Why social value is important

In the past, commissioning by the public sector was often described as a “race to the bottom”, where cost was the only consideration and contracts were simply being awarded to lowest bidder. Not only did this contribute to a number of contractors on public sector contracts collapsing, but it also led to a significant decline in the quality of services provided.

‘Social value’ is a different way of thinking about how public resources are allocated and used. It involves looking beyond the price of each individual contract to looking at what the collective benefit to a community is when a public body awards a contract.

The government has recognised the importance of using public money to build social value through the Public Services (Social Value) Act 2012. The act requires public bodies to consider how the services they commission and procure might improve the economic, social and environmental well-being of the area. 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.