The government spends £400bn each year to procure products and services – around one-third of all public expenditure.
And, since 2012, the Social Value Act has decreed that a minimum of 10% of commissioned public services must be dedicated to social value, making procurers secure wider social, economic and environmental benefits.
While it’s created positive impacts, consistent adoption remains challenging; clearer, standardised methods for measuring and quantifying social value to are still needed.
2021 research by Tussell (for SEUK) showed that only one in ten contracts awarded to CICs come from central government. The number of social enterprises winning contracts fell to its lowest for two years.
Currently, it’s generally the private sector’s gift to decide who that money goes to and how it’s spent.
So, if it’s that hard to measure value for money, why not carve out that money at the point of contract and spend it where you know you get impact?
What if we asked peer-led panels in our communities to decide on social investment? What if those decisions were made by those most excluded from the financial markets? People whose lived experience can provide solutions to societal issues?
Wouldn’t that shift of power be transformative?
Right now, we’re talking about an extra £250m for social investment. We know that STOs are under-resourced and still delivering huge impacts. We know that local authorities are strapped for resources, and the NHS is wondering how it can better do preventative work.
What if we used that £40bn – 10% of the government’s procurement budget – to fund social impact and social innovation within our communities – social investment that leads to jobs, good outcomes and social infrastructure to alleviate some of our current challenges.
It won’t cost more than is already being spent – it’s just being spent it in a different way. A more equitable way.
Public procurement isn’t just about buying the cheapest goods – it’s a huge lever to deliver social value.
The idea of the Social Value Act was to generate social impact for communities, beyond the primary purpose of the contract.
For instance, a construction firm might pledge to hire local apprentices or a catering supplier might source from local farmers as part of delivering the contract. But who really checks? Who goes back after the contract has been awarded to check on progress? Who follows it up in the future, to monitor longer term outcomes and impact? How do we know where that money’s really spent?
But what about this… If the NHS, for instance, lets a £100m contract for hospital services, instead of scoring the bidder on social value, the contract could stipulate that £10m (10%) is set aside to subcontract local social enterprises or fund community health programmes. In major infrastructure projects, 10% of the budget could go into a community fund or into social investment, creating local employment, training, or environmental improvements.
Wouldn’t this provide more direct investment into communities? Rather than relying on big contractors to deliver social value themselves, that portion of public money would flow to organisations whose primary mission is social impact, strengthening the social economy and ensure that public spending has a more tangible, targeted benefit for local communities, based on local insight and lived experience.
Social businesses provide solutions to our issues, based on their lived experience. They’re already used to monitoring their impact; evaluating and reporting back as a condition of their funding. They’re much better at telling stories of progress over time, and are more deeply embedded in their local communities. Shifting power to those most excluded from financial markets could be transformative for our economy – and our communities.
What if we treated social-value spending as its own funding stream; as social investment. But it could have huge impact.
It’s an ambitious idea. What do you think?