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A new law which will open up more opportunities for social enterprises to deliver public services came into force yesterday. The Public Services (Social Value) Act requires local authorities and other commissioners of public services to consider how their services can benefit people living in the local community.

Under the new legislation, local authority procurers must now consider how they can improve the social impact of their public service contracts before they start the procurement process. Many leading local authorities are increasingly finding that focusing upon social value alongside other factors drives more efficient and effective services in the long-term.

The Act also requires commissioners to consider consulting on the services to be procured. The government believes that wider consultation will not only develop stronger relationships between service providers and the authorities but will also enable people to say what they want from a particular public service. This will result in the best service for the local community.

Yesterday's new legislation comes as part of a major government drive to make it easier for Social Enterprises to deliver public services. Later today, the government will launch its new Commissioning Academy which will bring together commissioners from across the public sector to transform how public services are delivered.

Minister for Civil Society, Nick Hurd, said:

As taxpayers, we should all want those buying services on our behalf to get as much value as possible. This Act is an important step in encouraging public sector commissioners to think harder about maximising value to communities. It also supports our commitment to make it easier for charities and Social Enterprises to help deliver better public services.

Alongside this, the government's new masterclass programme will give voluntary sector organisations the chance to attend a series of new practical workshops to strengthen their commercial skills, and successfully bid for public service contracts.

Social Enterprise UK Chief Executive Peter Holbrooke said:

The Social Value Act presents a crucial opportunity to ensure that our public services are delivering maximum benefit to our communities. It relies on collective effort to make this the once in a generation opportunity it has the potential to be – Social Enterprise UK is therefore delighted by the enthusiasm expressed by commissioners around the country for the Act and we welcome the Cabinet Office’s policy note as a helpful clarificatory tool on this legislation.

"Alongside this, we encourage commissioners to read our Social Value Guide, which has been written in partnership with legal experts and gives straightforward practical tips on implementing the Act."

As an example of what the Social Value Act might mean in practice, if a local authority wanted to provide a ‘meals on wheels’ service for elderly people, it might first speak to potential users and suppliers along with other interested stakeholders. If the results of the consultation showed that many potential users suffer from loneliness and social isolation, it might be recommended that a service where people are collected and taken to a local community centre for their meals would help combat these problems of loneliness and isolation.

The local NHS trust may also suggest that older people would benefit from contact with health professionals for routine medical services which could take place at the community centre. The local authority might therefore decide to procure a ‘meals on wheels’ service which is based on bringing people to a local community centre, instead of meals to people’s homes.

Sir Stuart Etherington, Chief Executive of the National Council for Voluntary Organisations, said:

This little gem of an Act has the power to radically transform our public services. It gives commissioners the green light to take into account the extra value charities bring. We know charities add something special which can’t always be seen from the figures in a tender document. They do it by putting their values and their service users first, often involving volunteers who have a personal interest and experience of the issues they’re dealing with. They are frequently the most expert organisations in their fields and have the skills and the drive to create genuinely better services.

Notes to editors

1. The main provisions of the Public Services (Social Value) Act 2012 came into force on 31 January 2013. Cabinet Office has produced guidance on the Act for procurers and commissioners which can be found at http://www.cabinetoffice.gov.uk/resource-library/public-procurement-note-public-services-social-value-act-2012

2. The Public Services (Social Value) Act 2012 was introduced as a Private Members Bill by Chris White MP in 2010. It received Royal Assent on 8 March 2012.

3. The masterclasses will be developed in partnership between government and voluntary and private sector organisations. VCSE organisations will be primarily responsible for developing the masterclasses, promoting them successfully, and making sure they are relevant to the needs of the sector audience. Meanwhile, the private sector will provide pro-bono commercial expertise and share its experiences in tendering for large government contracts.

4. The National Council for Voluntary Organisations champions and strengthens the voluntary sector, with over 10,000 members, from the largest charities to the smallest community organisations.

5. Social Enterprise UK is the national body for social enterprise. Social enterprises are businesses that are changing the world. When they profit, society profits. Together with our members we are the voice for social enterprise in the UK. internationally. What unites them is their commitment to changing the world through business.