Firms must show their ‘social value’

Businesses seeking public sector contracts will have to show how they are tackling issues like the gender pay gap, ethnic minority representation and modern slavery under reforms to be announced by the government.

Suppliers will have to show the “social value” of their operation in the wake of the collapse of engineering giant Carillion in January, Cabinet Office minister David Lidington is due to say in a speech today.

He is expected to announce that the government will toughen up the Social Value Act 2013 to “ensure that contracts are awarded on the basis of more than just value for money”.

The move will provide more opportunities for “mutuals, co-operatives and social enterprises”, he is due to say in an address to the Reform think tank.

Carillion went into liquidation in January, costing thousands of jobs and leaving many public sector projects unfinished. Matthew Fell, CBI’S chief UK policy director, said: “The collapse of Carillion was a warning of the dangers of short-termism in public contracts. It’s therefore important industry and government learn the right lessons, putting their partnerships on a more sustainable footing.”