From today, Thursday 31 January, local authorities, the NHS and other public sector bodies spending tax payers money on public services will have to consider how they deliver both value for money and value to local people and communities from the services they put out to tender. The questions they and others will be asking – what is Social Value and how do you recognise it?
The best way to explain Social Value is to look at examples of the social businesses that are already bringing Social Value to the services they deliver to communities.
The key difference between them and private business is that they put the profits back into the services they are delivering and back into their communities. Public sector bodies will now have to take this into consideration.
Professor Simon Denny, Social Enterprise Development Director at the University of Northampton said: “The Social Value Act is a key piece of legislation that enables the public sector to get more for tax payers money – they should now be buying the goods and services they want from social enterprises wherever possible, because when they do they get local social value delivered. Private sector contractors just don’t deliver the same social value as they have to return profits to shareholders.”
For example, the HCT Group is a social enterprise in the transport industry. It generates its revenues from transport contracts won in the marketplace, from London red buses to social services transport, from school transport to Park and Ride, from community transport to education and training. It now has nine depots spread across the country, a fleet of over 320 vehicles, over 700 employees and delivers well over 12 million passenger trips on its buses every year. HCT Group does not do this to create shareholder value; rather it aims to create community value. Profits from commercial contracts are reinvested into further transport services or projects in the communities served by HCT Group. Training services are delivered for people who are long-term unemployed and designed to help them get back into work. The HCT Group aims to create employment opportunities for people in deprived communities, contribute to local economies and actively seek new ways to make communities better places to live and work through the way it operates.
In Northamptonshire, Goodwill Solutions uses the profits it makes from its unique, state of the art logistics business to provide ‘into work’ training and support programmes for people that have been homeless, troubled by substance abuse, or have been in prison. Buying services from Goodwill Solutions delivers a fantastic social value of helping people to get into regular paid work, thus helping to reduce re-offending rates and welfare payments.
As public sector markets, such as probation and health services are opened up to new providers, this legislation is going to be of vital importance to ensure that public spending decisions take Social Value into account.