Is the Public Services (Social Value) Act 2012 living up to expectation?

In October 2012, SITA UK launched a report ‘Creating Social Value – the Role of the Waste and Resource Management Industry’. The report highlights the broader social benefits that the waste and resource management industry, in partnership with the third sector, could offer local authorities alongside the delivery of waste management services.

The legal framework for procurement of these services, the Public Services (Social Value) Act 2012, had the potential to unlock an additional £600 million in social value by 2020. Six months after coming into force, is the Act living up to expectations?

The signs are that local authorities are getting to grips with the complexities of the Act. Two issues in particular stand out – how to measure social value, and how to procure services incorporating social outcomes.

Putting a monetary value on social outcomes is difficult, but methodological frameworks are available. Metrics such as the Social Return on Investment (SROI) are being tested by some councils. In contrast, procurement of social outcomes is perhaps the more challenging, requiring as it does a change in the way councils view their budgets and apportion costs and savings. Traditionally, each service, be it waste management, road repairs, education or social support, has been treated as an individual cost centre. But implementing the Act requires councils to span across these barriers and assess how the overall budget can benefit from having, say, educational and employment outcomes delivered through waste management services rather than as discrete, separately tendered and funded entities.

This new way of thinking would benefit from being supported by more comprehensive guidance for local government procurement officers than is currently on offer.

Which types of social outcomes are best correlated with particular public services? How should these social outcomes be monetised? What about local government accounting rules – could a saving in one service legitimately be offset against a cost in another? Can savings obtained under the Act be ‘banked’ and rolled over? These are some of the issues that have to be worked through before the full potential of the Act can be realised.