A three-nations perspective on creating ‘social value’ from procurement in the face of public spending cuts

Posted by The Project Team on 13 January 2023

Professor Hazel Conley i

The current economic and political climate is nothing if not volatile, a position that does not usually bode well for either equality or public spending. In the economic context of rising inflation, rapidly increasing interest rates and rocketing fuel costs, the political strategy has lurched from a momentary focus on growth and productivity to one that seems suspiciously like a return to austerity based on further extensive cuts to public spending. Although growth and austerity might appear to be polar opposites, when the route to increased productivity is envisaged largely as a reduction in taxation and further deregulation, as proposed in the controversial mini-budget of 23 September 2022, the impact on public services would surely have been the same as another wave of austerity. Since the change of Prime Minister on 24 October 2022 and swift reversal of nearly all of the tax cuts previously announced, a more explicit policy of public spending reduction is being pursued.

At the risk of evoking a blast from the past, it is tempting to wonder if there could, indeed, be a third or even a fourth way out of the gloomy prognosis that inevitably seems to be austerity in public spending and recession. Arguments that public spending might actually lead us out of recession are not new. They are the foundations of Keynesianism and contemporary arguments by, for example, economist Mariana Mazzucato, who stresses the need for public spending to be viewed as a way of creating value rather than the first site of retrenchment when an economic storm is approaching.

One thing is for sure, all public spending that survives another onslaught of austerity cuts will need to work hard to produce equality and social justice, which will otherwise be in short supply, particularly since research ii has indicated that austerity impacts most on social groups that are already disadvantaged. For this reason, our research project, Buying Social Justice, takes on even greater significance. Our research examines the potential for the £379 billion spent every year on public procurement in the UK to add value for equality for groups of workers who face disadvantage in labour markets. The project takes a three-nations approach that examines social value and equality in public procurement in England, Scotland and Wales. Interestingly, our initial research indicates that there are different ways of thinking about public spending as a resource that can be used to add value, and specifically social value, that enhances equality. Scotland and Wales have used their devolved powers to approach the production of social value from public procurement differently from England and slightly differently from each other. While social value is widely used to refer to the inclusion of additional social benefits in public procurement, particularly in England and Wales, the term community benefits has been used in Scotland and sometimes in Wales for similar activities, so the table below summarises the main differences in relation to legislation and the general approach to including social value in public procurement in the three nations.

Our research is continuing to investigate the practice of including social value and equality goals in public procurement in England, Wales and Scotland. What we see already is a clear difference of political approach, with greater priority given to the use of public spending power for social ends by the devolved governments in Scotland and Wales than in Westminster. We also see a shift from explicit notions of equality (as represented by the protected equality strands in the Equality Act 2010) to a more general concept of ‘fairness’ in Scotland and Wales. This is accompanied by an extension of the Equality Act provisions in Wales and Scotland to include a duty to consider socio-economic inequality. Although it should be borne in mind that, whilst equality is a legally enforceable concept, fairness is far more amorphous and has no legal standing, the socio-economic duties in Scotland and Wales may prove to be important powers to protect those likely to be hardest hit by a return to austerity. Our initial findings therefore suggest that public procurement is a significant tool for putting into practice policies to promote fairness and tackle socio-economic inequalities.

Table: Social value in the three nations

Social Value LegislationGeneral Approach to Social Value
EnglandPublic Services (Social Value) Act 2012Consideration of social value is left to the discretion of public authorities, however central government departments are required to explicitly evaluate social value in all procurements, using the Social Value Model. The Equality Act 2010 contains no duty to consider reducing socio-economic inequality.
ScotlandProcurement Reform (Scotland) Act 2014

The Equality Act 2010 (Authorities subject to the Socio-economic Inequality Duty) (Scotland) Regulations 2018 (The Fairer Scotland Duty)
The Procurement Reform Act contains a sustainable procurement duty requiring public authorities to consider how procurement can “improve the economic, social, and environmental wellbeing of the authority’s area” and the inclusion of community benefit requirements must be considered in high-value government contracts. The broader concept of ‘fairness’ rather than equality is used in relation to community benefits in Scotland. A duty to consider socio-economic inequality has been introduced into the Equality Act as The Fairer Scotland Duty.
WalesPublic Services (Social Value) Act 2012
Social Services and Well-being (Wales) Act 2014
Well-Being of Future Generations (Wales) Act 2015 
Social Partnership and Public Procurement Bill
The Equality Act (Authorities subject to the Socio-economic Inequality Duty) (Wales) Regulations 2021
Public procurement and social value play a central role in the concept of well-being of future generations in Wales. Concern that public procurement was not being leveraged enough in relation to the Well-Being of Future Generations Act resulted in the Future Generations Commissioner using her powers to trigger a Section 20 Review of procurement policies in nine public authorities in Wales.iii Similar to Scotland, ‘fairness’ rather than equality seems to be the preferred term, particularly in relation to the Social Partnership and Public Procurement Bill. A duty to consider socio-economic inequality has been introduced into the Equality Act.

i. Professor of Human Resource Management in the Faculty of Business and Law, University of the West of England and Co-Investigator on the Buying Social Justice project.

ii. Women’s Budget Group https://wbg.org.uk/analysis/uk-budget-assessments/misguided-plans-for-austerity-2-0-wbg-response-to-autumn-statement-2022/

Joseph Rowntree Foundation https://www.jrf.org.uk/report/poverty-across-ethnic-groups-through-recession-and-austerity

Institute for Fiscal Studies https://ifs.org.uk/sites/default/files/output_url_files/browne_scotcare_presentation.pdf

iii. https://www.futuregenerations.wales/resources_posts/procuring-well-being-in-wales/

Join Mailing List