Last edited 07 Apr 2022

Social Value Act

The Public Services (Social Value) Act 2012 became law in the spring of 2012. It resulted from a private members bill, the aim of which was to '…strengthen the social enterprise business sector and make the concept of 'social value' more relevant and important in the placement and provision of public services'.

It applies to all public services contracts (or framework agreements), and also to those public services contracts which include the purchase or hire of goods or the carrying out of works. NB There is general government support for public bodies considering social value in the award of all contracts, whether they fall within the requirements of the Act or not.

The Act applies in England and Wales, although it excludes some devolved functions in Wales. The requirements of the Act may be disregarded under certain circumstances where there is an urgent need to procure '... to the extent that it is not practical to comply with them'.

The Act requires that procuring authorities get best value from public spending by ensuring that services are procured in a way that benefits the community. Examples of social values that could be a part of a contract might include a commitment by a tenderer to employ the long-term unemployed or people with disabilities, or using local groups to provide services where the income generated by the group is likely to stay in the local community.

The procuring authority must consider:

The Act includes the provisos that:

The Act does not replace existing procurement law. The requirements of the Act are thought to be allowed for within EU procurement law, as long as the social values criteria:

The process of taking social values into consideration might include:

It seems likely that the introduction of the Act will improve the prospects of social enterprises tendering for public contracts and will increase the importance of corporate social responsibility in the private sector.

There are concerns about the Act, and whether it is simply another layer of red tape which will end up being a paper exercise that actually makes it harder for small businesses to tender for public contracts. There is also concern about the lack of guidance supporting the Act, which is itself very short, and how terms such as ‘social value’ should actually be defined.

In March 2019 the government launched a consultation on reforms to the Act. The consultation closes in 10 June 2019. Ref

In April 2020, UKGBC published Delivering Social Value: Measurement. A guide to measuring the social value of buildings and places.

In September 2020, the government published Procurement Policy Note – Taking Account of Social Value in the Award of Central Government Contracts setting out a new model to deliver social value through government's commercial activities.

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