The Public Services (Social Value) Act 2012, often referred to as the Social Value Act, marked a significant shift in how public sector contracts are awarded in the UK. Encouraging public service commissioners to think beyond cost ensures that procurement decisions deliver wider social, economic and environmental benefits.
Introduced by Chris White MP as a Private Member’s Bill, the Act stemmed from Social Enterprise UK’s 2010 election manifesto recommendation and was partially inspired by a controversial case where an overseas train manufacturer won a major contract, overshadowing the potential for local economic gains.
Coming into force on 31 January 2013, the Social Value Act has since influenced public procurement policies at both national and local levels. This guide explores its origins, evolution, implementation and future potential, offering insights for organisations striving to align their operations with the Act’s principles.
What Does The Social Value Act 2012 Cover?
The Social Value Act mandates that public service commissioners consider the wider benefits of the contracts they award. It applies to services contracts and some mixed contracts for goods and works, requiring commissioners to address the following:
- Economic Impact: How the contract supports local jobs, businesses and economic growth.
- Social Benefits: Contributions to social well-being, such as community support and fair employment practices.
- Environmental Considerations: Efforts to reduce carbon footprints, promote sustainability and protect natural resources.
While the Act’s requirements are non-prescriptive, it encourages commissioners to systematically integrate these factors into their procurement processes, setting the stage for change in public sector spending.
Timeline Of Key Developments
2012: Legislation Passed
The Social Value Act was introduced and passed as part of the UK government’s efforts to reform public sector procurement. Its goal was to embed a broader understanding of value into decision-making processes, reducing the sole reliance on cost considerations.
2013: Act Comes Into Force
Effective from 31 January 2013, commissioners were required to consider how their procurement activities could benefit their local economy, communities and the environment.
2018: Scope Expansion
Central government expanded the Act’s scope, mandating the explicit evaluation of social value for major contracts. Departments were now required to measure and report the social impact of their procurement activities, leading to greater accountability and transparency.
2020: Introduction Of The Social Value Model
The Social Value Model, established via Procurement Policy Note (PPN) 06/20, set a minimum weighting of 10% for social value in procurement decisions. It provided a structured, consistent approach for evaluating social, economic and environmental contributions.
2021: Enhanced Guidance
Procurement Policy Notes (PPNs) 05/21 and 06/21 built on previous developments:
- PPN 05/21: Urged authorities to align procurement with the National Procurement Policy Statement, integrating social value into broader organisational strategies.
- PPN 06/21: Introduced sustainability requirements, including Net Zero commitments for bidders.
2023: The Procurement Bill
The Procurement Bill consolidated various regulations, creating a single rule book for public procurement. Its introduction of “most advantageous tender” terminology allowed decision-makers to prioritise broader public benefits over cost considerations.
The Social Value Model
Central to the Act’s success is the Social Value Model, which offers a clear, systematic way to integrate social value into procurement processes. The Model is built around key themes and policy outcomes, including:
- Health and Well-being: Supporting healthier, safer and more resilient communities.
- Economic Equality: Promoting skills development, apprenticeships and diversity.
- Fighting Climate Change: Reducing environmental impact and promoting sustainability.
By applying a minimum 10% weighting to social value in procurement decisions, the Model ensures a fair, balanced approach where organisations compete on the merit of their qualitative proposals rather than size or scale alone.
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Impact On Procurement
The Social Value Act has significantly reshaped public sector procurement. Its emphasis on “value for money” extends beyond cost to include societal benefits, creating opportunities for a diverse range of suppliers, including small and medium-sized enterprises (SMEs).
Key Impacts:
- Local Economic Growth: Prioritising contracts that boost local businesses and create job opportunities.
- Environmental Benefits: Encouraging green initiatives and reducing carbon emissions.
- Social Inclusion: Supporting vulnerable groups through targeted employment opportunities and community engagement.
Challenges And Criticisms Of The Social Value Act
While the Social Value Act has received widespread praise for its progressive approach to public procurement, it is not without challenges.
One significant issue is the inconsistent implementation of its principles. Different commissioners may interpret and apply social value criteria in varying ways, leading to uneven outcomes and a lack of standardisation across the public sector. This variability can undermine the Act’s overarching goal of creating a cohesive framework for delivering social, economic and environmental benefits.
For smaller organisations, the administrative burden of complying with social value requirements can be a considerable hurdle. Smaller businesses often lack the resources or expertise to design and deliver proposals that meet the Act’s expectations. As a result, they may struggle to compete with larger companies that have dedicated teams for navigating procurement processes.
Another challenge lies in quantifying the social impact of procurement decisions. Measuring outcomes such as community well-being or environmental sustainability can be complex and sometimes subjective. Without clear and universally accepted metrics, demonstrating the value added by such initiatives can be difficult.
How Organisations Can Implement Social Value In Procurement
Implementing social value in procurement requires a strategic approach to ensure meaningful impacts.
1. Understand The Act’s Requirements
First, organisations must understand the requirements of the Social Value Act. This involves familiarising teams with key resources such as the Social Value Model and Procurement Policy Notes, which provide essential guidance on embedding social value into procurement processes. Clear comprehension of these frameworks is critical for aligning organisational goals with legislative expectations.
2. Develop Clear Metrics
Developing clear and measurable metrics is another vital step. Procurement objectives should be tied to tangible outcomes that address social, economic and environmental priorities. These metrics enable organisations to quantify the impact of their efforts and communicate achievements effectively.
3. Engage Stakeholders
Engaging stakeholders is equally important. Collaborating with suppliers, communities and policy teams helps design contracts that deliver impactful results tailored to local and organisational needs. Through active engagement, organisations can build a shared commitment to social value.
4. Communicate Expectations
To streamline the process, organisations should provide clear and accessible guidance to bidders. By outlining expectations and demonstrating how to meet them, organisations can ensure suppliers understand the importance of social value and their role in achieving it.
5. Monitor And Evaluate
Lastly, robust monitoring and evaluation systems are essential for tracking progress. Regularly reviewing and reporting on social impact ensures continuous improvement and accountability in delivering outcomes aligned with procurement goals.
Organisations can also benefit significantly from tools like the Veriforce CHAS Social Sustainability — ESG for Clients and Contractors framework. This independently verified assessment benchmarks ESG (Environmental, Social, and Governance) maturity across supply chains. It helps organisations overcome common challenges such as inconsistent ESG data collection, reputational risks from poor supplier practices and compliance with emerging international ESG legislation.
Additionally, CHAS provides reliable data, simplifying the otherwise time-consuming task of responding to ESG-related tender questions and performance reviews. Leveraging such tools enhances transparency, mitigates risks and drives improvements across the supply chain, ensuring sustainable procurement practices.
Related Reading: Ensuring Social Sustainability: Key Questions For Your Supply Chain
The Future Of The Social Value Act
The Social Value Act continues to evolve, with ongoing reforms strengthening its principles. The Procurement Bill represents a pivotal moment, simplifying regulations and enabling greater emphasis on public benefits.
Future developments may include:
- Increased Weighting: Raising the social value weighting beyond 10% to drive a more substantial impact.
- Enhanced Metrics: Developing advanced tools and frameworks for evaluating and measuring social value.
- Broader Sustainability Goals: Integrating new priorities such as biodiversity and circular economy principles into procurement processes.
The Social Value Act 2012 has transformed the UK’s approach to public procurement, embedding social, economic and environmental considerations into decision-making. While challenges remain, the Act provides a framework for creating meaningful societal benefits through thoughtful, strategic spending.
Join CHAS today and unlock the tools and support you need to meet your ESG, compliance and social sustainability goals. With CHAS, you can streamline your processes, mitigate risks and demonstrate your commitment to building a safer, more sustainable future.
