What will charities gain from the newly implemented Social Value Act? Five charity leaders give their views.

After much lobbying from social enterprises, charities and infrastructure bodies across the country, the Public Services (Social Value) Act finally came into force in January. The Act requires every English public body (and many Welsh ones) to “consider how the services they commission and provide might improve the economic, social and environmental well-being of an area”. Central and local government, housing associations, NHS trusts and even fire and rescue services have to abide by the new law. But what does it all mean? How can charities and social enterprises make the most of it? And will smaller charities gain anything from the new legislation? We’ve gathered advice and opinions from experts across the sector to help your organisation get to grips with the Act.

It’s not a silver bullet, but is a shift towards better commissioning, says Nick Temple

It's not often that the charity and social enterprise sectors celebrate the arrival of a piece of legislation or ponder the dry subject of procurement, but that is what has happened with the recent passing into law of the Public Services (Social Value) Act.

Although the Act only formally applies to commissioning above EU thresholds (£113,057 for central government, £173,934 for the rest), the guidance from central government is that they would like to see it applied to smaller contracts too. One important aspect, whatever size the contract, is that commissioners have to consider social value in the pre-procurement stage, to ensure it can be embedded in design.

So what does this actually means for charities and social enterprises on the ground? The reality is that this is not a silver bullet or panacea, and is likely to be implemented patchily: some local authorities are pioneering, while others are unaware of its existence; some commissioners see it as enabling them to do what they have wanted to for years, while others think it too difficult to implement at a time of such economic pressure. 

One key question the Act raises is: “what do we mean by social value and how do we measure it?” Social value is defined in the Act as “the additional benefit to the community from a commissioning/procurement process over and above the direct purchasing of goods, services and outcomes”, but that looks different in different areas: the same measures can’t be used for waste collection services as for a mental health service. So measuring social value will, as in the sector more widely, be bespoke and driven by both provider and commissioner – it is likely that sub-sector standards will emerge over time.

That word ‘consider’ has also attracted some attention – of course we would all much rather it said “implement at all costs” or something similarly strong, but this at least moves us in the right direction. It is now up to the sector to make enough noise locally and nationally to ensure ‘consideration’ goes on (and to make even more noise if it quite evidently doesn’t).

Will the Act solve all ills? No. But it does continue the shift to better commissioning that takes account of what charities and social enterprises have at the heart of their organisations: a social purpose. That is to be welcomed – but the sector needs to do more than welcome this legislation’s arrival and sit back expecting things to happen; we all need to be proactive.

Ultimately, the Act will be what we as civil society and a movement make of it, and it provides an opportunity there for us to take – to demonstrate that value is about more than just pounds and pence; it’s about positively changing people’s lives.

Nick Temple is director of business & enterprise at Social Enterprise UK

To benefit from the Act, smaller organisations need to find new ways of working, says Alex Swallow

The Social Value Act is a potential opportunity for small charities. It seeks to widen impact at a local level and many small charities are already firmly embedded in their local communities.

Small charities are also experts at providing additional value, such as by using volunteers: this is partly due to necessity because they wouldn’t be able to afford to provide the support they do otherwise.

The Act is potentially a boost for the charity sector in general, as Sir Stuart Etherington of NCVO said: “we know charities add something special which can’t always be seen from the figures in a tender document”.

However, in order for the aims of the Act to be achieved, there needs to be flexibility and a certain amount of ‘reaching out’ on both sides. The public sector commissioners need to consider the difficulties that smaller organisations may still face in winning contracts against larger, better-resourced and better-connected organisations. Examples of best practice should be shared, and here the government has a role in educating both sides.

The government will seek to partly do this via a ‘commissioning academy’, and by running training for third sector organisations. But it will be hard to support everyone who needs it and the particular concerns of each local charity may be very different.

For their part, small charities themselves need to grasp this opportunity and embrace new ways of working if they decide they are to the long-term benefit of their organisation.

Alex Swallow is chief executive at the Small Charities Coalition

Despite the prohibitive financial thresholds, the Act still holds potential for small charities, says Pauline Broomhead

At the FSI, we welcomed the introduction of the Social Value Act – it is an important step in recognising the value that local organisations add to communities, and the role that this plays in public service delivery.

However, for our beneficiaries – small charities – the benefits of the Act are most likely to pass them by. This is because many of the contracts they are likely to compete for will be below the financial threshold for the Act to take effect. As a consequence, local authorities will not be obliged to consider the social value that these organisations add to their communities through the services that they deliver.

However, there are two ways in which small charities may be able to take advantage of the legislation.

Firstly, as part of a bidding consortium, smaller organisations will have the opportunity to bid for bigger contracts. As such, the social value that their organisations add would be considered.

Secondly, as sub-contracted providers, small charities are extremely valuable in meeting the requirements of the Act for bigger organisations.

However, strong negotiating skills are needed to make sure that contracts are beneficial to small charities, and that small charities aren’t used as ‘bid candy’ by larger or

ganisations.

Pauline Broomhead is founding CEO at the FSI

Charities should check local authorities’ social value policy, say Shivaji Shiva and Mark Cook

The Social Value Act aims to counter the ‘am I bovvered?’ behaviours that can typify so many parts of the public arena. It’s part of a journey that should lead to greater resilience and more collaboration in times when the conventional is often unaffordable.

A key component of the Act is the requirement that public bodies consider the economic, social and environmental well-being of the areas that they serve. This has been common practice for local authorities for at least a decade: it is easy to do so when there is clear geographical area to apply this thinking. Housing associations and NHS bodies should also find this perfectly within their competence. It is more difficult possibly for government departments with national remits to reflect in these terms.

To help this thought process, charities should check whether the local authority in their area and other public bodies they engage with have adopted an identifiable social value policy as recommended by The Social Value Guide* .

Rather than a set of loose commitments, a social value policy can and should be defined in terms of the benefits that it promotes, for example:

• promoting training and employment opportunities for under-represented groups;
• promoting fair and ethical trading;
• ensuring more effective and efficient public expenditure;
• contributing to health improvement priorities;
• contributing to climate change mitigation targets and to energy efficiency.

If you believe a public body has failed in its duties under the Act, or has not complied fully with the wider requirements of procurement law, there may be scope for a legal challenge. Strict time limits apply to such challenges and advice should be sought at an early stage to identify the most effective means of raising your concerns with the public body.

Shivaji Shiva is a senior associate and charity sector specialist at Anthony Collins Solicitors LLP

Mark Cook is a partner at Anthony Collins Solicitors LLP and co-author of the new guide*

*Social Enterprise UK has launched The Social Value Guide: Implementing the Public Services (Social Value) Act. Created in association with Anthony Collins, the guide explains the Act, describes social value, and then sets out some guidelines on how to put the Act into practice.

The Act will help VCSEs win a greater share of public contracts, says Michael O’Toole

The new Social Value Act is hugely important for the sector because commissioners are now required to take social value into account when they choose suppliers for public services.

This is great news for voluntary organisations that already have a highly developed sense of social purpose and ethos, and can make it easier for commissioners to comply with the Act by offering positive social value outcomes as part of their tender.

But the onus is also on VCSEs to compete aggressively, and I encourage them to use the Social Value Act as part of their approach when competing alongside businesses. We are also working closely to achieve support from the public sector to spread the message across their commissioning teams and raise awareness of the Act across the sector.

Michael O’Toole is Crown Representative for the VCSE Sector