What does social value really cost, and perhaps more importantly, are we using procurement in the most effective way to create it?
That was the starting point for our recent LHCPG webinar, Economies of Social Value – Who Really Pays?, which brought together perspectives from HACT, Constructing Excellence, Trowers & Hamlins and LHC Procurement Group.
With increasing requirement for social value to be delivered through public procurement, the discussion challenged some of the assumptions that have become commonplace. Rather than simply asking “who pays for social value?”, the panel explored a bigger question: are we using the significant public investment already flowing through procurement in the best possible way to create outcomes for communities?
Social value has a cost
One of the strongest themes was the need to be more honest about the cost of creating social value.
Andrew Van Doorn of HACT highlighted that creating impact requires resources; staff time, expertise, organisational capacity, overheads and, in some cases, specific investment to deliver particular outcomes. Those costs do not disappear simply because they are described as “social value”.
Rebecca Rees of Trowers & Hamlins added an important perspective on what this means in procurement. As social value becomes a more significant part of tender evaluation, the percentage weighting alone tells us very little about the scale of the ask. A 20% weighting could represent a relatively modest requirement in one procurement and a substantial programme of employment, skills and community activity in another.
That has implications for both partners and contractors. Partners need to be clear about the outcomes they actually want to achieve and what is proportionate for the project, while contractors need the opportunity to have an open conversation about what can realistically be delivered, at what cost and where the greatest impact can be achieved.
Start earlier
Another key message was that social value shouldn't begin when the procurement exercise begins.
Alison Nichol of Constructing Excellence argued for social value to be considered much earlier – when organisations are defining their requirements, considering options and thinking about what they want an asset or project to achieve.
This is particularly relevant across housing and the built environment. The opportunity isn't simply to ask a contractor to deliver an apprentice or a volunteering day once a contract has been awarded. It is to consider from the outset how investment in an asset can contribute to wider outcomes – from better homes and energy efficiency to local employment, skills, stronger local economies and improved wellbeing.
It also means recognising the value that can already be created through core activity. A contractor employing local people, using local businesses, developing skills or delivering a high-quality asset that meets residents' needs may already be creating significant social and economic value.
The role of procurement is then to help maximise those opportunities, rather than simply adding a list of additional requirements to the contract.
What does this mean for SPA?
The discussion strongly reinforces the direction of travel for SPA: social value should be part of the wider framework and project conversation, rather than a separate requirement bolted onto procurement.
For partners, that means thinking about social value alongside the project itself – understanding local priorities, identifying the outcomes that matter and considering what the project could realistically contribute.
Those opportunities will vary from place to place. A local SME opportunity, skills development, community engagement, resident support, volunteering, use of existing expertise or contribution to a local initiative may all be more meaningful than delivering a predetermined output simply because it appears on a social value menu.
For SPA, our role is to help make those conversations easier. That includes providing appropriate outcome opportunities through our frameworks, helping partners and appointed companies understand what is possible, translating social value from procurement into project delivery, and supporting proportionate approaches to evidence and measurement.
We don't see ourselves as owning the social value created through a framework. The partner and contractor are ultimately responsible for the outcomes they agree and deliver. Our role is to facilitate, enable and support that process.
Proportionality matters
The webinar also highlighted the different ways social value costs can fall across the supply chain.
Rebecca Rees highlighted particular challenges for SMEs, which may have less capacity to absorb additional requirements or spread the cost of social value infrastructure across multiple contracts.
That makes proportionality critical. A good social value requirement shouldn't simply aim for bigger numbers. It should be relevant, achievable and capable of creating meaningful impact.
There also isn't necessarily a need for every social value contribution to have a separate budget line. As our very own Director of Communities, George Stevens, noted during the discussion, value can also be created through things such as staff time, volunteering, materials or expertise supporting local initiatives. The important thing is to have the conversation, understand the opportunity and avoid placing unnecessary constraints on what can be delivered.
So, who really pays?
While being transparent about cost matters, we should start with better questions: Are we asking for the right things? Could the same outcome be achieved more effectively in another way? And are we using procurement at the right point in the process? Cost comes after you’ve identified the opportunities and where the most impact can be made – agreed in partnership, proportionately and resourcefully.
For SPA, that is closely aligned with our approach to embed social value in our frameworks – using procurement as a lever for better outcomes, rather than treating social value as an additional transaction.
Whether you are a partner using an SPA framework or an appointed company delivering through one, the webinar is worth watching because it doesn't offer a simple answer to the question of who pays. Instead, it challenges us to think more carefully about cost, value, proportionality, responsibility and, ultimately, whether we are getting the greatest possible social impact from the investment already being made.
It is a conversation designed to help us ask better questions – and have more honest conversations about what social value should look like in practice.