News and Comment

What does the Public Services (Social Value) Act mean for the future of public services?

Thursday 31 January 2013


The following blog is an edited excerpt from OPM’s forthcoming Valuing Public Services publication, a practical guide to economic evaluation which includes ideas about how we measure and demonstrate the value of our public services. Valuing Public Services will be available to download on the OPM website in the near future.

The Public Services (Social Value) Act, which came into effect today, means that for the first time, all public bodies in England and Wales are required to consider how the services they commission and procure might improve the economic, social and environmental well-being of the area.

Whilst this legislation has been received well by many in theory, it will now be vital to track its impact in practice ‘on the ground’. After all, evaluations have found that commissioning practice is at times inconsistent, with some commissioners motivated by ‘lowest cost’ rather than by ‘added value’. This leads us to believe that although improvements are being made, we are still some way off where we want to be.

The RSA has argued that social value that can be created through better relationships between citizens, society, business and public services. The Public Services (Social Value) Act may help create the conditions for social enterprises and charities to, for example, secure more public contracts and create new forms of cross-sector collaboration. But it also raises questions about metrics and accountability. One of the key challenges will be managing the tension between conventional ‘cost’ based approaches with the much heralded ‘value’ based ones. This tension is not new.

Despite the rhetoric around consideration of ‘value’, ‘cost’ is king when it comes to practice. There is real concern that cost considerations will continue to rule, particularly against the backdrop of austerity – new legislation notwithstanding. Moreover, ‘cost’ has always been a more straightforward concept to understand and operationalise in comparison with ‘value’.

It would be naïve however, to posit ‘cost’ and ‘value’ based approaches as being mutually exclusive. After all, public services do need to be far clearer about the true costs involved. For far too long, voluntary and community sector organisations have been complaining that commissioners of services have under-estimated the real costs of service delivery. The sector has been motivated to adopt full cost recovery techniques to avoid being commissioned ‘on the cheap’.

Value cannot be understood properly until we have a robust picture of the real costs involved. At the same time, understanding costs is only the first step. A value-based approach takes us into an arena that requires a fundamental culture change, and a reconfiguration of different sets of relationships in practice. Metrics can only do so much in this territory.

Instead, pragmatic decision-making, informed by greater engagement with a wider set of stakeholders, is required to determine what we mean by (social) value, and to consider how this may be realised. It is not simply a commissioning conversation or a measurement issue, but a wider civic call to action.

Notions of ‘efficiency’ and ‘value’ are not solely defined by the objective measurement of experts, rather there should be room for negotiation and co-creation with those who pay for, those who deliver, and those who benefit from public services. The future of public services rests on the success of this ongoing dialogue.

As a public interest organisation, OPM has a role in engaging and shaping conversations relating to the future of public services. Few topics could be as crucial to get right as how we make decisions about which aspects of public services are more and less valuable. We have recently published an edited volume, Valuing Public Services, that offers practical ideas about how we measure and demonstrate the value of our public services, based on OPM’s real life experiences of working with a broad range of public organisations, including charities and professional bodies to achieve this.