The idea of social value has grown tremendously since the introduction of the Public Services (Social Value) Act (2012), which brought in the requirement for public buyers to consider how they could secure social, economic and environmental benefits as part of their procurements.
However, it’s recent years that have been transformative for ‘social value’, taking it from somewhat of a tick box exercise for many, to a crucial practice. Now, the government has introduced new measures for social value calculation – which came into force this month.
What’s changed and why is it important?
In September last year, the government announced that it would be introducing a new public procurement model that will take greater account of the additional social value created by contractors who are bidding for work. Essentially, central government will now have to go further and ensure that all major procurements explicitly evaluate social value where appropriate – not just consider it.
Social value is a term that is everywhere in the construction industry and is described as ‘being at the heart’ of many developments and practices. This change in government legislation is important because it is driving towards a greater understanding of ‘true’ or ‘real’ social value and delivering in a way that makes sense to the local community – and it will pave the way for change across the whole industry.
We can certainly expect that measuring local social impact will become a mainstream priority across all public sector procurement. Local authorities and other public sector organisations will follow suit and have the same requirements before long, so the construction industry must respond and adapt now before falling behind – those that don’t will surely miss out on work and tenders in the future.
The new measures mean that central government must go further with social value, and all major procurements must explicitly evaluate it where appropriate.
A localised approach will drive real-life impact
The government’s new approach will also mean more opportunities will be available for SMEs and social enterprises to win government contracts by demonstrating the full extent of the value they would generate.
Sarah Coughlan, the recently appointed COO of Social Profit Calculator – the UK software platform that helps businesses measure the social impact they create – spoke with RICS Construction Journal about how social value cannot be tackled with a ‘one size fits all’ approach. What may benefit one community, may not be a huge priority for another, so we have to consider geographical and community-based differences – and this is where SMEs can really make a difference.
These companies will be the lynchpin in delivering localised social value, which has a real-life impact on the ground. Their more location-focussed activity puts them in the perfect position to help larger organisations really understand the impact of the works they are carrying out – the key to effective delivery being the magic supply chain collaboration that the industry is always talking about.
SMEs will become central to delivering truly localised social value, giving larger organisations the all-important understanding of the communities they serve.
Post-COVID recovery and the rise of frameworks
We are already seeing more companies requiring reports from the supply chain on their social value activities to ensure that the impact of an entire project, end-to-end, can be reported on accurately.
Local authorities and public sector organisations need to account for every single penny they spend on development endeavours – even more so in light of the COVID-19 pandemic when budgets are greatly constrained during the recovery phase. Many will opt for the safety and security provided when procuring works via a framework agreement, and many in the industry expect to see the use of frameworks dramatically increase.
And in turn, we expect to see more competition in the market as companies vie for the coveted places as accredited framework suppliers. Demonstrating social value is a pass/fail exercise for some framework providers, so measuring the impact of projects will become important to many, not just from a social and community aspect, but from a business perspective too.
The new measures are designed to – in the government’s own words – promote new jobs and skills, encourage economic growth and prosperity, tackle climate change and level up the UK. The government made it clear throughout 2020 that it saw the construction industry playing a huge part in the UK’s economic recovery with the Prime Minister’s Build, Build, Build initiative being just one example.
2020 saw businesses and industries – including construction – cut swathes of jobs across the board. We also collectively learned the importance of access to community spaces, and the scale of the climate emergency we are facing as a planet. These are the three key areas social value examines – social, economic and environment – so there is no doubt from anyone working in the industry that it will become a central aspect to best practice in the built environment in 2021 and beyond.