A Trowers levelling up publication: Levelling up and social value
The Levelling Up White Paper sets out the Government's long-term plans to move to a more equal society.
The plan involves identifying and understanding spatial disparities across the country and putting measures in place to address them. As part of the policy framework that wraps around this process, social value has been included as a factor that public sector buyers consider in their purchasing decisions to create jobs for local communities, build back better and transition to Net Zero.
It is interesting that all references to "social value" in the White Paper are made in the context of procurement: social value is seen very much as a component of this decision-making process: to ensure that contracts are not awarded on a lowest-price basis. Further, the White Paper highlights that post-Brexit public procurement reforms allow for a greater consideration of social value in public sector purchasing decisions – with not less than 10% of the stated award criteria for central government contracts being allocated to social value proposals. With such an emphasis being placed on social value as part of a procurement, it is clear that it will be a differentiator across the procurement landscape: with over £300 billion-worth of public contracts per annum delivering significant social value gains: but is it just about procurement outputs – or should the White Paper policy framework have more to say about social value?
Articulation of Social Value Plans
Councils, the NHS and health providers, education providers, housing associations and community organisations will all have a significant role to play in Levelling Up the UK. To this end, Boris Johnson notes in his Prime Minister's Foreword that he is, "determined to break that link between geography and destiny, so that it makes good business sense for the private sector to invest in areas that have for too long felt left behind".
It will therefore be key for such place-making organisations (often referred to as "anchor institutions" within the communities they serve) to comprehensively articulate their social value drivers for their community with clarity. Nevertheless, we often see social value plans drawn up in isolation, creating avoidable overlaps and omissions: if Levelling Up is to succeed, particularly in those areas that have suffered chronic underinvestment, public sector buyers need to adopt a more collaborative approach to community investment: working together to meet the different needs of their communities and understanding which organisations are best placed to drive particular social value outcomes and impact.
Commencing any social value programme with a collaboratively-conceived, clear Community Investment Plan can help politicians, executive teams, procurement officers and stakeholders understand the overall objective of a local or hyper-local plan. Further, it allows all involved in the programme to understand "what Good looks like" and increases accountability at all stages of the process.
Value of a whole-organisation approach
The White Paper clearly links the achievement of social value outcomes with the power of procurement. Unfortunately, we often see that this results in procurement officers being required to articulate the desired social value outcomes on a per-project basis, along with the targets, incentivisation mechanism and measurement techniques. This ad hoc approach often adds unnecessary cost to the overheads of a project (an ambitious social value requirement will never be delivered by the supply chain "for free") and risks last-minute decisions being made in isolation and without any deference to the actual needs of the community.
Instead, organisations should adopt a "bottom-up/top-down" approach to social value: the relevant community should be asked what it needs and the anchor institution: from the Board downwards, should respond corporately to such needs. This avoids a siloed approach to social value and increases the opportunities that can be identified (both within the procurement space and beyond) to achieve impactful outcomes for the communities.
How to measure social value
As with any emerging agenda: the number, type and sophistication of social value measurement systems proliferate. Organisations need to be cognisant of the fact: whatever you measure will drive particular behaviours. If organisations do not want to drive a "tick-box" mentality from its supply-chain vis-à-vis social value, then it should avoid output- or numbers-based measurement systems. Whether a supplier has delivered 3 apprenticeships or 30 may not make any difference to the community affected by the project if the apprenticeships were in non-sustainable vocations, were not completed "on the job", or were undertaken by apprentices who have no long-term commitment to the skill they were apprenticed to.
On the other hand, systems that measure the impact of a social value intervention on an individual can drive very positive outcomes: eg., for a first-time mother living in the community – the provision of a "mother and baby drop-in service" once a week in the community hall has given her much needed respite and fellowship, and increased her sense of wellbeing – she did not need skills, training or employment (which are often the "go to" outputs stated in public sector contracts, particularly construction-related ones).
Measurement metrics, like the UK Social Value Bank, that include a variety of outcomes that can be measured on an economic basis, allow public sector buyers the comfort of a like-for-like analysis of different outcomes. Measuring impact rather than outputs also ensures that the social value conversation never stagnates: they can change and become more ambitious as the needs of the community evolve and in any event allow a more sophisticated conversation about what the social value outcomes are achieving on the ground and in real time.
What can be achieved
An inspiring example of how social value can make a meaningful change through the procurement process is the work that we did alongside Poplar HARCA and HACT on the Teviot Estate project. Trowers & Hamlins advised Poplar HARCA on the legal and procurement aspects of the project and HACT were specialist advisers on the project's social value aspirations.
The Teviot Estate is a £600 million regeneration project with plans to build 1,750 new homes, green spaces, infrastructure and retail. The project was ambitious but what really set it apart was how much the community engaged with and got involved in the process. Social Value became a key part of the partner selection and the scheme now aims to add over £278 million in social value across the contract duration.
Following a series of resident engagement sessions, social value was split into four key themes: community, homes, streets and parks. These four themes were then linked back to outcomes from the UK Social Value Bank which enabled the outcomes to be objectively measured and evaluated. Hill was appointed as the successful delivery partner and the social value commitments offered by Hill have been embedded in the contractual documents and will be regularly monitored and enforced for the contract duration.
This project demonstrates how important stakeholder engagement is in the procurement process and how it can be used to drive meaningful social value that is bespoke to the requirements of that community.
The Levelling Up White Paper has reinforced the central role social value will play going forward in the public sector's contract award decisions. Social value outcomes: articulated, procured and measured on a local or hyper-local basis will ensure that place-based decision making is at the centre of each contract. Community organisations have a responsibility to consider such outcomes on a collaborative basis with neighbouring public-sector buyers to ensure that they don't duplicate efforts and don't miss a trick.