes the job of a government procurement manager challenging, since they need to weigh the benefits of various tenders, which may offer very different proposals to generate social value. 

Sharpening focus

That challenge became more pronounced with the introduction of Public Procurement Notice (PPN) 06/20 on 1 January 2021. If the Social Value Act established a general commitment to securing wider economic, social and environmental benefits when contracts are awarded, PPN 06/20 mandated such consideration.

“Social value should be explicitly evaluated in all central government procurement,” the note states. It later establishes that social value questions should carry a minimum 10% weighting in the overall score, with procurers given freedom to attribute a higher weighting “if justified”. 

Our contact at the Cabinet Office observes that the commitment to social value was strengthened by PPN 05/21, which came into force in June 2021. This reminds procurers of the need to consider national priority outcomes when awarding contracts, including “creating new businesses, new jobs and new skills; tackling climate change and reducing waste, and improving supplier diversity, innovation and resilience”.

In other words, social value is no longer a “nice-to-have”. It’s firmly embedded in the government’s procurement processes – and very much here to stay. 

Delivering social value: good news stories

All of which begs a question: how do contracting authorities secure social value? The government commercial function and Crown Commercial Service publish regularly updated guidance for procurers. Moreover, tools like the Social Value Portal – an independent online resource that guides both procurers and the supplier community through the process of maximising social value in tenders and subsequent contracts – are popular. This uses a framework known as “National TOMs” (themes, outcomes and measures) to quantify social value, thereby offering a standard against which competing tenders can be assessed. 

The result has been some excellent practice, with genuine impact on society and the environment. This is a point made by Andrew O’Brien, who was director of external affairs at Social Enterprise UK until March and is now director of policy and impact at Demos, a think tank that worked with Chris White on the Social Value Act. 

“There are some great examples of social value emerging from public sector procurements,” O’Brien says. “We’ve definitely seen a mindset change in central and local government, with a commitment to making life better for the planet and the public when awarding contracts resulting in tangible outcomes.”

Many such outcomes were highlighted in a report published by Social Enterprise UK last year, entitled Social Value 2032. Authored by Chris White, it analysed the impact of the Social Value Act in its first 10 years and mapped a vision for the coming decade. 

“The government needs to recognise the ongoing work many small companies do to drive social value – that would level the playing field” Pippa Birch

The good stuff is self evident. Suez Recycling delivering an upcycling and repair hub for Greater Manchester Combined Authority as part of its waste management contract. Shaw Trust committing more than £1m across a 10-year partnership with Somerset County Council to drive social value through its provision of children’s services. Siemens influencing its supply chain to deliver sustainability and inclusion. PwC introducing a “Voice of the Victim Forum” to help West Midlands Police and other bodies better manage rape and serious sexual assault cases. 

“All these examples speak of the power of public sector procurement to deliver added value, thereby maximising the return on every pound of public money spent,” O’Brien says. “If social value is properly embedded in contracts, it actually saves the government money by enhancing the quality of public services.”

The challenge 

Despite the good news, there is some way to go before the full potential of social value is realised – especially in central government buying. In his report, White references analysis by Social Enterprise UK suggesting that some £760bn worth of opportunities to create economic, social and environmental value may have been missed in public sector procurement between 2010 and 2020. “[That is] equivalent to £56bn a year, or 14 Levelling Up Funds.”

Such figures may serve to deflate the sense of optimism around social value, but White sees it as an opportunity to pursue “exponential growth”. “The holy grail of policy making is to deliver better public services for less,” he says. “If we increase social value in government contracts, we’ll achieve that aim, transforming public services and creating an environmentally sustainable future.”

To do so, further work is needed to help government procurers embed social value in their tendering processes. That’s the view of many in the supply chain, who believe a lack of consistency and proportionality makes it difficult to answer questions relating to social value, and harder still to deliver against it in-contract. 

“I see a lot of variation in the questions around social value in tender documents,” says Sarah Hinchliffe, founder and chair of the Social Value Group for the UK chapter of the Association of Bid Proposal Management Professionals (APMP UK). “PPN 06/20 has definitely brought it to the forefront of procurers’ minds and ensured social value is included in tenders. But there is a lack of consistency in the way questions are asked, or the space given to respond. Equally, there is often no clear sense that the expectation around social value is in proportion to the size of the contract, or of the supplier.”

Part of the challenge, Hinchliffe says, is to develop the skills and understanding of procurement managers so they know how to apply the guidance of PPN 06/20 and PPN 05/21. “If social value is part of the mainstream of government procurement, those managing the process need to develop expertise in asking the right questions and assessing them. Then, of course, we need effective governance to make sure it is delivered once a contract is under way.”

Working together

One of the themes to emerge from government suppliers across several sectors is the need for clear engagement around social value. For example, a survey by APMP UK in September 2022 found that 75% of respondents disagreed with the statement that buyers engaged well with stakeholders and industry to develop clear social value requirements and questions, while 80% felt buyers’ knowledge of social value ranked lower than “good”. 

A similar picture emerges from qualitative research conducted by techUK and Dods Research – a sister company of CSW which is now part of the Total Politics group – in June 2022, published as Getting IT Done: techUK Public Sector Supplier Perspectives. While pre-tender engagement has increased, suppliers found the approaches taken by different departments lacked consistency – a general comment that has resonance in relation to social value, where a lack of clarity among buyers can make it hard for suppliers to define their offer. 

A solution would be to move away from a contract-by-contract approach to social value. As one respondent to the techUK survey said: “The questions are asked on a per-contract basis. Whereas what you want to know is really about the company and what it does as a whole.”

Hinchliffe echoes this sentiment, saying: “Companies of all sizes complain that their established policies, programmes and initiatives typically fail to count for anything in procurement unless they can be extended to be contract-specific – which isn’t always feasible, especially on small contracts. Allowing some flexibility to include these would be a big improvement.”

This is a particular burden for SMEs, says Pippa Birch, a bid writer specialising in the construction industry: “Companies with smaller budgets are not able to compete with larger corporations when it comes to social value. They can’t always afford specific initiatives to win contracts. The government needs to recognise the ongoing work many do to drive social value – for example, in terms of job creation, skills training and environmental care. That would level the playing field.”

The endgame is what Chris White calls the “enculturation” of social value across the public sector and its supply chain, or, to use the language of his Social Enterprise UK report, “systems-change”. The idea is that social value becomes a part of how businesses and government operate, rather than being centred on specific contracts. When weighing the social value of a particular procurement, the focus is on its contribution to long-term social and environmental goals. “That way, you also circumvent the difficulty of separating the mandatory from the optional,” he says, “which ensures innovation and creativity remain a feature of the social-value landscape.”

The coming decade

Rather than indicating frustration with the government’s pursuit of social value, these comments point to the huge appetite among the supplier community to deliver. In this, there is a clear double coincidence of wants, established by the Social Value Act and hardened in the subsequent decade. 

“The next 10 years will see an acceleration of social value in both the private and public sectors,” White suggests. “Come back to me in 2033 and we’ll have seen a step change in the whole way we transact business as a government and as a society.” 


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