Today marks the tenth anniversary of my Private Member’s Bill receiving Royal Assent, and becoming the Public Services (Social Value) Act 2012.
Comparatively short in length and also ‘light in touch’, the Act was driven by a simple idea, not least based on my own experiences as a district councillor; when awarding contracts, the council had not been always been able to award it to the organisation likely to generate the most value to its residents, but to the one that could offer it at the cheapest price. I had, through chance, the opportunity to do something about that.
What is now known as the Social Value Act was about cultural change. By allowing all public bodies to consider the added social, economic and environmental wellbeing that could be created through commissioning services, public bodies could take a much broader view of how they spend their money. When Lord Young conducted his review into the Act in 2015, he found that wherever it had been used in line with the legislation, it had a positive impact. My own review into the Act in 2017, found much the same; social value was influencing around £25bn in public money. Not a bad return on those eight pages. This year marks the tenth anniversary of the passing of the Act, and I am excited to be launching a new initiative, Social Value 2032, to look at how we can take the principles of the Act to the next level.
The Social Value Act was written a time when levelling up was a phrase restricted to the construction sector, not a major government policy. Net zero was not even in the imaginations of the most ambitious champions against climate change. And we are now seeing significant innovation in the public and private sectors following a greater focus on ESG to concepts such as ‘Community Wealth Building’.
Despite all this, the idea behind social value remains fundamental. Why? The simple truth is that if we are going to deliver the aspirations behind any of these policies, we need to look at how our money is spent. Are we spending it smartly? Are we generating the maximum possible social and environmental return, in terms of the all-important impact? Are we working with the right organisations? The route to every major policy objective appears to go through the prism of social value.
Working with Social Enterprise UK and its partners; PwC, Suez, Siemens and Shaw Trust, I want to look at how we can take social value to the next phase.
It is a remarkable fact that Social Enterprise UK estimates that the Social Value Act now influences some £100bn of public spending, following the stronger adoption of social value by central government, but that is still only 1/3 of all public spending. However, in the private sector, large swathes of our biggest businesses have never even begun to start their journey. Some may choose to look at this as a glass half empty. I choose to look at this as a glass half full. We are still only at the foothills of what social value can achieve and this means that there is still huge untapped potential if we get it right.
Over the rest of this year, I want to explore how we can move towards 100% adoption of social value across the public sector and our largest private companies. I know from speaking to leaders in local and regional government, that there are still barriers caused by a lack of awareness and understanding, as well as challenges in measurement and reporting. I want to identify how we can resolve these issues through partnership between the public and private sectors, not least to see how we can use social value to build greater resilience in our supply chains. From my work on industrial policy, I know that we are going through a fourth industrial revolution in everything from zero carbon technologies to AI. How can we use social value to strengthen our supply chains to embrace these new technologies and support innovative SMEs and social enterprises to grow and access new investment? These are the themes that we will be discussing at a Social Value Leaders’ Summit in Birmingham in May this year.
When I introduced the Social Value Act, I used to speak about the journey that we were taking. Changing the culture of public sector procurement is a tanker that we have taken a decade to turn in the right direction. It is for that reason that I have chosen to start working towards the 20th anniversary of the Act today through this new programme. Hopefully, when I sit down to reflect again, on March 8 2032 we will be looking back on this decade as the period where social value flourished and all our communities benefitted – a little nearer to the top of the mountain.
Professor Chris White is director of the Industrial Policy Research Centre at Loughborough University and former Member of Parliament for Warwick and Leamington, 2010-2017.