Many local authorities have been slow to implement the Public Services (Social Value) Act 2012 since it came into force more than two years ago. Indeed, a survey by the online information and knowledge exchange the Social Value Portal, published in March, found that less than 15 per cent of local authorities had social value policies. The act requires people who commission or buy public services to take into account the wider economic, social or environmental benefits to their local area, not just the price.
One local authority that has been quick to embrace social value is Croydon Council, the Greater London borough that spends about £400m a year through third parties. Sarah Ireland, director of strategy, communities and commissioning at the council, is in charge of ensuring that social value is taken into account in its contract tenders. Ireland says the council started to take social value seriously even before the social value act came into force.
"In 2012, we reviewed our approach to commissioning," she says. "It led to the creation of our Social Value Toolkit, which we worked on with small and medium-sized enterprises and not-for-profit businesses. The toolkit is published on our website and clearly sets out the council's approach to social value."
Previously, many small local businesses were asking her questions such as why the council bought its lights from Germany and its chairs from the US. "They thought it was nuts, and it was," she says.
Now social value is included in all the contracts of more than £100,000 that it puts out to tender. Ireland says the council doesn't allocate a set number of marks to social value when it invites people to tender, but decides instead how much to award on a contract-by-contract basis. But she says it is a meaningful amount, so providers understand it is important. "It is horses for courses," says Ireland. "Usually, 60 per cent of the contract is awarded on quality and 40 per cent on price. Of the 60 per cent, between 15 and 20 per cent would be awarded on social value."
Lord Young's review of the social value act earlier this year called for stronger leadership in public bodies to encourage more take-up of the legislation. Ireland says that Croydon Council, run by Labour, firmly believes in social value and the party even included it as a pledge before last year's local elections.
The council has also put in place a structure designed to ensure that relevant contracts incorporate social value. Ireland says: "I am the one who is accountable. We have a member of my team working on every contract worth more than £100,000. Part of their role is to ensure the appropriate level of social value. Contracts are also checked at key stages."
The types of social value the council seeks from providers bidding for contracts can be very broad, Ireland says, ranging from offering apprenticeships and jobs to local people to supporting schools and offering help to local businesses and good causes.
She cites the example of the housing maintenance contract that the council last year awarded to Axis, a buildings maintenance company. "As part of the agreement, the firm provides support to third sector organisations and small and medium-sized enterprises," she says. "It has expertise in areas such as marketing and financial planning, even though its main role is housing repair."
At present, Ireland concedes, major contracts tend to be awarded to large private sector companies rather than social enterprises. She says this is mainly because social enterprises don't have the capacity to be prime providers and awarding contracts to them wouldn't be efficient. But she says the council encourages smaller organisations to become part of its supply chain and looks to create smaller contracts where possible. "We have done this with our cleaning contract," she says. "We believe that having separate cleaning contracts in different areas benefits local business."
Croydon Council is also in the process of setting up a system that will alert registered local providers about any contracts it is issuing that are worth more than £5,000. "In times of austerity, we need to optimise how we spend money," says Ireland. "Social value is a fantastic way to enable you to get something back from providers and support communities."