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About this hub

This hub is a free resource created by a range of partners who serve the social economy. It’s for anyone who wants to understand more about social value, and especially about the Public Services (Social Value) Act 2012. You may work in a social economy organisation and want to win a contract and push your competitive advantage on social value. You may work for a public body and want to be sure you’re complying with the Act, or you may be a social value champion, and want to push your organisation to use a social value approach, or use the Act, to do great things.

What is the Social Value Act?

The Public Services (Social Value) Act 2012 came into force on 31st January 2013. It requires public bodies to consider how the services they commission and procure might improve the economic, social and environmental well-being of the area.

Value for money is the over-riding factor that determines all public sector procurement decisions. In recent years there has been a shift in understanding how value for money should be calculated, and growing support for the idea that it should include social and economic requirements. However, many people have been held back by uncertainty over whether a social value approach is compatible with the EU’s procurement regulations.

The Public Services (Social Value) Act was designed to clarify the law in this area and compliments a growing body of EU documentation encouraging the use of social value in procurement. Tabled as a Private Member's Bill by Chris White MP, the Act received Government backing as well as cross-party support in both the Commons and the Lords.  

All English and some Welsh bodies (those primarily under the jurisdiction of the Westminster Government) are required to comply with the Act. This includes local authorities, government departments, NHS Trusts, CCGs, fire and rescue services, and housing associations.

 

What does the Act apply to?

The Act applies to contracts for public services, including contracts that are primarily for public services with an element of goods or works, which are over the EU threshold (currently £111,676 for central government and £172,514 for other public bodies). This includes all public service markets, from health and housing to transport and waste. Commissioners are required to factor social value in at the pre-procurement phase, allowing them to embed social value in the design of the service from the outset.

The Act does not require social value to be considered in contracts for public works and public supply (goods), or in contracts for services below the EU threshold. This does not mean that commissioners can’t apply social value in these contracts – only that it is not compulsory. In fact, many public bodies have found it more straightforward to apply the Act to all contracts and the government promotes the inclusion of social value in all contracts as best practice.  

 

What is social value?

Social value is “the benefit to the community from a commissioning/procurement process over and above the direct purchasing of goods, services and outcomes”. 

There is no authoritative list of what these benefits may be – the Act is deliberately flexible because social value is best approached by considering each local context and needs. For example, in one area youth unemployment might be a serious concern, whilst in another health inequalities might be more pressing.  

The Act therefore gives commissioners and procurement officials the freedom to determine what kind of additional social or environmental value would best serve the needs of the local community as well as creating an opportunity for providers to innovate.

There are however plenty of examples to draw upon for inspiration form public bodies who have implemented the Act. For more details and examples, see our resources section.

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