Private Sector Social Value Act?

This week I was at the Lib Dem Party Conference in Brighton, where the RSA put on an event in partnership with ASDA on how business might help to meet social need in hard times.  Paul Buddery has given the toplines from the discussion in this blog, and in it he poses the question of how we make the transition from good practice at the margins, to common practice in the mainstream.  How do examples like ASDA’s Community Life Programme, and B&Q’s interest in co-producing shared value with its local communities, become standard business MO?

In discussing social value in the event, Lord Newby touched on the Public Services (Social Value) Act, which places a duty on public authorities to consider the economic, social and environmental well-being they (could) generate in the procurement of public services.  For example, in considering tenders for a catering contract, a local authority might ask a potential supplier about local job and supply chain opportunities, and broader questions about how they intend to develop and utilise local social assets and networks.

In considering the potential of this legislation in the context of our event, an obvious thought occurs.  What is the private sector equivalent of this act?  How can we prompt businesses to consider how they can use their purchasing power to generate more social value?  There are a number of avenues to explore.  Firstly, would an equivalent ‘act’ work?  What levers do we have to encourage businesses to buy in goods and services in such ways that create additional social value?  Could businesses amend their procurement decision-making criteria to include an assessment of the social value generated by a potential supplier?  If so, could this account for say 10% of the overall ‘score’ that determines which supplier gets the business?  To incentivise businesses to adopt such procurement practices, could they qualify for a tax discount equivalent to a small proportion of the social value created?

There is probably not the appetite in any quarter to tinker with the tax system in this way, and such a proposal runs into another issue raised in our discussion: how do you measure social value in a fair, consistent, comparable way?

Parking the measurement issue for a moment, an alternative model might be to connect a ‘Private Sector Social Value Scheme’ to the Public Services (Social Value Act).  Rather than merely considering the social value a supplier will create through their proposed delivery of a public service contract, a public authority could also consider how the supplier uses its own purchasing power to create social value.  This could form part of the assessment for the award of the specific public service contract.  Public authorities could require that businesses wishing to be placed on approved supplier lists/supplier frameworks consider how they use their purchasing power to create social value.  Care would have to be taken not to privilege big business through such assessments.  Returning to the measurement issue, it is clear that a form of relative measure is required instead of (or alongside?) an absolute measure of social value, and that such measurements are rigorous and not onerous to produce.

There are other avenues.  Corporate Social Responsibility needs to progress from the sometimes tokenistic PR, peripheral to the core business proposition, to the notion of shared value through which the processes of enhancing business competitiveness, and the social and economic advancement of the communities the business serves/operates in, are brought together.  Many businesses are moving in this direction.  Could a voluntary scheme (adopted by big businesses with multiple local operations, or by the business community more widely) catch on in which businesses would change their procurement decision-making processes in the ways described above?  What status could we give such a scheme to create value for participating businesses?  Would a ‘Standard’ akin to Investors in People, or an accreditation and award scheme such as the RSA’s Business Awards for the Environment programme incentivise businesses to adopt these practices and provide sufficient reward for doing so?  Perhaps this is an avenue for Business in the Community to examine.  Part of the strategy to drive participation in the scheme would require making a clear case to business as to why this is in their best interests.  The RSA’s recent Community Footprint report provides some evidence on the competitive advantages such behaviour generates for business.

So there are my top of the head thoughts on a Private Sector Social Value Scheme.  At the end of our Lib Dem party conference event, in the time we had for networking and hoovering up the remaining ASDA muffins, I put the idea, in its equally embryonic state, to Lord Newby.  He seemed to think there was potential.  What do you think?