How the Social Value Act has Changed UK Procurement
Transforming Public Sector Spending
Happy Tuesday, Transformation Friends. Another week, another opportunity to go Beyond the Status Quo.
What if public procurement decisions weren’t just about cost, but about maximizing broader social, economic, and environmental value?
The UK asked this question over 10 years ago and set out to create the Public Services (Social Value) Act that challenges traditional procurement by shifting the focus from cost savings to long-term impact.
Since then, the Act has reshaped government procurement, ensuring that public spending contributes to economic growth, social well-being, and environmental sustainability. Instead of prioritizing cost alone, this law mandates that government contracts actively generate wider benefits for society.
Today, we’ll explore the purpose of the Act, its goals, and how it works in practice. We’ll also examine real-world case studies showcasing its impact.
Grab your morning coffee, and let’s get started.
What is the Social Value Act?
The Public Services (Social Value) Act 2012 requires public sector organizations in the UK to consider how their procurement decisions can create broader social value. This means that commissioners must also assess how services can contribute to local communities and economies instead of awarding contracts based solely on price.
The Act came into force on 31 January 2013, applying to all service contracts above the Official Journal of the European Union (OJEU) procurement threshold. However, many organizations have extended their principles to lower-value contracts and goods procurement.
In 2018, the UK government strengthened the Act by requiring major government contracts to explicitly evaluate social value as part of the procurement process. This change meant that departments could no longer just consider social value—they had to score and measure it when awarding contracts.
To help implement this shift, the Cabinet Office and the Department for Digital, Culture, Media and Sport (DCMS) developed the Social Value Model, introduced in 2021. This model provides a structured framework for government departments to assess social value across key themes, such as economic inequality, climate change, and equal opportunity. The model ensures consistency across procurement processes, making it easier for bidders to understand expectations and integrate social value into their proposals effectively.
Goals of the Social Value Act
The Act aims to shift procurement from a purely cost-based model to one that maximizes public benefit. Its key objectives include:
1. Improving Public Services
Ensuring that public spending delivers long-term benefits for society.
Encouraging innovation in service delivery by considering wider community impacts.
2. Boosting Local Economies
Supporting small and medium-sized enterprises (SMEs), voluntary organizations, and social enterprises in securing public contracts.
Encouraging job creation, apprenticeships, and skills development.
3. Enhancing Environmental Sustainability
Prioritizing carbon reduction, waste management, and energy efficiency in procurement decisions.
Encouraging businesses to adopt environmentally friendly practices.
4. Reducing Inequality and Promoting Social Inclusion
Ensuring procurement benefits disadvantaged groups, such as the long-term unemployed or disabled individuals.
Strengthening community resilience by supporting local projects and charities.
How Does the Social Value Act Work?
The Act requires public bodies to consider social value in procurement through three key stages:
1. Before Procurement
Identify potential social value opportunities in upcoming contracts.
Engage local businesses and organizations to shape procurement decisions.
2. During Procurement
Include specific social value requirements in contracts.
Evaluate bidders based on their ability to deliver social, economic, or environmental benefits.
3. After Awarding Contracts
Monitor whether social value commitments are being met.
Require suppliers to report on their social impact, such as job creation or carbon savings.
Case Studies: Social Value in Action
The UK conducted a review of the Act in 2014 (Lord Young’s review of the Social Value Act) and a positive effect where it is being taken up. Below are a few of the case studies:
Circle Housing – Value for Money and Apprenticeships
Circle Housing, a social housing provider, aimed to integrate social value into its procurement for maintenance and repairs.
How the Act Was Used:
Required one apprenticeship for every £0.5 million worth of contract value.
Used monetary values from HM Treasury Green Book to calculate social return on investment (SROI).
Results:
Estimated £80 million cost savings over 10 years.
Calculated an SROI of £5.40 for every £1 invested.
Start in Salford (Salford CCG) – Mental Health Through Creative Arts
Start in Salford offers creative arts programs to support mental health recovery and social inclusion.
How the Act Was Used:
Salford Clinical Commissioning Group (CCG) incorporated mental health support initiatives into healthcare procurement.
Contracts required providers to demonstrate social value impact, particularly in community well-being.
Results:
Provided therapy through arts programs, improving mental health outcomes.
Achieved a Social Return on Investment (SROI) of £6–£10 per £1 invested.
Enhanced social inclusion, offering structured pathways into education, volunteering, and employment.
Durham County Council – Social Value in Banking Contracts
Durham County Council sought to maximize community benefits from its banking services contracts.
How the Act Was Used:
Engaged potential providers before procurement to explore social value offerings.
Included clauses requiring support for local financial education and credit unions.
Results:
Financial education programs established for local communities.
Local credit unions supported, improving access to fair lending.
Lambeth Council – Supporting Local SMEs
Lambeth Council focused on increasing procurement opportunities for small and medium-sized enterprises (SMEs).
How the Act Was Used:
Embedded social value requirements into procurement policies.
Identified SME-friendly contracts and simplified bidding processes.
Results:
Increased local SME spending from £159 million to £180 million.
Fostered economic growth in the local business community.
Cleanstart – Reducing Crime and Creating Employment
Cleanstart, a social enterprise, helps ex-offenders reintegrate into society through employment in property maintenance.
How the Act Was Used:
Trafford Housing Trust embedded employment-focused social value requirements into contracts.
Cleanstart was awarded contracts based on its ability to provide jobs and reduce reoffending rates.
Results:
40+ ex-offenders employed, with many moving into permanent jobs.
Estimated cost savings of £442,000 for Greater Manchester Police due to reduced crime rates.
Wrap up
The UK Social Value Act reshapes public procurement by ensuring taxpayer money delivers wider benefits beyond cost savings. The Act is driving innovation in public service delivery.
Reflecting on these case studies, ask yourself:
How can social value principles be integrated into other public sector initiatives?
What challenges might arise in measuring and monitoring social impact?
How can private sector organizations align with social value objectives to secure government contracts?
Until next time, stay curious and I’ll see you Beyond the Status Quo.