10 Years on from the Social Value Act – Where are we?

This year marks 10 years since the passing of the Public Services (Social Value) Act in 2012. Temple’s Social Value team discusses its impact, some of its successes and failures, and reflects on what the future holds in a climate increasingly focused on sustainability. 

The origins of the Social Value Act

The Social Value Act is a requirement for public authorities and public bodies to factor in economic, social, and environmental well-being when issuing public services contracts.

Created and written in the aftermath of the 2008 recession and subsequent hardship, elements of Cameron’s Big Society and localism agenda can be seen in this act. Originally, the act was viewed as a mechanism to broaden out the supply chain of procuring bodies to include more small and medium-sized enterprises (SMEs) and voluntary, charity, and social enterprises (VCSEs). It was an attempt to level the playing field for smaller companies, and those with local ties, and afford them better access to contracts. Under the act, commissioners of public services contracts are required, prior to the procurement process, to assess whether the services they are going to buy will secure these benefits – economic, social, and environmental – for their area or stakeholders.

In 2012, this was left relatively vague, resulting in different approaches to what social value outcomes were across procuring bodies. A plethora of industry-led thought pieces, toolkits, and calculators have been produced in the intervening years to define what social value is and how to implement it, and attempts have been made to “measure” social value.

How was the Social Value Act received? Was it effective?

Like any law of this nature, the act was more effective among some businesses and sectors than in others. While the more progressive businesses and authorities had already been seeking to maximise economic, social, and environmental benefits in procurement processes when the act came into being, for those authorities with procurement cultures where silo working was the norm and cost was the principal consideration, the law signalled a real – and sometimes difficult – shift in culture and approach.

But in a survey carried out by the Centre for Local Economic Strategies (CLES) in 2016, 83% of authorities stated the Act added value, for a variety of reasons, including:

• It would enable them to achieve wider corporate priorities through procurement around tackling worklessness
• It would give authority to what they were already doing around economic, social, and environmental factors in procurement
• It would focus minds that procurement was not a one-off decision, but a process that potentially delivers wider benefits

In 2015, the Lord Young Review on the impact and take-up of the Act in its first two years was published. This review suggested a positive view of the Act amongst local authorities where it had actually been implemented. Since these studies, there has been only a limited overarching analysis of the act, but there are numerous case studies and examples of implementation. One leading public sector authority in this regard is the Greater Manchester Combined Authority, which has developed a comprehensive social value policy, network, and checklist to help their supply chain and organisations within the area.

The spread of social value in infrastructure and planning

Temple has been glad to see the emerging recognition of social value in construction, infrastructure, and planning since 2012.

The growing importance of social value to the built environment is evidenced by the range of toolkits, reports, and consultations that have been published by bodies such as the Royal Institute of British Architects, the Institute of Civil Engineers, the Construction Innovation Hub, and the UK Green Building Council over the years, as well as the growth in social value roles and reporting in the industry.

Whilst this represents a supply-side trend, the demand-side too has been growing. This is in part due to changes in legislation and guidance from the government, such as the Construction Playbook and Green Book approaches to measuring wellbeing outcomes. Furthermore, at a local level, social value has been adopted at the local and spatial plan stages. Councils such as Coventry, Salford, and Islington have already been adopting social value into their local plans, requiring developers to produce social value statements, whilst the Liverpool City Region has incorporated the concept into their spatial development strategy.

Furthermore, social value fits into the social and sustainability objectives outlined in the National Planning Policy framework. Whilst social value was not explicitly mentioned in the Planning for the Future Whitepaper (2020), the concept of improving wellbeing clearly chimes with the paper’s stated ambitions, as well as the more recent Levelling Up and Regeneration Bill, even if there is a lack of clarity on the mechanisms for delivery.

Social value in a new era

The concept of social value when introduced to legislation in 2012 was not “new”, and builds on the back of previous concepts such as triple bottom line accounting, social accounting, and corporate social responsibility, perhaps creating confusion over what social value means. The lack of definition has led to positives for social value, allowing creativity and bespoke applications to the concept, but it has also had some perverse effects, including narrow definitions and a focus on measurement, which can sometimes crowd out some of the smaller players the act was meant to empower.

It is important to realise that social value has not been static, and interpretations of the concept reflect changing political and strategic priorities of the decade. In January 2021, the Public Procurement Note 06/20 defined what social value meant to Central Government through its Social Value Model, providing five themes (including COVID-19 recovery) and assorted metrics. This note marked a distinct shift in applying the Social Value Act, moving from being required only to consider social value, to explicitly evaluating social value in tenders. The impact of this is yet to be fully understood, although debate continues over the impact of quantifying well-being outcomes

Most recently, the Procurement Bill 2022, currently making its way through Parliament, has re-focused the lens again on social value. The Bill has been advertised to align with the current political agendas of Levelling Up and other strategies, such as Net Zero Carbon, which has overlapped with social value, as well as suggestions that the bill will again open up opportunities to broaden the supply chain. Yet, there have also been reports of Jacob Reese-Mogg wanting to reduce the minimum 10% requirement for social value, describing it as ‘red-tape’. We are yet to see how this will develop and change the landscape of social value.

A further, crucial aspect to reflect on is how social value interacts with other concepts in the sustainability world. There is no shortage of concepts and strategies to increase sustainability, with Environmental and Social Governance gaining prominence and concepts such as the “circular economy” growing in popularity. It is important to situate social value within these concepts and to recognise that social value’s selling point, going back to first principles, is its focus on wellbeing.

So, what now?

It is all well and good talking about the power of social value to improve the economic, social, and environmental wellbeing of our society, but pin-pointing the necessary steps to put this into practice is not always so easy. Social value, or the wellbeing element, often gets lost in the noise of fitting quantifiable and existing actions into a procurement or reporting box.

It is crucial for our sectors – infrastructure and planning – not only to support the incorporation of social value in the industry but also to help lead the way in making it the norm so that social value becomes truly embedded in the planning, delivery, and operation of projects. This requires fresh thinking about what truly delivers social value – or wellbeing – to the workforce, as well as to the communities in which we work.

Social value practitioners need to harness the expertise of our fellow industry professionals, across climate change, engagement, and digital solutions to name a few, to create evidenced road maps of design that create long-lasting social value, rather than simply score points in a procurement exercise. Additionally, they need to follow up with an evaluation of projects post-implementation to determine if the social value has really been created.

This will, of course, require a behavioural change, from the industry as well as local government, which will not always be the comfortable option, but it is our only option if we are to truly strive to build sustainable futures.

Perhaps now is the time to move away from a compliance culture and instead buy into a culture that tells a positive, credible, social value story.