Councils will have to consider the "social value" of services when commissioning.
Jonathan Stanley, chief executive of the Independent Children’s Homes Association, told CYP Now that the Social Value Act will radically change the way children’s services are delivered.
The act calls on public bodies in England and Wales to commission services from organisations that create “social value” in communities when delivering public service contracts.
This could lead to an increase in public sector services being commissioned out to social enterprises or staff mutuals. There is also potential for private firms or voluntary organisations to win contracts if they prove that they can deliver “social value”.
The law comes into effect today, but Stanley said there is still a lack of clarity over the implications and how local authorities should respond to the legislation. He argued that urgent talks between central and local government are necessary, in order to clarify a way forward.
One potential outcome is that the legislation could result in councils becoming solely commissioners of services rather than providers, Stanley said.
“Potentially this is a whole new world for children’s services,” he said. “It requires a new form of relationship between local authorities and external services. We must not go forward with the future being opaque.
“As with many other aspects of the reforms of children’s services we need to have in-depth discussions about the practicalities of the changes. External providers can provide an essential perspective on the future.”
Meanwhile, the national body for social enterprise is calling on government to strengthen the legislation by making “creating social value” a legal requirement of all public service contracts.
Peter Holbrook, chief executive of Social Enterprise UK, said: “The Social Value Act has the potential to create a more level playing field for social enterprises and charities that are often squeezed out of public services by larger private providers.
“Social value in the DNA of contracts will help banish a culture of commissioning that always defaults to lowest cost and is responsible for the mass degradation of services.
“This law, if strengthened, has the power to improve standards across the board as private companies will also come under pressure to deliver social value to win contracts.”