As buzz words go, ‘Social Value’ is only marginally sexier than the ‘Corporate Social Responsibility’ it is beginning to supersede.
But firms of all sizes should sit up and take note, because the idea has real potential to benefit the bottom line, as well as helping communities.
It was given real momentum by last year’s Public Services (Social Value) Act, which I supported through Parliament on a cross-party basis.
The Act requires public sector organisations to consider social, economic and environmental benefits for communities when awarding contracts to provide services — rather than simply choosing the cheapest option.
That was never going to happen overnight, because it requires a new approach for many commissioners and would-be service providers.
Earlier this year I worked with the Sustainable Business Partnership to report on progress so far – including a survey of public authorities, businesses and third sector organisations. This showed that while most commissioners are now aware of the Act, more needs to be done to develop best practice in using it and raise awareness among service providers – 75% of public authorities felt businesses were unprepared to take advantage of the Act.
When Salford City Council recently tendered for a new public health contract, it scored rival bidders on a 1–5 basis (with 5 being best) for their evidence of commitment to social value. While 42% of private sector bidders scored 1 or 2, and none achieved 5, 80% of voluntary, community and social enterprise bidders scored 3 or above, with 20% scoring 5.
The message is clear: if traditional companies want to win big public sector service contracts they will increasingly need to ‘think social’.
That may soon apply to firms which provide goods and infrastructure as well as services. I am currently taking part in a Government review of the Act and considering whether it can be extended, as well as looking at how would-be providers and contractors can measure and evidence social value.
Embedding social benefits within a business model also has huge potential to boost a company’s reputation.
The Act arrived against a backdrop of a breakdown in public confidence in some big businesses, amid stories about the financial crisis and mis-selling of PPI insurance by banks.
Some large firms spend massive amounts on public relations, but what better way to win the respect of the community than a pledge to train the long-term unemployed or sub-contract to a local social enterprise?
A new online platform tradingforgood.co.uk includes a directory of companies of all sizes which are committed to Social Value, enabling the growing number of socially-conscious customers to choose an enterprise which shares their values.
Similarly, our brightest young talents increasingly want to work for businesses which are seen to be forces for good.
Among the firms already using the Social Value Act to help communities and boost business is Interserve, which specialises in construction and support services.
Its commitments include providing apprenticeships, work experience and staff volunteering – and it encourages suppliers to do likewise.
The firm believes its belief in social value helped it to retain a £322m contract to manage the Ministry of Defence training estate.
It says its role arranging the first Social Value Summit and delivering social value has generated significant positive media coverage – which can in itself lead to more business.
In short, a company which is well thought of is more likely to secure more contracts and custom.
It’s a virtuous circle in which doing good really is good business.
Hazel Blears is the Labour MP for Salford and Eccles. She served as Secretary of State for Communities and Local Government from 2007-09.