London’s intensifying needs, budget constraints and charged public mood are driving increasingly defined requirements for social value within the procurement process. Seven years on from the Social Value Act, there’s significant variance in the approaches to and strength of uptake, with authorities in the Midlands and the North leading the charge for using the Act to maximum effect.
On Monday 7 October, Future of London brought together delegates from public-, private- and third-sector organisations for a half-day conference that showcased approaches to establishing policies and best practice across departments and throughout supply chains, to deliver demonstrable, ongoing social value for London and Londoners.
Back to the Act
The Public Services (Social Value) Act is a tool designed to empower public organisations to get more value for money. It requires commissioning teams to think about how they can secure wider social, economic and environmental benefits from contracts, in addition to the core service commissioned. Research from Social Enterprise UK in 2017 found that social value was already shaping £25bn worth of public-sector spend and for Chris White, author of the Act and conference keynote, this is a measure of success. But with £268bn spent each year, there’s potential to go much further.
While austerity encouraged many public bodies to look for the ‘best lowest priced’ larger providers, the tide is turning post-Carillion. White emphasised the importance of both long-term thinking and co-producing strategies with end-users to ensure value is gained where most needed.
The Act is currently undergoing reform, strengthening the commitments to awarding contracts based on social value, rather than just value for money.
Defining social value
All practitioners have an idea of what social value means, but definitions and approaches vary. Social value can sit under its own suite of policies, linking into corporate social responsibility or sustainability agendas. Some organisations are comfortable with the term ‘social value’; others use ‘community investment’ or ‘community benefit’. In all cases, social value can be understood as positive social impact which is sought, tracked, measured and monetised.
While the Act avoided a prescriptive definition of social value, ensuring it could be applied in a way that makes sense for local context, there is a case for a tighter definition – not least because enforceable, legal clauses need clear terms.
Shared definitions can also help communication between partners, particularly large contractors working across regions. Birmingham’s Business Charter for Social Responsibility sets out guiding themes, providing business, third sector and public partners with a common framework.
Jackie Fearon, Director of Resident Services at Gateway Housing, noted that it’s important to retain some flexibility, allowing outcomes to be shaped by the people they seek to serve. Community priorities shouldn’t “get lost trying to fit into boxes”.
Asking for more
Future of London’s first social value roundtable found that the time is ripe to ask for more from contractors. Authorities in the Midlands and the North are leading the way, affording social value outcomes up to 30% weighting in tenders – and some have banded together for even greater effect.
For example, six local authorities in the Midlands have created the Scape Group. Formed in 2006, it offers fully managed procurement frameworks for all UK public-sector bodies. In all contracts, social value is given a 20% weighting and all frameworks run for four years – which allows time to review and adjust outcomes where needed, in line with changing local needs.
Alison Ramsey, Social Value and Performance Manager at Scape Group, pointed out that there’s little point asking for more unless what is offered is gained. With monitoring in place, penalties can be set for failure to deliver. In Scape’s frameworks, contractors are expected to prove they’ve met targets, which are reviewed by Scape’s performance team. One delegate suggested that a sliding scale of financial penalties should be established from the start, with the “top slice” of payment held back when KPIs are not realised.
For more from Alison Ramsey on this topic and FoL’s conference, please see her recent blog post on Scape’s website.
When to ask
Guy Battle, CEO of the Social Value Portal, suggested that negotiations are a key time to ask for more – but, ideally, social value should feature across all departments and decisions.
In London, S106 is a well-used but imperfect mechanism, and can be a site of conflict. One delegate questioned the “barter system” on which S106 hinges, instead proposing taxation at a percentage of the construction cost as a simple, flexible and transferable way of capturing contributions. Social, economic and environmental contributions aligning with social value can be sought through S106 and CIL, but once these are agreed and the budgets redlined, the conversation moves from asking for more to competing for left over resources. Once money has been “drained” through these processes, asking for social value through tenders can be a fruitless process.
Rajvinder Kaur, Employment Skills & Development Officer at Southern Housing observed that while infrastructure delivered through CIL is needed, tacking social value on after these discussions risks leaving communities behind. Best practice is to consider what social value is needed in conjunction with infrastructure at the earliest stage.
Leading the way, Liverpool Combined Authority is working with RealWorth to evaluate the social value of every policy within its Spatial Development Strategy. Coventry City Council uses a dual condition requiring developers to present a Social Value Action Plan to the council ahead of occupation.
Dr Kelly Watson, Senior Consultant at Hatch Regeneris, advocated for these more holistic approaches, citing the good that social value can do across projects, from smart cities to green infrastructure, when integrated across all stages.
Embedding social value
LB Islington’s Fairness Commission is central to the borough’s understanding of social value. For LB Croydon, social value is “in the DNA” of the local political context (see FoL’s blog from 2015), and is now being translated into outcomes through the borough’s Social Value Toolkit and policy.
To embed social value across departments, LB Islington created opportunities for Heads of Service in the borough to learn from colleagues leading on Greater Manchester Combined Authority’s inspirational social value programme. LB Croydon stresses the importance of stories over case studies, focusing on the outcomes and lived experience of beneficiaries. Both acknowledge that embedding social value is harder for SMEs and believe the council has a role to play in supporting their aspirations.
Places for People has been pleasantly surprised by the willingness of contractors to commit capital and build partnerships with local charities. Embedding social value across operations requires policy, but also vision and confidence – having a list of ‘asks’ can’t hurt.
Local versus social
The social value outcomes sought by local authorities, while mostly similar, are tied to highly specific local needs and demographics; councillors are elected on the basis of a hyper-local offer. This can produce a narrow focus, which can be problematic for larger contractors who may not have the capacity to deliver social value in the immediate area.
For housing associations with a large geographic spread, sharing and distributing social value outcomes to where they’re most needed is a process of matching outcomes with need. For local authorities, generating social value outside of borough boundaries is unlikely to win votes, but proportionality throughout the supply chain could, arguably, do the most social good. A collaborative approach to social value could deliver better outcomes.
Pan-London social value
Analysing community manifestos, inclusive growth and economic wellbeing strategies across boroughs, Rob Wolfe, Director of CHY, observes that the headlines remain the same:
“A healthier and happier community with access to good, sustainable employment; meaningful and relevant education and training to meet the requirements of local businesses; and support to start and develop enterprises and secure inward investment.”
A pan-London approach to social value, founded in shared aspirations, would increase accountability and efficiency and allow learning to be shared. It could also set common benchmarks and make public-sector bodies a stronger client, collectively asking for more.
The expertise and practice are already in place to make this happen, what’s needed is convening. Local authorities with the appetite to make better use of social value for their communities must collaborate to drive the process forward. There is a key role here for the GLA and public-sector bodies.
For more from Rob Wolfe on FoL’s conference and why we need a pan-London approach to social value, please see his recent blog post on CHY’s website.
Thank you to the panelists, speakers and chairs who contributed their expertise and experience:
Julien Allen, Partner, Real Estate, Trowers & Hamlins
Guy Battle, CEO, Social Value Portal
Simon Bishop, Principal Economic Development Officer, LB Islington
Fiona Brenner, Area Manager, Groundwork London
Jackie Fearon, Director of Resident Services, Gateway Housing
Liz Holford, Lead Consultant, Action Sustainability/Supply Chain Sustainability School
Stephen Hopkins, Interim Head of Commissioning and Procurement, LB Croydon
Marcus Hulme, Social Value Director, Places for People
Snowia Hussain, Strategic Contract and Responsible Procurement Manager, LB Camden
Rajvinder Kaur, Employment Skills & Development Officer, Southern Housing
Chris Paddock, Director, Hatch Regeneris
Pritesh Parmar, Senior Development Manager, Scape Group
Alison Ramsey, Social Value & Performance Manager, Scape Group
Marina Robertson, Senior Director, NPS Group
Dr Kelly Watson, Senior Consultant, Hatch Regeneris
Chris White, Director, Institute for Industrial Strategy, King’s College London
Rob Wolfe, Director, CHY
Learn more about FoL’s Social Value in Procurement project.