Most small businesses haven’t heard of the Social Value Act (SVA), but if they’ve ever been through the government procurement process, they’ll almost certainly have felt its force.

The Act requires businesses bidding for public sector contracts to give back to the community through ‘socially valuable’ initiatives. The intention might have been laudable, but in more than a decade since it became law, it has buried businesses under an avalanche of red tape and frozen out smaller companies from the procurement process. And despite an estimated cost to the taxpayer of £5bn per year, there’s precious little evidence of any social value having been delivered.

Perhaps surprisingly, some of the most damning criticism of the Act comes from those responsible for getting it onto the statute in the first place.

Professor Chris White is the former MP who was the architect and champion of the SVA. In the foreword to a 2023 report marking a decade since the law was enacted, White acknowledged that the “measurement and tracking of social value lacks common standards and approaches” and that “data is patchy and accountability is mixed.”  

He also admitted that approaches to social value also remain largely reliant on the personal convictions of individuals within the public and private sector.

This is a shocking admission. But the problem extends beyond the fact that even the Act’s chief cheerleader recognises its demands are unmeasured, opaque, and subject to the whims of those commissioning services. 

It has become clear that the administrative burden of the Act is weighing heavily on businesses at a time when they are already suffering.

In 2023 more than 25,000 company insolvencies were reported in England and Wales, the worst figures for 30 years. Voluntary liquidations were up almost 10% from 2022, their highest rate since 1960. Meanwhile, small business growth remains stagnant, with the proportion of SMEs expanding their workforce plummeting by 40% between 2021-22. And beneath the surface of these figures lies a labyrinth of compliance measures and box-ticking exercises that leave startups drowning in paperwork before they’ve even had a chance to swim. 

At the Campaign for Fair Procurement, we hear the same story from SME owners: of page upon page of ‘social value’ box-ticking – and an absence of oversight of these community initiatives or measurement of the supposed benefits they yield.

Read the full article at Startups Magazine.