The social value act will be extended to ensure that all government departments explicitly evaluate social value when commissioning services, David Lidington, Minister for the Cabinet Office, has announced.
Lidington said in a speech at the think tank Reform today that the Public Services (Social Value) Act 2013 would be reformed to strengthen the government’s commitment to awarding contracts based on social value, rather than just value for money.
The act currently requires commissioners only to "consider" social value while awarding contracts, but the new proposals will strengthen this further by making it an explicit requirement in central government contracts to the private and third sectors.
Today’s announcement would appear to cover only central government contracts and not local government or other public sector commissioners.
Lidington said he hoped the changes would encourage more charities, mutuals, cooperatives and social enterprises to apply for and win central government contracts.
"We want to see public services delivered with values at their heart, where the wider social benefits matter and are recognised," he said.
"That means government doing more to create and nurture vibrant, healthy, innovative, competitive and diverse marketplaces of suppliers that include and encourage small businesses, mutuals, charities, cooperatives and social enterprises – and therefore harness the finest talent from across the public, private and voluntary sectors."
He said the changes to the act, specifically the requirement to explicitly evaluate social value when awarding contracts, would "ensure that contracts were awarded on the basis of more than just value for money – but a company’s values too, so that their actions in society are rightly recognised and rewarded".
Last year, after completing a review of the act for Social Enterprise UK, Chris White, the former Conservative MP for Warwick and Leamington who put the social value act through parliament as a private member’s bill, called for the legislation to be extended to areas such as wider infrastructure projects and planning access.
In a statement, SEUK said that the reforms were welcome, "although it shouldn’t require a scandal to force the government to take action in the future".
The statement said: "The social value act is a fantastic tool to ensure taxpayers get the best possible value for money. It is in everyone’s interest, but there is still a long way to go to enable the act to be used to its full potential.
"So, although we welcome today’s announcement to strengthen the act, SEUK will continue to work with our allies until every pound of taxpayers’ money is managed in the interests of wider, longer-term value."
This meant rolling out the act to local government and the NHS as well as central government, applying social value to all goods, works, asset management and disposal, and setting these requirements in law, not just guidance, SEUK said.
Lidington also announced proposals to ensure that government suppliers publish data and provide action plans to show how they intend to tackle social issues such as gender pay, ethnic minority representation and modern slavery.
"Living wills", which allow public services provided by the private and voluntary sector to continue running if the organisation running them collapses, would also be introduced, the Lidington said.
The government has not yet confirmed when the extension of the social value act will come into force or if it will require new legislation.