Emerging approaches for procuring social value: London

London’s intensifying needs, budget constraints and charged public mood are driving toward increasingly defined requirements for Social Value within the procurement process. But time-poor procurement teams are often overwhelmed with options, and rarely have time to share lessons learned.

On 25 April, a Future of London roundtable offered senior, cross-sector practitioners an opportunity to discuss approaches and experiences.

This event kicked off our project on Social Value in Procurement, supported by Lendlease, Countryside Properties, and Trowers & Hamlins. Countryside Properties kindly hosted the roundtable – a Chatham House summary is below.

Commissioning for additional value

The Social Value Act came into force in 2013, requiring public service commissioners to think about how they can also secure wider social, economic and environmental benefits through the procurement process. The term social value refers to:

 “Additional value created in the delivery of a service contract which has a wider community or public benefit. This extends beyond the social value delivered as part of the primary contract activity[1].”

This important distinction between the social value of the primary contract activity and additional social value created through commissioning is opaque, particularly in the arenas of health and social care. In the built environment, defining what social value means, what needs it meets, and how it differs from Section 106 and CIL is key.

Defining social value through procurement

For City of Westminster, social value aspirations are closely linked to their corporate strategy, with outcomes aligned to strategic priorities, including routes into work for the borough’s 10,000 long-term unemployed residents. LB Enfield also refers contractors to its corporate strategy in lieu of a (forthcoming) social value policy.

Alignment with strategic goals can help clarify what the commissioning body is seeking through procurement. From there, the task is assessing whether procurement is a more effective route for those particular outcomes than mechanisms like Section 106 or CIL.

Government developed the National Themes Outcomes and Measurements (TOMs) as part of the drive to improve uptake and provide a resource for commissioning bodies, providing a minimum reporting standard. Social value outcomes are divided into five categories: jobs, growth, social, environment and innovation.

One borough’s approach to defining social value in procurement was to start with this list and check off outcomes already being met through Section 106, CIL and elsewhere, using the outstanding elements to kick off a more in-depth discussion with key stakeholders including commissioning leads and councillors.

Who drives it?

It was noted that the Social Value Act could be seen as an evolution of Corporate Social Responsibility, which is well established in the private sector and includes all financial and non-financial investment in communities.

Private sector participants made it clear they welcome the challenge of ambitious procurement frameworks, with 20% weightings for social value in Manchester and the West Midlands viewed as aspirational. For commercial actors, demonstrating social value is increasingly important in gaining a competitive edge; the more forward-thinking anticipate that social value outcomes are a given and set aside funds accordingly.

However, the Act puts the onus on public authorities to consider what they want from providers, and delegates were clear that drive from the client side/commissioning body is needed. This makes sense: boroughs and housing associations have a remit to understand their local context and are privy to knowledge and data that would be unknown to a contractor coming in.

In many authorities, the problem of silos is slowing progress. Whether procurement or service delivery teams are pushing for increased social value, the message can get lost across departments.

In some cases, push-back against increasing requirements is internal, driven by a fear of alienating bidders. Such fears need addressing. It’s time to recognise: “You are the client, you are spending the money, you can literally dictate what you want!”

A Social Value (P)act for London?

In a receptive policy and market context, and with many similarities across the public sector, an opportunity is clear:

“If we are all asking for the same things then there’s an opportunity to be a really strong client in what we’re demanding and how aspirational we’re being, and allowing the industry to have a collective response to that”.

Shared aspirations can be articulated by developing local or sub-regional pacts.

While social value requirements must be geared to local need and grounded in a thorough understanding of place, establishing common headline KPIs across or within London would:

  • Make it clear who’s doing well against shared benchmarks
  • Foster better awareness of best practice
  • Achieve efficiencies savings through scale
  • Send a clear message to the sector

Measuring outcomes

As the adage goes, “what gets measured gets done” and measurement is key to driving better social value outcomes, but the process is in its infancy.

The development of national standards (TOMs) and the creation of the Social Value Portal have been designed to support organisations at the start of their journey, but the extent of what can be measured is as vast as the conception of what social value is. Some of the most valuable outcomes can only be understood qualitatively and it is acknowledged that the drive for measurement risks more nuanced outcomes being overlooked.

It’s not just about tracking outcomes but implementing a responsive, “smart” approach that will assess the impact of interventions as they roll out. All of this requires capacity, and while the public sector is stretched, third-sector and SME partners further down the supply chain face even more substantial challenges.

Where’s it working well?

Countryside and L&Q are working with Social Life to understand what social value means for residents at Acton Gardens.

At South Acton Estate, Countryside and L&Q are working closely with Social Life to understand the impact of regeneration on local people. A survey of South Acton Estate (soon to be Acton Gardens) and the surrounding streets is carried out every two to three years to monitor the social impact of changes associated with regeneration. A write-up of Future of London’s recent visit to the estate is available here.

Ahead of procurement for the Cambridge Estate, RB Kingston compiled a report drawing on census data and interviews with residents. They then sense-checked findings through door-to-door surveys before finalising bid requirements, which incorporated residents’ ambitions.

The GLA’s Good Growth Fund has awarded nearly £30m to projects which will boost local economies, improve the environment and bring people together in some of London’s most deprived communities.

In LB Haringey, political change has brought a new focus on “community wealth-building”, an idea welcomed by the regeneration team, and becoming understood across the borough.

  • In Tottenham, GLA funding is being used to provide affordable finance to local businesses in return for measurable social value outcomes. The project has been so successful targets were increased.
  • The Good Growth Fund is also being used to support placemaking through the wider Connecting Wood Green Design teams were procured through GLA’s Architecture Design and Urbanism Panel (ADUP) and asked to demonstrate their approach to working closely with local people.

UKGBC’s report on Social Value in New Developments spotlights best practice nationally, including:

  • Work in Hounslow and Manchester to drive up standards in construction tenders by setting the minimum social value weighting at 20%.
  • Planning for social value: bringing expectations in early and supporting these through a cohesive suite of policies.

Working smart

LB Sutton is moving towards an integrated approach to social value in procurement. Work is underway to map services and departments involved, find vacant sites and forge links between planning, regeneration, public health and adult social care.

The point was made that private-sector partners have investment teams loaded with expertise that could make capital go further. Sharing this capacity with public-sector partners as part of contractual agreements could help ensure money is not just spent but grows, delivering social value in the long term.

Top tips

  • In an approach Westminster are seeking to replicate, City of London has a Social Value Panel, which allows residents and businesses to review key aspects of tenders about to go out.
  • Setting selection criteria ahead of procurement can ensure bidders coming through have an offer that aligns with public sector goals. Criteria can be set by teams across the organisation and populated ahead of review, removing the need for specialist knowledge on the part of the reviewing commissioner.
  • Where developers are unable to deliver the desired social value outcomes, outcomes can be costed and converted into a capital fund.
  • Not all aspects of social value cost money, some just require a change of mindset. The example of good hiring practice was stated: recruitment can deliver on social value by giving the same jobs to different people.
  • LB Tower Hamlets held a ‘social value exchange’ asking third-sector partners what they want to see and building findings into their social value approach.
  • LB Newham are working to enhance social value through co-production in regeneration, working with community group People’s Empowerment Alliance for Custom House (PEACH). The selection panel for the procurement of the design team included community representatives who are paid London Living Wage and provided with structured support and training, enabling full engagement.

Participants

Bola Abisogun, Founder, Urbanis
Anna Allan, Senior Regeneration Manager, L&Q
Nicola Bacon, Founding Director, Social Life
Dave Baptiste, Head of Housing Development, LB Ealing
Angela Beanlands, Project Manager, LB Enfield
Vicky Clark, Divisional Director, Growth and Economic Development, LB Tower Hamlets
Sophia Cox, Sustainability advisor, UKGBC
Angela Crowther, Associate Director, Arup
Jim Dodd, Managing Director Land & New Business, Partnerships South, Countryside Properties
Andy Fulterer, Head of Strategic Procurement, Lendlease
Pippa Gueterbock, Regeneration Manager, LB Haringey
Rosie Holcroft, Senior Manager – Regeneration, LLDC
Marcus Hulme, Social Value Director, Places for People
Snowia Hussain, Responsible Procurement Lead, City of Westminster
Mark Jones, Director of Procurement, One Housing
Kashif Mirza, Senior Economic Development & Partnerships, RB Kingston
Fozia Parveen Sheikh, Senior Social Value Manager, Countryside Properties
Mandar Puranik, Area Renewal and Regeneration Programme Manager, LB Sutton
Becky Wardle, Partner, Trowers & Hamlins
Rae Whittow-Williams, Senior Project Officer, GLA
Mike Woolliscroft, Managing Director, Countryside Properties

 

For more info on Future of London’s Social Value in Procurement project please visit our webpage.

[1] https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/403748/Social_Value_Act_review_report_150212.pdf