Richard Dickins, MD of Social Value Business, discusses the Procurement Act 2023 and asks if commissioning and procurement teams are ready for the legislation.
With under a week to go until the biggest reform to procurement in years comes into force, local authorities across the country are working to ensure their commissioning and procurement teams are ready. There are significant changes ahead, with the main focus being on demonstrating and measuring social value in government contract bids at both local and national levels. However, there is still concern that many local authorities are unclear on what is expected of them, leaving them vulnerable to penalties.
The Procurement Act 2023, coming into force on 24th February, introduces new rules for local authorities when awarding business contracts. The biggest change is that all contractors bidding for government work will now have to clearly demonstrate their social value contributions. If they fail to do so, regardless of offering the best price, they will not be awarded the contract. Social value considers benefits beyond cost or profit, such as well-being, skills and education, localism, and environmental impact. Contractors must provide measurable evidence of these contributions in their bids, while local authorities must conduct thorough due diligence in verifying these claims before awarding contracts. Those who fail to do so could face serious consequences.
There is also concern that the Act’s well-intentioned goal to generate maximum benefit for communities could be undermined unless procurement teams take decisive action. Local authorities must fully understand the social value implications of the new legislation and actively engage with suppliers. Research undertaken in 2024 by Social Enterprise UK (SEUK) and Social Value 32 estimated the cost of missed opportunities in social value at £56bn. SEUK’s report highlighted widespread challenges within local authorities in terms of social value policy, leadership, measurement, and implementation. Without action, this ‘value drain’ will persist, negatively affecting local economies and employment.
Each local authority must establish a tailored approach to social value, ensuring it aligns with local priorities and community needs. Local authorities also have a responsibility to improve supplier engagement and support SMEs. The new parts of the Act provide an opportunity to diversify supply chains by enabling smaller businesses and social enterprises to compete for public contracts. It is, therefore, imperative that councils should proactively engage with their local SMEs to offer guidance on bidding processes and consider breaking down large contracts into smaller, more accessible lots. Doing so will help to boost local economies, create jobs, and foster innovation. Some councils are already doing this and are likely to see an easier process when demonstrating their accountability.
One way businesses can demonstrate their commitment to social value is through independent accreditation, such as the Social Value Quality Mark (SVQM). Standards like this assure that businesses have established governance, plans, and processes for measuring their social impact. Procurement teams can use social value accreditation as independent verification when assessing tenders and tracking a supplier’s progress on social value commitments.
To comply with the Act’s requirements, councils must ensure their procurement teams are well-trained and equipped with digital tools to track spending, measure impact, and share data transparently. The government’s official learning and development programme provides a strong foundation, but local authorities must also take the initiative to tailor training to their specific regional needs. This is, unfortunately, not a one-size-fits-all situation; we know that social value needs can vary significantly between regions. What is a priority in one area may not be in another. While the Procurement Act sets national guidelines, its application at a local level requires interpretation and flexibility. Councils should collaborate, share best practices, and align their approaches where possible to strengthen outcomes.
The Procurement Act 2023 is not merely a compliance exercise; it represents a transformative opportunity for local government to reimagine how public spending can drive meaningful social change. By embedding social value at the heart of procurement, investing in transparency, and fostering supplier diversity, councils can lead the way in ethical and effective public service delivery. However, achieving this requires proactive leadership, investment in training, and a commitment to continuous improvement. Local authorities that embrace these changes will not only ensure compliance with the Act but also position themselves as pioneers in delivering sustainable and socially responsible procurement. As councils adapt to this new era of procurement, the aim is that they maximise the opportunities presented by the Act to create lasting positive impact for communities across the UK.
