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The Public Services (Social Value) Act 2012

The Public Services (Social Value) Act 2012

The Public Services (Social Value) Act 2012 is an Act of the Parliament of the United Kingdom. The Act calls for all public sector commissioning to factor in ("have regard to") economic, social and environmental well-being in connection with public services contracts; and for connected purposes.

But, the Public Services act, otherwise known as the Social Value Act of 2012 is not about giving money to charity.  Put very simply, this act is a modification to European Procurement Rules, and allows any organisation to redefine BEV (Best Economic Value).

BEV became synonymous with “cheapest”.  Tenders above a certain value (typically for services, above £85,000 and for goods above £150,000 although this has changed over the years, and is a £ equivalent of a Euro amount) had to be awarded to the supplier offering the Best Economic Value, meaning that British firms lost out to suppliers from countries where wages were much lower.

The Social Value Act turns this on its head.  Although the Act itself is pretty tame (it had to be innocuous, to get past the special interest groups), its effects are very powerful. This act allows any organisation which is subject to European Procurement Rules to define what it considers to be “Economic Value”.

Growing the local economy

Most local governments and a number of other organisations have taken the opportunity to define local employment as an “Economic Value” activity.  This is understandable – local authorities can retain some part of the business rates in their area and have a penalty on their core grant which is affected by the cost of unemployment.  By increasing jobs locally (reducing unemployment) and helping local businesses (raising business rates), they generate more income for themselves.  So they’re including the effect of local authority income, into account when assessing tenders to provide a particular good or service.

What The Social Value Act means to businesses

The Social Value Act 2012 provides a lot of value to British businesses. If you are local or employ local people, it means that you get a competitive advantage over bidders who aren’t local.  It also means that big companies who want to win tenders may want to talk to you about local supply opportunities, as they may be able to answer this part of the tender through their supply chain.

Impact on society and community

Many organisations, especially local government and housing associations, are also interested in the effects on society.  Local Authorities hold funds in order to improve the quality of life for the people who live and/or work in the area they govern.  People who are lonely or who have lost hope are a concern to these organisations.  So some have a component of BEV which takes into account activities that might improve conditions.

  • Loneliness: if you offer a hall for community groups to meet when you aren’t using it yourself, or maintain playing fields for the local football league
  • Employability and Business Growth: if your staff offer mentorship to businesses or your trainers offer training courses to people outside of your own staff as well as your own staff
  • Apprenticeships: perhaps you host an apprenticeship scheme for a number of small to medium-sized enterprises because none of you is big enough to run your own

The Social Value Practice supports organisations of all sizes to understand and deliver social value projects, in line with The Social Value Act. Find out more about our services and how we can help you here.

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