Posted 3rd March 2015
The SROI Network response to Social Value Act Review
On the 13th February, Lord Young released the much anticipated review of the Social Value Act. The growing interest in social value, what it is and how we can produce more of it, is encouraging and a revision to the Act is a great opportunity to make this easier for commissioners whilst ensuring that local communities are really benefiting. More social value is being created than before.
And so it was a disappointment that the Act has not yet been extended to include goods and works. The SROI Network’s aim is to change the way the world accounts for value, across the board. Incorporating social value into all procurement decisions is a natural step.
One of the issues raised by Lord Young before the Act can be extended or given more statutory permissions is measurement. As stated in the report, ‘whilst potential bidders are able to articulate the social outcomes they will provide, there is a lack of consistency and rigour around how these outcomes are quantified. This can make it harder for procurement officers to be reasonably objective when they are evaluating social value bids, and make it more difficult to assess the additional value for money provided by a social value offer.’ (pg.11)
This means that measurement of social value is not yet developed enough to provide commissioners with adequately robust measures which can be compared between bidders.
Challenges around measurement and clarity of definition of social value will of course contribute to a lack of take-up and inconsistent practice. As Hazel Blears said in Hansard in September of last year, “This is a plea to the Minister: we have to have consistent principles and grounds for the measurement of value”[1].
It is this consistency in the principles, rather than indicators or values that will enable different values to be compared between each other, and decisions to be made on this basis. That is why we have had a set of seven core, consistent principles that lie at the heart of SROI. This enables different types of value to be measured in the same way, according to the same principles of best practice, but suitable for different levels of rigour, depending on the organisation’s purpose.
It is also important that we do not lose sight of the linkages with the public sector’s existing approaches to thinking about value, for example through the need to ensure value for money, cost benefit analysis, and business case requirements to support expenditure programmes.
The National Audit Office defines Value for Money as ‘the optimal use of resources to achieve the intended outcomes’. We would want to be clear that assessing value for money must also take account of non-intended outcomes. However if the focus is on outcomes, and these have been determined with the involvement of those who will be affected by commissioning decisions, then social value will be aligned with value for money.
The Business Case, specifically the Five Case Model, is designed to ensure public value is being achieved through spending decisions. Again there is a strong relationship between social value and public value.
The challenge is to make the approach to measurement appropriate for commissioning decisions, whilst remaining consistent with existing requirements. As the measurement of social value develops and helps commissioners make choices between bidders, the SROI Network would recommend that our principles are used as the basis which will contribute to comparability without falling into the trap of pre-determined lists of indicators that are thought to represent all the important sources of social value. The Treasury were part of the steering group that resulted in the Guide to SROI and its principles and we would recommend therefore that the NAO and Treasury are closely involved in developments.
For more information on our SROI principles, you can download our Guide to SROI or our 2-page principles document.
We also hope to contribute to an increase in social value commissioning and creation through our Social Value Commissioning site, with its database of case studies and resource documents. We were also happy to note that the Guide and our SROI Self Assessment Tool are both referenced in the report as useful sources of more information.
Useful links:
Download and read the full report here
[1] Hansard, 2nd September 2014: http://www.publications.parliament.uk/pa/cm201415/cmhansrd/cm140902/halltext/140902h0001.htm