Social Value & SME’s

SME’s are important. According to the FSB, small businesses accounted for 99.3% of all private sector businesses at the start of 2018 . Total employment in SMEs was 16.3 million; 60% of all private sector employment in the UK. The combined annual turnover of SMEs was £2.0 trillion, 52% of all private sector turnover.

That’s a huge contribution to the economy and to the exchequer. So its ironic that although Government is committed to spending £1 out of every £3 with SMEs, its SME spend is falling. The latest figures show a decline from 27.1% of government spend in 2014/15, to 22.5% in 2016/17.

Government recognises in its Industrial Strategy: “our decisions on procurement, are among the government’s most significant interventions in the economy”. The concept of looking at the wider consequences of a purchasing decision isn’t new. Its in the DNA of many local government buyers, and The Public Services (Social Value) Act 2012 has been enshrined in law since January 2013. It requires people who commission public services to think about how they can also secure wider social, economic and environmental benefits.

In 2016 CCS introduced the Procuring for Growth Balanced Score-card to help Government buyers support economic growth. This approach is mandatory for certain types of Government procurement and recommended for others.

In the wake of the lessons learned following the Carillion failure, Government, through the Chancellor of the Duchy of Lancaster, David Lidington,  is now reinvigorating  Social Value, which will be factored into a wider range of procurements than now.

For all this, there has been little explicit consideration of what Social Value means for technology. An exception is Dr Mark Thompson. In his blog Disrupting Government: Reassessing Social Value for the Internet Age, Dr Thompson argues that the public sector has struggled to assess Social Value – and there is no doubt that Social Value presents challenges. For some, it lacks a clear definition, for others, the perceived ambiguity is helpful, as it allows purchasers to focus on what’s important to them.

A good starting point is DCMS’s Social Value guidance, whilst the Social Value Portal shows how Social Value can be measured. Its been endorsed by the Local Government Association and, according to the portal “Crown Commercial Service is actively promoting it through central government departments”.

When Social Value is discussed, it is often associated with local government, and the Preston Procurement model is a good, if extreme, example. Nonetheless, its basic ambition is equally applicable to central government (as it is to technology) and shouldn’t need reassessment, as the legislation gives the buyer latitude, and is more about spirit than prescription.

Social Value is undoubtedly less mature in central government and, until very recently, almost non-existent in technology. But Social Value is coming to the mainstream, and SME’s shouldn’t be afraid of it, or regard it as another barrier to doing business with Government. Many SME’s have a great story to tell, and more widespread adoption of Social Value principles in technology procurement could even become the key in reversing Government’s declining SME spend. Visit https://ukcloud.com/why-ukcloud/social-value/ to find out more about social value and UKCloud’s commitment.