Achieving social value through social enterprises

Recently, David Lidington, Minister for the Cabinet Office, announced proposals for central government contracts to ensure that all major procurements explicitly evaluate social value, the aim being to “ensure that contracts are awarded on the basis of more than just value for money – but a company’s values too”.

The usual process for public bodies when assessing value for money is to weigh up the value of those goods or services against the money paid for them. However, in order to make the most of the Social Value Act, this needs to be thought about slightly differently.

A negative impact will be created by the purchase of goods manufactured or services delivered by people paid less than a living wage, or where damage is caused to the environment. On the other hand, a positive impact will be created when purchasing goods or services from a business that reinvests profits into their business or donates them into projects, ideas, or initiatives that improve people’s lives, their environment and well-being. Businesses that operate in this way are social enterprises and this sector is growing, as awareness increases about the greater positive social change they facilitate.

Social enterprises trade like any other business and need to make a profit to be sustainable. However, their profits are used to tackle social problems, improve people’s life chances through better education and training opportunities, as well as supporting communities across the country through social investment. The most well-known social enterprise is probably The Big Issue. All of their profits are reinvested back into helping vendors with a “hand up, not a hand out” to improve their social mobility. However, The Big Issue is only one of 100,000 social enterprises throughout the UK, that together contribute £60bn to the UK economy, whilst employing two million people.

Public sector commissioners looking to meet the requirements of the Social Value Act and deliver enhanced community benefits need look no further than their nearest social enterprise to “consider how their procurement could improve the social, economic and environmental well-being of their areas,” as this is the very purpose of social enterprises.