New report calls for clarity on defining and applying social value in government contracts

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As different regions and sectors of the economy look to build back better from the COVID crisis, social value in government contracts is a powerful lever the public sector can pull to stimulate recovery.

New CBI research shows that there is widespread agreement between business, charities and the public sector on the importance of embedding social value in central and local government contracts.

However, the report, ‘Valued Partnerships’, says progress is being hamstrung by complexity and confusion around how it is being applied.

Liz Crowhurst, CBI Head of Infrastructure and Public Sector Policy, commented on the report: “Companies are already delivering substantial social value across a variety of sectors, from construction to manufacturing and lT services.

“Whether creating apprenticeships and investing in training, investing in employee well-being or increasing renewable energy consumption, responsible firms have been contributing significantly to social value for years.

“Yet the lack of consistency in government contracts is hampering further progress in embedding social value more widely.

“Until there is greater clarity, there is a danger that significant opportunities to deliver greater social impact for the public are being missed.

“Therefore what’s needed is a more consistent approach to defining and measuring social value ensuring commissioners and suppliers are singing from the same hymn sheet.

“Ultimately, supporting public bodies deliver on national policy objectives, such as levelling up and res-killing through partnerships with suppliers requires renewed effort to effectively measure and apply social value.

“This report sets out some clear steps as to how this can be achieved.”

The Public Services (Social Value) Act 2012 challenged public sector commissioners and providers to improve social, economic and environmental factors as part of contract delivery, defined as ‘social value’.

Examples included working with charities, creating apprenticeships or reducing greenhouse gas emissions.

While this has led to progress, the report shows the definition of social value needs updating if commissioners and suppliers are to deliver maximum impact.

Reducing complexity and increasing consistency in how social value is measured across the UK’s regions and nations will boost competition, allowing businesses of all sizes to compete.

With a new social value model expected from central government later this month, the CBI argues there is no better time to be driving the social value agenda forward at speed.

Recommendations made in the report included:

  • Publish a national policy statement every five years, setting out what key policy areas the social value agenda will focus on.
  • The next iteration of the government’s Playbook should lay out how Social Value should be a mandatory and distinct category of discussion during pre-procurement supplier engagement to enable a dialogue from an early stage of procurement.
  • Procurement Green Paper should recommend changing procurement rules, moving away from cost criteria to explicitly requiring commissioners to consider non-economic benefits (including broader social value, social impact, sustainability objectives, or corporate social responsibility) when making decisions.