Lord Young rejects extending social value act to goods and works

In his review, published today, the peer says awareness of the act is growing, but implementation of it in the public sector is low

Lord Young of Graffham
Lord Young of Graffham

A government review of the social value act has rejected extending the legislation to goods and works but has recommended that the act be better promoted and amended to take into account changes to EU procurement rules.

The Public Services (Social Value) Act 2012 came into force two years ago and requires public service commissioners to consider the social value offered by bidders when awarding contracts. But a number of organisations, including Social Enterprise UK and the National Council for Voluntary Organisations, have called for the act to be strengthened because it has not been implemented by many public bodies.

Last September, the government asked Lord Young of Graffham, the Prime Minister’s adviser on enterprise, to carry out a review of the act and its implementation.

Young’s review, published today, says that although awareness of the act is growing, incorporation of social value across the whole public sector appears to be "relatively low" and there is "inconsistent practice" among public bodies about how to apply the act.

He says that an amendment to the act is required to reflect recent changes to EU procurement laws, which have raised the threshold for contracts to €750,000 (£556,000), from €134,000 (£99,000) for contracts offered by central government and €207,000 (£153,000) for other public bodies. 

Young says the change has led to an "unwelcome side effect" that means the act will no longer apply to the majority of public service contracts.

He says in the report: "I think this is quite the wrong direction of travel for the act, and so I have asked the minister for the Cabinet Office to enact an amendment to the act."

Young says better measuring and quantifying of social outcomes is also needed.

He says: "At its weakest, the current state of social value measurement can make it difficult for public bodies to differentiate the additional social value offered by one bidder over another."

But calls to strengthen the act by extending it to goods and works and making it mandatory for commissioners of public services to take the legislation into account when buying services were rejected by Young.

He says that extending and making more of the provisions of the act mandatory risked adding "a level of bureaucracy to the procurement process and shutting down the essentially innovative and non-prescriptive nature of the act".

Nor does Young's review recommend the introduction of statutory guidance to help public commissioners make use of the act, something called for by both SEUK and the NCVO.

But Young does call on the Cabinet Office to do more to promote awareness and take-up of social value across the public sector and business, and he says that central government should publish a white paper outlining how each government department has implemented social value so far.

Further take-up of the act among other public bodies should be encouraged by the government investigating ways to "incentivise" public bodies to make use of the act, Young says.

Peter Holbrook, chief executive of SEUK, said in a statement: "We are disappointed that there is no statutory guidance underpinning the act and seemingly little support to extend the act to goods and works. However, there remain positive indicators for the country’s growing number of social enterprises in the recommendations. We welcome the suggestion of another review in two years’ time to see how much progress has been made against these recommendations and what more should be done.

"After much campaigning, we are optimistic that the government will show greater ownership of the act by embracing the recommendations in the report. We are also buoyed that the rhetoric is moving to greater implementation of the act."

Sir Stuart Etherington, chief executive of the NCVO, said in a statement that he was pleased the review adopted several recommendations made by his organisation, including the need for government to promote awareness and take-up of the act and for better measurement tools to help commissioners assess social value in public service contracts.

"However, we are disappointed that the review panel has not seized the opportunity to strengthen the act – for example, by requiring commissioners to account for the social value they generate – or accepted our recommendation that statutory guidance be issued to public bodies to help them use the act to its full potential," he said.

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