Call for Government to make Social Value Act compulsory
Liverpool is backing calls from the organisers of Northern Enterprise 2016 for the Government to re-evaluate the Social Value Act 2012 and make it a compulsory part of public sector procurement
Northern Enterprise 2016 is a one-day conference, exhibition and awards happening in Manchester on October 13 that will address the current state of social value in public procurement and map out plans to make the social economy a key driver in the Northern Powerhouse agenda.
Councillor Rosie Jolly (pictured above), Liverpool City Council’s Mayoral Lead for social and community enterprise and organiser of Northern Enterprise 2016, said: “The Social Value Act 2012 needs teeth. Current legislation states public sector procurers need only ‘consider’ social value. This does not go far enough. Lord Young’s 2015 report highlights this as only 21% had taken social value and embedded it into practice.
“My work with Liverpool City Council has been instrumental in transforming the procurement process. The council has developed a social value KPI portal to tackle the issue of measurement and has found that it spends £449 million across its supply chain, with analysis revealing that £228 milion (51%) is spent directly in the Liverpool City Region since adopting the social value model, directly supporting the city’s priorities.
“Three years ago the supply chain was extremely fragmented, now Liverpool can track where it is spending money. This is a model we want to see replicated across the country. Northern Enterprise 2016 will set out the parameters and show good practice. This is the point where we need Government to step up and make the Social Value Act 2012 compulsory, not a consideration.”
Liverpool City Council has a clear aim, to make a strong city built on fairness. This combines the triple objectives of making the city’s businesses-purpose driven, eliminating poverty and focusing on fairness. The authority has embedded these principles into the successful use of social value, using a straightforward framework – the Fair City Outcomes Framework.
Trevor Ingham, head of procurement at Liverpool City Council said: “Implementing social value has involved a widespread programme of market engagement and development, with both the local third sector and local SMEs. To ensure potential suppliers have an understanding of what a purpose driven business is, we have given them five key principles, including how customers and suppliers are treated, how employees are treated, corporate citizenship, environmental sustainability and how this is proven to lead to an improved and sustainable financial position in the medium term.
“Liverpool City Council recognises the contribution made to the supply chain by adopting social value, figures highlight that out of the £228m (51%) spent in Liverpool City Region, 1364 suppliers (36%) are from Liverpool and an additional 506 (13%) are based in Liverpool City Region. These statistics show a hugely beneficial trend for regional economy and we feel that Northern Enterprise 2016 is a refreshing platform to highlight the importance of this agenda.”
The Heseltine Institute for Public Policy and Practice at The University of Liverpool has funded research to assess the scope of the social economy, with the aim of presenting evidence to policy makers that demonstrates the possibility for social and economic development when social value is taken seriously.
Dr Alan Southern, co-director at The Heseltine Institute for Public Policy and Practice, University of Liverpool, said: “Early work indicates that the asset base of the social economy in the Liverpool City Region is around £2.4billion with a turnover to match. To put this into perspective, tourism, a key strategic growth sector, is estimated to be worth £4 billion.
“We are also finding that there is a concentration of social enterprises in the most deprived areas, perhaps reflecting a failure of the state and the market. The lack of attention paid to the social economy is disproportionate to its importance and Northern Enterprise 2016 will address this. Stronger legislation on social value and localism is essential, as is a more positive narrative about the social economy. Things can be different and potential can be realised.”
Salford Council has demonstrated that it is possible to go way beyond the confines of the Social Value Act 2012. Anne Lythgoe, manager of policy and partnerships at Salford City Council, explained: “Social value is not just about procurement, we have embedded it into everything that the council does, as well as every pound that the council spends. The positive strategy has influenced suppliers, for example. The authority has a development agreement with Keep Moat, who has employed a member of staff to maximise the local social, environmental and economic impact from the development.”
The authority has five objectives:
• Good employer of local people – accredited Living Wage Employer, car club and flexible working arrangements.
• Commissioning and procurement – strategy-based on creating as much social value as possible.
• Influencing developers – planning and local development agreements maximise social value impact.
• Local business – working to maximise social value and purposeful business.
• Strategic partnerships – including mutuals and the arms length parts of the council, notably the new Integrated Care Organisation with NHS Salford CCG, Salford Royal Foundation and Greater Manchester West NHS Mental Health Trust.
Lythgoe summarised: “The Social Value Act 2012, if taken literally, is a straight jacket. I agree with Rosie Jolly, it should apply to all procurement, giving local authorities the duty to maximise social value from the expenditure of public funds in their area and make them accountable to their residents for this.”
The Social Value Portal is pioneering the way that local authorities measure their procurement, making it easier to implement social value, through best practice case studies that compliment the measurement software.
Guy Battle, chief executive of Social Value Portal, said: “I recognise that it would be better to make the Social Value Act 2012 compulsory, but I also think that there is a head of steam building around clear successes and that given the Government’s absolute resistance in adding more red tape, it may be sensible to wait before pushing too hard.
“Having said that, with the new Prime Minister’s push to engage business, now is the time to suggest big ideas as I think there might be some willing ears.”