The Cabinet Office has announced a review of the social value act, with a view to it being widened.
The Public Services (Social Value) Act 2012, which came into force last year, was designed to make public contracts more accessible to charities, social enterprises and small businesses by making local authority commissioners consider the potential social value offered by bidders in addition to cost in their procurement processes.
A working group to review the act will be led by Lord Young, the Prime Minister’s adviser on enterprise, and will include: Chris White, the Conservative MP for Warwick & Leamington, who introduced the act as a private member's bill; Hazel Blears, the Labour MP for Salford & Eccles; and Michael O’Toole, the outgoing crown representative for the Voluntary Sector, based at the Cabinet Office, who is joining the drug and alcohol charity Mentor as chief executive next month.
The act applies only to central government and NHS contracts worth more than £113,057 and local government contracts worth more than £173,934. It applies to contracts for services but not to those for goods.
The Cabinet Office said that the review would look at whether the legislation should be widened to cover, for example, contracts for goods.
The department said the working group would invite comments for the review and would report in early 2015.
The review was welcomed by the Social Economy Alliance, which campaigns on behalf of social enterprises and cooperatives.
Peter Holbrook, chief executive of the umbrella body Social Enterprise UK, which is a lead partner in the alliance, said: "We’re pleased the government is listening to our calls to strengthen the social value act.
"The act is still in its infancy, but already it is transforming the public service landscape for the benefit of communities. It is helping to eradicate a commissioning culture that selects providers based on price alone, which often results in sub-standard services.
"But more can be done to ensure social value is engrained in public service commissioning. Public money must be spent only on the most socially responsible firms. With public service budgets shrinking, every ounce of the government’s spending power must be channelled into providers that put communities and people first, not private profit."
Neil Cleeveley, acting chief executive of the local infrastructure body Navca, said that social value had tremendous potential but had been "largely untapped".
"We want the social value act extended to cover all contracts, something they have already managed in Birmingham," he said. "Public bodies should also be required to publish a short annual social value statement, setting out how they are using the act and what is being achieved. This would make sure it remains a live issue for all public sector commissioners."
Karl Wilding, director of public policy at the National Council for Voluntary Organisations, said: "We called for a review of the act earlier this year, so we’re pleased to see it happening now."
He said the act had great potential to deliver better public services, and his organisation would soon be meeting Young to discuss the review.
In a statement, Young said: "The government has been facing growing calls to extend the social value act and I am delighted that this review will give us the opportunity to fully consider those ideas, thinking about how we can achieve the aims of the act."
He said he was keen that any changes did not add any regulatory burden to social enterprises or voluntary sector organisations.