PUBLIC SERVICES (SOCIAL ENTERPRISE AND SOCIAL VALUE) BILL
Help for Big Society agenda
This is a Private Member’s Bill (ballot) introduced by the Conservative MP, Chris White on 30 June 2010. It applies to England & Wales only, though in practice most measures only affect England. It received its Second Reading in the Commons on 19 November and will be considered next in Committee (date to be announced). It attempts to strengthen the social enterprise business sector and make the concept of ‘social value’ more relevant and important in the placement and provision of public services. New duties will be placed upon central and local government authorities to publish explicit strategies for supporting these values and the public procurement process will need to reflect and measure them. The Bill should be seen within the context of the Big Society agenda and is essentially enabling legislation to help support this agenda. The Government believes that the big society presents a great opportunity for charities and social enterprises as public services are opened up and power devolved, but recognise that in the short-term many organisations may be concerned about potential budget cuts. There have been many attempts in recent years to promote what is sometimes described as the ‘third sector’ to try to secure greater involvement of third sector organisations in public service delivery. This third sector is hard to define but generally recognisable in practice. It includes a range of organisations and businesses covering a wide spread of personal and commercial services. They include charities, not for profit organisations and businesses with a social element in their commercial activities. Organisationally they can be charities, the relatively new Community Interest Companies (CICs), social enterprises, co-operatives, industrial and provident societies, trusts, unincorporated associations, mutual organisations, credit unions or limited companies or partnerships and so on.. The Bill would require every local authority (in England) to include in their sustainable community strategy proposals for promoting engagement with social enterprise in their area. They must also include a statement of measures for social enterprise to participate in the implementation of these proposals. The Bill would require the contracting authority to give greater consideration to economic, social or environmental wellbeing during the pre-procurement stage. Significantly Social Enterprises are seen to be of growing importance by the Government and are regarded as significant agencies in the delivery of the Big Society Agenda . So what exactly are they? It is important to understand that Social enterprises are defined by the purpose of the organisation, not by its legal status or format. Thus, a limited company, or a co-operative could be part of the sector or not. One representative group in the UK is the Social Enterprise Coalition (SEC). It defines social enterprises as:
businesses that trade in the market with a social purpose. They use business tools and techniques to achieve social aims and include an incredibly wide range of organisations, for example co-operatives, development trusts, community enterprises, housing associations, social firms, and leisure trusts. So some aim overtly to make a profit and all a margin or surplus. They are in effect businesses with a social purpose. It is estimated that 5% of all businesses with employees are engaged in SEA with a total turnover of £27 billion
What about social value? While there is no single, generally accepted definition of ‘social value’, it is usually understood to refer to the “non-financial impacts of programmes, organisations and interventions”. These usually refer to social and environmental impacts as well as to individual well-being. What is really crucial though to transforming public services is procurement and commissioning policies, and in respect of the Big Society Agenda, procurement and commissioning policies at the local level which is of course subject to EU law. A commissioning role according to guidance ‘ is one in which the authority seeks to secure the best outcomes for their local communities by making use of all available resources – without regard for whether services are provided in-house, externally or through various forms of partnership.’ The guidance urged authorities to put “people and places” at the heart of commissioning, exploring with communities how services can be varied or targeted and locating commissioning decisions closer to communities” By virtue of the Local Government Act 1999, local authorities are subject to “best value” requirements, defined as a duty “…to secure continuous improvement in the exercise of all functions undertaken by the authority, having regard to a combination of economy, efficiency and effectiveness.” The Labour Government launched a National procurement strategy for local government in 2003 to promote good practice in local authority procurement. Its “key messages” were said to be:
…councils should build up their capacity; take up further opportunities for collaborative working; implement further steps on e-procurement; and stimulate markets.
The national procurement strategy document advised councils that neither the EU procurement rules nor the best value requirements stopped them from working with suppliers to realise “community benefits”.
The Public Services (Social Enterprise and Social Value) Bill contains three substantive clauses concerning social enterprise, local authority community strategies and new rules on central and local government procurement.
Clause 1(1) requires the Secretary of State to publish a “national social enterprise strategy” that will involve, Clause1(2), representatives of the sector and public in either its implementation or the monitoring of its effectiveness
Clause 2 of the Bill seeks to amend Section 4 of the Local Government Act 2000 which concerns strategies for promoting well-being. The amendment requires that every local authority (in England) must include in their sustainable community strategy proposals for promoting engagement with social enterprise in their area.
Clause 3 places certain requirements on public sector bodies (“contracting authorities”). These requirements only apply to procurements which are subject to the EU rules (see above). The contracting authority must consider how a contract might improve the economic, social or environmental wellbeing of the UK. In doing so, however, the authority may only consider matters which are relevant to the contract and proportionate. The authority must also consider whether to consult those intended to benefit from the goods or services supplied under the contract. The authority must take into consideration the matters it identified at the pre-procurement stage as promoting well-being when drawing up the contract.
The Government has set out policy measures to help the third sector maximise new opportunities in its strategy document Building a Stronger Civil Society.