Social value: Maintaining Momentum

With the new government administration’s priorities established in recent weeks, it’s clear that public spending will continue to be a major political focus in the coming months – particularly the value in money directed towards local communities being spent well.

For me, the concept of levelling up – which has been at the core of government rhetoric in recent years – has proven a hugely useful vehicle through which to improve awareness of social value and to encourage action that generates it. As an organisation that supports local authorities and other public sector bodies in procuring their construction projects, the positive impact of localised regeneration has been heartening to see – particularly the tangible increase we’ve witnessed since coming out of the pandemic.

We recently published the results of our second annual Social Value in Construction Benchmarking Report in partnership with the Social Value Portal. The 400 projects analysed, ranging from £50k to £400m in budget, generated more than £1bn in social value over the course of 12 months – representing a fifth of total project spend and a 14% increase on 2020’s figures.

The stats go to show what can be achieved by progressive local authorities – those operating in the North West and West Midlands acting as levelling up frontrunners according to our research – with a focus on using investment in public infrastructure to create legacy. Notably, the social value we tracked was heavily weighted towards local apprenticeships, job creation and supply chains – a development in line with government’s current growth narrative.

However, as we approach the Autumn Budget, there is the potential that local authorities will be asked to continue to generate social value with fewer resources. Even in the event of public spending levels being maintained, social value generation remains at risk from the effects of inflation. Speaking with a construction hat on, we have seen contractors’ costs for materials such as rebar increase by more than 50% at a time when the public coffers are being devalued – for example, Scotland alone has seen £1.7bn of its budget eaten up by inflation since the start of the year.

While these figures paint a challenging landscape, we’ve seen how resilient the UK economy can be in recent years – with construction driving growth even, as last month’s figures show, amid market turbulence.

The public sector has also never had better guidance on how to achieve social value through regeneration. I need only point to the government’s Construction Playbook which no longer mandates that procurement exercises prioritise lowest cost outcomes. With the support of recent additions, the Playbook now offers a practical public sector bible for contracting authorities looking to enrich communities and create sustainable legacies through construction.

The recent 2022 update to the LGA’s National Procurement Strategy for Local Government in England also emphasises the importance of social value outcomes in procurement. In short, projects that deliver social value are a priority.

The public sector can’t do it alone though. Much of the £1bn of social value we registered in our analysis was the result of high-quality procurement frameworks, experienced contractors and local supply chains working in harmony. As one of the largest industries in the UK, employing over three million people and responsible for a large proportion of the UK’s carbon emissions, the construction sector has recognised the role it has to play in improving society and accelerating the journey to net zero.

It may be too soon for us to start talking about upward or downward trends in social value generation but collaboration between public and private sector will be key if we are to maintain progress in the next 12 months.