The idea of "public value" has emerged as a key factor for government agencies, local authorities, and public sector buyers in evaluating the objectives and effectiveness of their purchasing. In contrast to conventional private-sector definitions of value, which emphasise profitability or return on investment, public value encompasses a broader range of objectives. While it includes economic efficiency, it also integrates social results, trust, legitimacy, community satisfaction, and longer-term effects.
From Value for Money to Broader Outcomes
Public value encompasses more than just the financial cost of goods or services, which is typically assessed through the lens of value for money. It also considers the overall benefits that public spending and actions bring to society. The concept was popularised by scholars like Mark H. Moore, who likened public value to shareholder value in the private sector. Private sector companies are evaluated based on their ability to provide returns to shareholders, but public organisations are assessed on their capacity to generate value for the community.
This perspective has increasingly shaped government performance evaluation and procurement, policy-making, and service delivery approaches in the UK. The UK public sector has historically operated under the value for money (VFM) principle, especially in procurement processes. VFM is typically interpreted as achieving the optimal balance of quality and cost to fulfil specific needs. It has been fundamental to audit and accountability practices, particularly influenced by the National Audit Office and the Treasury’s Green Book, which outlines the framework for developing business cases.
However, while this approach is significant, it has its drawbacks. It often emphasises immediate financial results and may overlook broader societal and long-term advantages that are more challenging to measure. Acknowledging these limitations, the concept of public value offers a wider perspective. It accommodates indirect benefits and social improvements that may not be evident in short-term financial assessments.
For example, a procurement choice that incurs higher initial costs but leads to improved health outcomes, environmental sustainability, or enhanced community cohesion may provide greater public value over time than a less expensive option. This evolution signifies a more profound recognition of the government's role, which extends beyond mere efficient spending to delivering substantial and lasting benefits to the public.
Measuring the Intangible in Public Value and Policy Design
A significant challenge in realising the concept of public value lies in its measurement. While quantifying cost savings or output levels is straightforward, public value encompasses various dimensions that traditional metrics fail to capture. These dimensions may include enhanced trust in public institutions, greater social inclusion, improved mental health outcomes, and decreased crime rates, factors that significantly affect quality of life and governmental legitimacy but are challenging to quantify numerically.
The UK has adopted more advanced evaluation methods integrating quantitative and qualitative data to tackle this issue. Approaches such as social return on investment, a cost-benefit analysis that includes non-monetised benefits, and outcomes-based commissioning exemplify efforts to encompass the full range of value derived from public expenditure. The Public Value Framework, created by Sir Michael Barber and embraced by HM Treasury, aims to assist local authorities in evaluating performance more comprehensively. It encourages public entities to consider the costs and outputs of services and the quality of outcomes, user satisfaction, and overall legitimacy.
Moreover, public value plays a crucial role in shaping the design and implementation of policies. It serves as a framework for assessing whether a policy benefits society significantly, extending beyond mere efficiency or compliance. For example, when formulating education policy, public value would promote a focus not just on exam scores or graduation rates, but also on equity, access, student well-being, and long-term opportunities. In the healthcare sector, public value would encompass treatment expenses and waiting times, preventive care, mental health services, and the overall patient experience.
This comprehensive strategy is reflected in policies incorporating social and environmental factors into decision-making. The Social Value Act of 2012 represented a significant shift, mandating that public authorities evaluate how the services they procure can enhance their communities' economic, social, and environmental health. This legal requirement has prompted public entities to expand their focus beyond mere contractual obligations, encouraging them to consider how their purchasing decisions can yield broader societal advantages, including job creation, lower carbon emissions, and promoting equality.
Accountability, Innovation and Long-Term Thinking
Public value is intricately linked to legitimacy and democratic accountability. In a representative democracy such as the UK, it is essential for governments to not only function effectively but also to be perceived as acting in the public's best interest. The Public demands transparency, fairness, and responsiveness from their public institutions. Consequently, a significant portion of the value generated by public organisations is determined by their conduct, including their inclusivity, willingness to listen to the public, and adherence to ethical standards.
This aspect of public value underscores the critical role of public engagement and trust. Public value is compromised if services are efficient yet perceived as unfair, inaccessible, or unresponsive. For instance, a local council might provide waste collection services at a low cost. However, the perceived public value diminishes if residents feel excluded from decision-making or believe the system favours specific neighbourhoods. This insight emphasises the necessity for participatory governance, transparency, and responsiveness as fundamental to public value creation.
A vital element of public value is the focus on innovation and long-term impact. Conventional public management strategies prioritising short-term goals and budget cycles often fail to promote innovation or embrace risk-taking. In contrast, public value thinking advocates for a more progressive approach. It acknowledges that addressing complex social issues, such as homelessness, climate change, or health disparities, necessitates long-term investment, collaboration across sectors, and a willingness to experiment. While these initiatives may not provide immediate benefits, they can generate significant public value over time.
This perspective has led to innovative public service delivery models prioritising prevention over reaction. For instance, while early intervention initiatives in health or social care may require higher initial funding, they can alleviate the burden on emergency services and enhance long-term outcomes. Likewise, although investing in green infrastructure may not yield immediate financial benefits, it fosters sustainability and resilience. The concept of public value legitimises these approaches by presenting them as essential and justified investments in the common good.
Challenges and Criticisms of Defining Public Value
The public value framework, while attractive, faces several challenges. A prevalent critique is that the concept lacks clarity and can be overly subjective. Its broad range of outcomes and viewpoints makes it challenging to apply consistently or to use as a foundation for accountability. Additionally, there is a concern that public value may be politicised, potentially serving as a rhetorical device to justify contentious decisions or obscure inefficiencies.
In response to these issues, the UK public sector has aimed to establish clearer standards and methodologies for assessing public value. Instruments like the Green Book (guidance issued by HM Treasury on appraising policies, programmes, and projects) now consider broader social impacts, and organisations such as the Office for National Statistics are working on quantifying wellbeing and social capital. However, conflicts persist between differing values, such as efficiency versus equity, speed versus inclusion, and central control versus local responsiveness.
Balancing these priorities necessitates careful judgment, political leadership, and continuous public discourse. In the UK, public value signifies a departure from a limited, transactional mindset in the public sector towards a more comprehensive and nuanced perspective on the role of government and its operations. Although value for money remains a key consideration, it is no longer viewed as adequate on its own. The objective is to reduce spending and invest wisely, fostering genuine and enduring societal benefits.
This comprehensive perspective encompasses indirect and non-financial results, ranging from enhanced well-being to more cohesive communities and increased trust in institutions. It necessitates innovative measurement methods, more inclusive governance practices, and a long-term vision for public service. Although the concept can be intricate and occasionally debated, it presents an essential framework for comprehending how public institutions can secure their role in society, not solely through efficiency but also through legitimacy, responsiveness, and meaningful impact.
Thus, public value transcends mere managerial terminology; it embodies a democratic principle. It captures the public's shifting expectations. It acknowledges the importance of public services in addressing the needs of people and communities rather than just focusing on markets or metrics. As the UK faces ongoing social, economic, and environmental challenges, public value is a foundational principle for fostering a more equitable, resilient, and accountable public sector.
Defining Social Value
In the UK, social value pertains to the broader non-financial consequences of decisions, especially those associated with public sector purchasing, business practices, and community enhancement. It emphasises the contributions of various activities to the enduring welfare of individuals, communities, and society. While it includes economic advantages, social value extends beyond profit to encompass environmental sustainability, health, education, equality, and community resilience. This concept has progressed from an ambiguous ethical goal to a quantifiable and increasingly enforceable element in public and private sector decision-making.
A significant milestone in establishing social value was the enactment of the Public Services (Social Value) Act 2012. This legislation mandates that public authorities in England and Wales consider how the services they commission and procure can enhance economic, social, and environmental well-being. This shift in procurement policy encourages public entities to look beyond mere cost-effectiveness and consider the long-term social implications of their purchasing. Consequently, organisations vying for public contracts must illustrate how they will provide value that transcends the immediate service offered.
However, the definition of social value is not universally applicable; it varies based on local circumstances, the stakeholders involved, and the specific nature of the project. For example, a local authority in an economically disadvantaged urban area may define social value regarding job creation and youth engagement. At the same time, a rural council might focus on environmental conservation and transportation accessibility. This adaptable nature of social value presents opportunities and challenges: it enables tailored local solutions but can also result in varying standards and complications in assessment.
Measuring Social Value
Measurement continues to be a highly debated element of social value. In contrast to conventional financial metrics, social value encompasses intangible results such as enhanced mental well-being, fortified community connections, and diminished feelings of isolation. Various frameworks have been developed to assist in quantifying these outcomes, including the Social Return on Investment model and the National TOMs (Themes, Outcomes, Measures) Framework created by the Social Value Portal.
These instruments aim to assign monetary values to social benefits, allowing organisations to evaluate and compare results across different projects and sectors. However, some critics contend that this approach may oversimplify intricate social challenges or prioritise outcomes that are easier to measure. Integrating social value into procurement and corporate responsibility strategies is on the rise. For businesses in the UK, particularly those vying for public contracts, demonstrating a strong commitment to social value has become essential for maintaining a competitive edge.
This transition has catalysed innovation and encouraged partnerships with voluntary and community organisations, particularly in skills enhancement, carbon footprint reduction, and social inclusion. An example might include suppliers that offer apprenticeships to the local community or adopt sustainable materials as part of their commitment to social responsibility and strategic initiatives that align with a wider social value framework. In 2021, the UK government expanded the Social Value Act by implementing the Social Value Model, a framework designed to assist public sector buyers in determining which inquiries to make to distinguish suppliers based on their societal impact.
This model establishes standardised focus areas, including combating climate change, aiding COVID-19 recovery, and addressing economic inequality. It offers a more structured approach for public entities to evaluate proposals and encourages uniformity in how social value is incorporated into procurement processes. While the model does not eliminate the need for local interpretation, it provides a more robust framework for comparison and accountability in assessing social value initiatives.
Despite the progress made, discussions persist regarding the boundaries of social value. Critics caution that without authentic engagement and a focus on long-term outcomes, it may devolve into a mere exercise in compliance. Additionally, there are concerns about 'social washing,' where organisations make inflated claims about their impact without delivering substantial results. In response to these issues, many stakeholders advocate for enhanced regulations, improved data sharing, and more thorough monitoring of results. The public, private, and third sectors must collaborate transparently to ensure that social value initiatives align with community needs.
The concept of social value in the UK signifies an increasing awareness that the effectiveness of services and projects should not be evaluated solely on their financial cost. It emphasises assessing whether initiatives genuinely enhance lives and fortify communities. As challenges such as inequality, climate change, and social disintegration persist, the demand for integrating social value into core decision-making processes is expected to intensify. The clarity with which social value is defined, measured, and implemented will be pivotal in determining whether it evolves into a transformative influence or becomes another fleeting policy trend.
The Difference Between Public and Social Value
The notions of public value and social value are interconnected yet distinct. Both concepts focus on outcomes that benefit society, but they arise from different frameworks, fulfil differing roles, and are evaluated through various methods. Recognising these distinctions is crucial for policymakers, public service providers, and organisations functioning in both the public and third sectors. Public value pertains to the worth generated by government and public institutions through their actions, policies, and services. It includes the objectives that the public sector seeks to accomplish for the public, such as safety, health, education, equity, and democratic accountability.
The term gained traction in the UK thanks to Mark H. Moore's contributions and has since influenced public management theory and practice. Public value emphasises the legitimacy and backing of government initiatives, the effectiveness of service delivery, and the alignment of public services with the public's expectations. It is a comprehensive framework for evaluating how public organisations contribute to the common good, considering quantifiable outputs, trust, fairness, and community engagement.
Conversely, social value in the UK is defined within a more specific legal and policy framework. It was established through the Public Services (Social Value) Act 2012, which mandates that public sector organisations and buyers assess how the services they procure can enhance their local communities' economic, social, and environmental well-being. Social value is often linked to the outcomes of third-sector organisations, social enterprises, and private sector companies executing public contracts.
Social value is frequently assessed through instruments such as the Social Return on Investment and is associated with procurement strategies, community benefit clauses, and corporate social responsibility efforts. It highlights the additional advantages that extend beyond the main objectives of a service or contract, including the creation of local jobs, the development of skills, community involvement, and the promotion of environmental sustainability.
The Contexts of Public and Social Value
The fundamental distinction between the two concepts lies in their origins and scope. Public value is a more expansive and abstract idea, deeply rooted in public administration and political theory. It encompasses the overall contribution of public services to society, including intangible aspects such as public trust and civic engagement. This concept focuses on how public institutions validate their existence and actions to the public they serve. In contrast, social value is more practical and tied to specific policy tools. It emphasises the additional benefits of commissioning and contracting, often within a competitive market context.
Another notable difference is in their evaluation methods. Public value is typically assessed using qualitative and comprehensive approaches, such as public surveys, democratic feedback, and long-term policy impacts. It prioritises legitimacy and public satisfaction over financial metrics. Conversely, social value is measured through quantifiable indicators that illustrate the effect of investment. This approach often employs frameworks that assign monetary values to non-financial outcomes, making it easier to compare and justify decisions in procurement.
Despite their differences, the two concepts are interconnected. Initiatives aimed at social value can enhance public value when they align with broader societal objectives and bolster the legitimacy of public services. For instance, a local authority that contracts with social enterprises provides services and promotes inclusive employment, community cohesion, and environmental sustainability, thereby enhancing public value.
However, focusing exclusively on social value without considering the broader implications of public value may lead to fragmented services and weaken democratic accountability. In the UK context, public and social values play crucial roles in developing an effective, fair, and responsive public sector. Understanding the differences between these concepts aids in defining roles and responsibilities, prevents conceptual misunderstandings, and ensures that procurement practices and public management strategies align to benefit the public good.
Additional articles can be found at Supply Chain Management Made Easy. This site looks at supply chain management issues to assist organisations and people in increasing the quality, efficiency, and effectiveness of their product and service supply to the customers' delight. ©️ Supply Chain Management Made Easy. All rights reserved.
