How the public sector can use social value to build back better
The UK Government is doing everything it can to help the economy recover from COVID, but one thing remains noticeably missing from the steady stream of Treasury announcements and that’s any reference to social value.
In April, the Cabinet Office started advising procurers to pay suppliers quickly to release much needed cashflow and last week came the announcement that it would bring £8.6 billion of capital spending forward. Presumably the government is hoping the impact of this spending will trickle down the supply chain, but given that a lot of these contracts will be awarded to one of the government’s 34 strategic suppliers, it won’t be enough to announce the expenditure and hope for the best.
The 2012 Public Service (Social Value) Act requires all public bodies to consider how the money they spend on the services they are commissioning can also help deliver wider social, environmental and economic benefits for the communities they are serving. In the midst of a global pandemic this has never been more important and it would be a real missed opportunity if the UK Government doesn’t insist that the suppliers awarded these contracts offer social as well as economic value in their bids.
Barriers to change
Increasing expenditure from SMEs and employing local people is difficult for large public sector suppliers. Not because they don’t want to but because their systems and processes aren’t set up to support it. This means that any value from these contracts is often retained by these organisations (many of whom are headquartered overseas) and dispersed as profits and dividends to their shareholders rather than being passed down into the wider economy.
The Cabinet Office have issued a number of guidance notes for procurers since COVID began, but what’s really needed is a guidance note on Social Value which mandates to all government departments that it should be a priority post-COVID for public sector expenditure. The proposed changes to the Social Value Act should also be urgently reviewed and the Act should at least be amended so that it is applied to goods contracts as well as services.
Ideally, we’d like to see public sector contracts have specific social value clauses that offer targeted support to the groups most badly affected by the virus including charities and organisations who support:
In the absence of this, what can public sector procurers and suppliers do today to help prioritise social value and help to build back better?
5 Tips for Public Sector Procurers:
But the responsibility doesn't just lie with procurers. Here's what you can do if you supply the public sector:
As the government continues to try and kickstart the economy with tax cuts, spending incentives, cash grants and loans, it’s the public sector that can play an instrumental role in maximising the value of this emergency expenditure. Reviewing the Social Value Act in the context of Covid; if organisations consider how money spent on commissioned goods and services can also help those most impacted by the pandemic, it will not only help the value of that money go further, it will deliver long-term social value and help us all to build back better.
In April, the Cabinet Office started advising procurers to pay suppliers quickly to release much needed cashflow and last week came the announcement that it would bring £8.6 billion of capital spending forward. Presumably the government is hoping the impact of this spending will trickle down the supply chain, but given that a lot of these contracts will be awarded to one of the government’s 34 strategic suppliers, it won’t be enough to announce the expenditure and hope for the best.
The 2012 Public Service (Social Value) Act requires all public bodies to consider how the money they spend on the services they are commissioning can also help deliver wider social, environmental and economic benefits for the communities they are serving. In the midst of a global pandemic this has never been more important and it would be a real missed opportunity if the UK Government doesn’t insist that the suppliers awarded these contracts offer social as well as economic value in their bids.
Barriers to change
Increasing expenditure from SMEs and employing local people is difficult for large public sector suppliers. Not because they don’t want to but because their systems and processes aren’t set up to support it. This means that any value from these contracts is often retained by these organisations (many of whom are headquartered overseas) and dispersed as profits and dividends to their shareholders rather than being passed down into the wider economy.
The Cabinet Office have issued a number of guidance notes for procurers since COVID began, but what’s really needed is a guidance note on Social Value which mandates to all government departments that it should be a priority post-COVID for public sector expenditure. The proposed changes to the Social Value Act should also be urgently reviewed and the Act should at least be amended so that it is applied to goods contracts as well as services.
Ideally, we’d like to see public sector contracts have specific social value clauses that offer targeted support to the groups most badly affected by the virus including charities and organisations who support:
- People with poor mental health
- Older people experiencing loneliness and isolation
- Victims of domestic abuse
- Immigrants
- The homeless
- Unemployed 16-24 year olds
- People with long-term health conditions who are shielding and the charities who support them
In the absence of this, what can public sector procurers and suppliers do today to help prioritise social value and help to build back better?
5 Tips for Public Sector Procurers:
- Talk to your suppliers. Emphasise how important social value is to you and find out what they can offer. What are they already doing to support the economy and what ideas do they have to support people living in the community where the contract is being delivered? Do they have a corporate responsibility initiative that could be refocused? Depending on the size of the contract, what opportunities are there for local content in the supply chain and local job creation?
- Talk to your third sector and community groups to find out what they need. Did you know, for instance, that 4 in 5 charities have had their funding negatively affected by coronavirus and mid-sized charities are desperate for resources from business to stay afloat? 60% have reduced their key services and over half of charities say they need strategic help to navigate through this unknown period. Focus on the organisations serving the communities and sectors that have been most impacted by COVID. To keep costs down encourage them to ask for things that are relatively easy to provide. For ideas see this list we created for Perth & Kinross Council.
- Review your contracts register and identify procurement opportunities that could be matched with social value initiatives. For example, contracts for anything to do with housing could support initiatives that tackle homelessness, while heating system suppliers could work with programmes addressing fuel poverty. Speak to the category managers of these contracts and make sure they are aware of the needs of your community groups.
- Try and include social value in as many of your contracts as possible. You should be considering social value at the start of any procurement process and not just trying to meet the limited number prescribed by the Social Value Act. Liverpool City Council is a great example of an organisation doing this well.
- Update your Social Value or Community Benefits Policy to take into account the impact COVID has had on your region. If you use a points system to score social value, ensure initiatives which support the sectors hit hardest by COVID19 score maximum points. If you don’t have a Social Value Policy, write one. There are some great examples out there like this one from Bristol Council.
But the responsibility doesn't just lie with procurers. Here's what you can do if you supply the public sector:
- Research relevant organisations and contact them. Find out what they need and design your offer around that. Identify the groups who are most disadvantaged and use whatcharity.com’s online dashboard to get an idea of what charities’ most urgent needs are. The most impactful social value is proportional and relevant; offer to provide resources and skills pro-bono to charities and community groups whose work most aligns with the contract.
- Don’t take the furlough bonus if you win a contract.
- Commit to creating a certain % of jobs via the kickstart scheme to employ young people aged 16-24 to help deliver the contract. Work with the Local Authority’s employability support team to identify pathways for young people into employment in your business.
- Embed a local social enterprise or supported business in the supply chain – this directory from BASE is UK-wide and searchable by location which makes it a great reference point
As the government continues to try and kickstart the economy with tax cuts, spending incentives, cash grants and loans, it’s the public sector that can play an instrumental role in maximising the value of this emergency expenditure. Reviewing the Social Value Act in the context of Covid; if organisations consider how money spent on commissioned goods and services can also help those most impacted by the pandemic, it will not only help the value of that money go further, it will deliver long-term social value and help us all to build back better.
