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Is ‘Social Value 2032’ assured? Possible lessons from angry Edwardian shopkeepers for the Social Value Act’s future

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This past March, the UK quietly celebrated the 10th anniversary of the Public Services Act (otherwise known as the Social Value Act or SVA). Heralded by its proponents as ‘the biggest opportunity in decades for social enterprise’, the SVA rewrote the rules governing the competitive landscape for public contracts. The first of its kind legislation compels public contract awarding authorities to consider ‘how what is proposed to be procured might improve the economic, social and environmental well-being of the relevant area, and how, in conducting the process of procurement, it might act with a view to securing that improvement’. Lord Young, in his 2015 review of the SVA’s efficacy, found that the Act has encouraged ‘commissioners to think about securing value through procurement’ and ‘generated significant cost savings’. To commemorate the recent anniversary, a coalition comprising the SVA’s original author (former MP, Professor Chris White), Social Enterprise UK (representing the interests of 100,000 social enterprises), and multinational companies like PwC and Siemens, have announced Social Value 2032—a programme to ‘accelerate’ and ‘expand’ the impact of the SVA. Social Value 2032 envisions a ‘Social Value Economy’ in which all public sector procurement decisions in the UK are made by an obliged balancing of monetary costs with stakeholder externalities.

Social Value 2032 is a timely manifestation of both the post-Covid commercial environment, in which seemingly every firm is subliminally or unambiguously marketing their social impact, and the government’s fashionable ‘levelling up’ agenda. Consequently, it is difficult to imagine any direction other than onward for the SVA. However, the early twentieth-century experience of the British Co-operative Movement (the Co-op) in actualising a novel economic system—guided by the dual aims of social good and financial growth—suggests that the path to 2032 may be fraught with more complications than anticipated. The Co-op of 1900 was a behemoth social and commercial organisation; it registered 2 million Co-op members in the UK and represented an annual total trade of roughly £80 million. Despite its enormity and favourable growth trajectory in the early twentieth century, the Co-op’s grand ambition of driving forward wider reform in the economy never materialised. One reason for this is that the Co-op eventually drew the political and social ire of the existing pattern of distribution it was aiming to displace. The early twentieth-century history of the anti-co-operative movement offers a valuable historical perspective on the direction and potential tribulations for the UK’s path to Social Value 2032.

The anti-co-operative movement first arose in Scotland in 1886 and then in England in 1902. Small private shopkeepers, seeing their market shares decline toward the end of the nineteenth century, increasingly blamed the growing Co-op for their financial troubles. The nature of the ensuing conflicts was diverse and nuanced, regularly crossing into legal, political, and social battlefields. From the beginning of the anti-co-operative movement, the private traders and their allies in the trade press bitterly attacked the Co-op on its principles. The Co-op’s guiding values had been outlined by the Rochdale Pioneers in the 1840s and codified into the Rochdale Principles. These principles (concern for the community, member education initiatives, democratic member control, dividend on surplus, etc.) were the declared distinctions between co-operative and competitive business. The supporters of the anti-co-operative movement lambasted the Co-op and its principles as a ‘sham’. The anti-co-operative press, responding to ceaseless co-operative growth, began regularly publishing articles on every example of Co-op misconduct, regardless of triviality and occasionally veracity. The private traders inundated weekly pages with reports of co-operative fines for selling adulterated food, criminal charges of embezzlement, and dismal co-operative charitable giving rates—as if to ask, ‘what principles?’. Responding to the Co-op’s social activities (i.e., community, religious, and educational work), the private traders proclaimed the co-operative system to be a ‘communistic’, ‘anti-Christian’, and ‘socialist’ expression seeking the extermination of both the shopkeeper class and the founding economic tenets of the British state. These attacks, pervasive in the trade press by the first decade of the twentieth century, slowed co-operative initiatives and began some of the processes of the Co-op’s mid-century containment.

Though the SVA has had a slow uptake, its authority is steadily being strengthened by policy revisions, better training for contract awarding authorities, and heightened private and public interest. As the SVA’s influence grows, it will disrupt the existing procurement structure in a more acute way. Any ambiguities or frustrations in contract awarding procedure may expose the SVA to similar charges—albeit with a contemporary flavour—to those experienced by the Co-op from resentful firms passed over for public contracts.

The early twentieth century saw an expansion in private trader associations and concerted political lobbying in part as a result of co-operative growth. One of the priorities of these associations in Parliament was the removal of the co-operative exemption from income tax. Since the 1893 Industrial and Provident Societies Act, Parliament had accepted that co-operative surplus was not to be taxed as income as it was redistributed (the famous Co-op ‘Divi’ paid out to customers). From the late nineteenth century to 1916, anti-co-operative private traders campaigned on narratives of vacant high streets, the death of fair competition, and higher prices for the consumer—all instigated, they alleged, by the co-operative system and its preferential tax position. The politicisation of working-class consumption in the decade of Tariff Reform witnessed the Co-op’s waning influence over Parliament and eventually culminated in the passing of the Excess Profits Duty during World War I, ending the co-operative income tax exemption. The SVA has so far managed to avoid high-profile conflicts; yet, future politicisation may be inevitable, especially if Social Value 2032 becomes mainstream. Without explicitly defined contract awarding guidelines and fully perceived independent decision-making authorities, politicisation will take root and may erode support for the SVA. 

The authors of Social Value 2032 trust that ‘Social value isn’t going anywhere’. With support from both parties and polling consistently on the side of social value mindfulness, the popular question is not whether Social Value 2032 will be realised but when. The Co-op had similar expectant feelings (c.1900). To the extent that the SVA acts as a replacement commercial system, current suppliers of public contracts, both small and medium-sized, will find their market shares slipping from them. Some will adapt and embrace social value, but others may become supporters of a regressive commercial or political movement. SVA 2032 is a necessary component of the UK’s future. A levelled-up economy and a stable environment require it. Nonetheless, nothing can be assured. Energy and funding must be spent on bringing the old economy into the fold— simply leaving it to die, like the approach to small shopkeepers in Edwardian times, could threaten such progress.

Please note: Views expressed are those of the author.
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