MPs have voted to overturn amendments made by the House of Lords to embed social value in public procurement processes.
Earlier this week, the procurement bill started its committee stage in the House of Commons where the proposals for change were discussed and voted on.
Conservative members voted to reject peers’ amendments that had sought to mandate contracting authorities to consider social value.
MPs from other parties had unsuccessfully argued that the amendments were necessary to “reduce barriers to entry for charities and voluntary organisations”.
NCVO called the outcome “disappointing” and a “missed opportunity to further embed social value in procurement”.
‘Crucial’ to tackle barriers faced by charities
Some nine Conservative MPs voted against the amendments while five Labour and one Scottish National Party (SNP) representatives voted for their inclusion in the bill.
During this week’s debate, Labour MP Florence Eshalomi said the bill “must reduce barriers to entry for charities and voluntary organisations because they’re often best placed to deliver a range of public services.”
“While all types and sizes of charities experience challenges relating to the commissioning and procurement of public services, smaller organisations often face greater barriers.”
She said the nature of charities and voluntary organisations means that they can reach people who are “overlooked or undeserved by mainstream services, and can provide wraparound support to address the root causes of the challenges many people face”.
“The government spent £11.6bn on contracts with charities alone in 2019-20. Ensuring that the bill works for such organisations and services is therefore crucial.”
SNP MP Kirsty Blackman described the Lords amendments as “clever and necessary”.
She said: “Charities are struggling at the moment. Every charitable organisation that I have spoken to has mentioned its concerns about how it will carry on. We know that during the cost-of-living crisis, people are reducing their discretionary spending; they do not have any money left to spend on things such as charitable giving, and therefore charities are really in need of contracts to be able to continue to provide their services.
“Charities have workers—people work for charities. Without securing sensible, value-for-money contracts, charities will not be able to give their staff the uplift they need in order to avoid the cost-of-living crisis. It would be helpful specifically to include charities in the bill and define that.”
Amendments deemed ‘unnecessary’
However, Conservative MPs said the bill “already functions to give appropriate support to charities’ participation in public procurement”.
Alex Burghart, parliamentary secretary for the Cabinet Office, said: “It’s undesirable to include other types of organisations in clause 12(4) and risk diluting the separate requirement for contracting authorities to have particular regard to barriers that smaller suppliers face because of their size. I respectfully request that the committee does not support amendments 90 and 91.”
Burghart argued that the amendments were “unnecessary” as existing law requires contractors to consider “the extent to which public money spent on their contracts can deliver greater benefit than it otherwise would—for example, broader social value or equitable outcomes for groups such as armed forces veterans, local employment and such like”.
NCVO: Clause removals ‘disappointing’
According to NCVO’s 2022 UK Civil Society Almanac, voluntary sector income from the government is at its lowest for 15 years. Introducing a social value requirement in public procurement could lead to more government funding for charities.
Chris Walker, policy and public affairs manager at NCVO, said: “It’s disappointing that the government has removed these clauses from the bill.
“There was cross-party agreement in the House of Lords that the bill should do more to require consideration of social value in procurement, allowing us to build on the success of the Social Value Act.
“The government has reaffirmed the role of the Social Value Act, but this is looking like it will be a missed opportunity to further embed social value in procurement. We urge MPs and peers to keep pushing the government to put social value on the face of the bill.”
NPC: ‘More difficult decisions for charities’
Theo Clay, policy manager at New Philanthropy Capital, said: “It’s becoming ever more unsustainable for charities to deliver government contracts below cost price. We know from our State of the Sector research that 59% of charities subsidise government contracts with other forms of income.
“The Procurement Bill was an opportunity to recognise the broader value that working with charities can bring, and build better partnerships with them. This announcement will mean more difficult decisions for charities, and could leave communities without support when they need it most. It remains an important issue for the charity sector and for good public services, so we will continue to make the case as well as working directly with local councils to help them improve how they work with charities.”
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