‘Worst law you’ve never heard of’ kills competition, freezes SMEs out of government contracts & costs UK taxpayers uncounted billions each year
London, 7 November 2023 — A new campaign is calling for the repeal of an obscure law that costs the taxpayer billions of pounds each year, buries businesses under an avalanche of red tape, and prevents small and medium-sized enterprises (SMEs) from bidding for government contracts.
The Campaign for Fair Procurement (CFP) was formed in response to a recent report by the Adam Smith Institute which revealed how the Public Services (Social Value) Act 2012 forces businesses, regardless of size or circumstance, to complete a 30-page checklist of criteria for evaluating how their bids would deliver ‘social value’. The result is a ‘blizzard of bureaucracy’ which puts SMEs at a serious disadvantage because they lack the expertise and resources to deal with the huge volume of box-ticking mandated under the Act.
One UK national newspaper estimated the Social Value Act has cost the UK taxpayer £50 billion in the decade since it became law in January 2013. The CFP however warns that the true cost is far higher, since it is impossible to calculate the damage to the UK economy of stifling competition by excluding nimbler and more innovative SMEs from government contracts.
“If you set out to waste as much public money as possible, you’d be hard pressed to come up with a better mechanism than the Social Value Act,” said Robert Jessel, Co-founder and Director of the Campaign for Fair Procurement. “The Act incentivises public sector purchasers and suppliers to add unnecessary expense and complexity to government procurement, which at £379 billion accounts for a third of public expenditure. Not only does this embed inefficiency and drive up costs; it creates a blizzard of bureaucracy and results in colossal, incalculable sums being spent on initiatives of dubious or unproven value.
“The Act and the accompanying Social Value Model are riddled with error and omission,” Jessel continued. “Nowhere is ‘social value’ defined, and there is no agency responsible for governing the regulations or assessing the success of ‘socially valuable’ initiatives, making the whole system entirely unaccountable. Yet our research has found that many MPs don’t even know the Act exists — including some who voted on it in 2012. It’s the worst law you’ve never heard of, which is why we are building a coalition to expose the Act’s failings and put pressure on parliament to repeal it.”
Maxwell Marlow, Director of Research at the Adam Smith Institute, said: “The Campaign for Fair Procurement is on a critical mission to deliver the public services that British taxpayers expect and deserve. We’re excited to partner with them to review the Social Value Act and changes in legislation which have made it harder for SMEs to contribute to public services.”