Members of the House of Lords have voted to mandate public commissioners to consider social value when tendering contracts.
On Monday, the chamber voted through two amendments to the procurement bill put forward by two cross-party peers compelling commissioners to consider social value.
This comes after Social Enterprises UK (SEUK) and NCVO expressed concerns over the lack of explicit mentions of social value in the bill.
The amended bill, which aims to tackle “key barriers” faced by charities bidding for public service contracts, will now return to the House of Commons to be voted on by MPs.
Amendment gives social enterprises ‘the priority they deserve’
In a parliamentary debate, Baroness Hayman of Ullock and Lord Lansley moved two amendments to include the concept of social value in the procurement bill.
Lord Lansley said that meeting the requirements set out in the Public Services (Social Value) Act will help ensure that “social enterprises are given the priority they deserve”.
He said: “For example [...] the European Commission document Buying for Social Impact, published in 2018, had a range of examples from across Europe, one of which was from Scotland. The Scottish example said that one of the implications of buying for social impact has been the use of not-for-profit and social enterprises in respect of public procurement. It is therefore a very effective way of bringing that to the forefront.”
Peter Holbrook, chief executive of SEUK, welcomed the amended bill, saying: “At a time when our country faces multiple crises, we need to focus on social value more than ever.
“True value for money means considering the wider social, economic and environmental value that social enterprise creates. The ball is now in the government’s court, but I hope that they will listen to social enterprises, businesses, public sector leaders and the House of Lords who all want to see social value not just embedded into public sector procurement, but expanded.”
Sam Mercadante, policy and insights manager at NCVO, said: “We are very glad to see significant support for the inclusion of social value in the procurement bill. The Social Value Act has been a vital tool to maximise the social, economic and environmental benefit of public spending for the past decade - so it is entirely sensible for it to be included here.
“If used well, it can unlock funding for charities and volunteering that generate social value for communities through what they do and how they do it. We want the government to use this opportunity to ensure communities can benefit from the social value that charities and social enterprises offer.”
Tackle current barriers to participation
Some peers also called for the removal of “particular barriers to participation” charities and social enterprises face when bidding for public contracts.
This, they argued, could be done by adding these organisations to the beneficiaries of a separate amendment. However, the amendment was not moved.
Lord Maude of Horsham said: “The reality is that not-for-profits, social enterprises and mutuals, when they come to retender or bid for different contracts, because a number of mutuals we supported have grown, both by expanding into different areas for the same group of clients but also by expanding into different geographical areas for different public authorities—and this is very worthwhile—but they are subject to very much the same kinds of constraints that the conventional procurement we inherited in 2010 imposed on [small and medium-sized enterprises] SMEs.”
He gave the example of the coalition government’s introduction of an aspiration whereby 25% of contract should be awarded SMEs.
“Opening up procurement got rid of some ridiculous requirements that were not necessary at all but were imposed by safety-first procurers: for example, that bidders should have to show three years’ audited accounts and that there should be turnover thresholds, performance bonds and requirements to show that they had in place the insurance to cover the contract value before they even bid.
“The combination of all these things meant that many SMEs and start-ups and some of the most innovative, competitive and dynamic potential suppliers were simply not able to get into the marketplace at all [...]. I strongly support the amendment the minister has brought forward, but I urge her to look sympathetically at amendment 41, because social enterprises, not-for-profits, mutuals and so on suffer from exactly the same disadvantages and obstacles as there were in old-fashioned procurement and it is important, I believe, that they should be included in the same bracket.”
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