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02/07/2020

Social value: How can the construction sector deliver more tangible impact?

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Commissioners of public services are obliged to consider the social value of the work they procure. A new report from the Institue of Economic Development shows that, in construction at least, there are issues with understanding and delivery. Bev Hurley reflects on how this can be improved

The construction sector is the sixth largest source of employment in the UK, contributes nearly 7 per cent of the UK’s GDP and is a major recipient of public spending – it is critical for placemaking, economic development and job creation, all of which highlight its importance to Boris Johnson’s ‘New Deal’ and post Covid-19 recovery.

With construction spend estimated to be £500 billion by the end of this decade there is also a need to make sure that every one of those pounds delivers additional tangible social impact, and makes a major contribution to addressing the significant inequalities faced by our most disadvantaged citizens and left-behind communities.

The Social Value Act, published in 2013, is a requirement for people who commission public services to think about how they can also secure wider social, economic and environmental benefits. Before they start the procurement process, commissioners must therefore determine how they can secure maximum benefits at all stages of the project for their local communities.

Given the significance of construction to our economy, we undertook research to support greater understanding of what ‘good practice’ social value looks like, and to find and share examples where innovative, replicable and impactful social value has been delivered at all levels of place-based interventions as a result.

"There is no common, comprehensive definition of what counts as social value, to frame understanding, procurement, benchmarking or reporting"

Our final report, From the Ground Up – Improving the Delivery of Social Value in Construction, found there is no common, comprehensive definition of what counts as social value, to frame understanding, procurement, benchmarking or reporting, and aid comparison of tenders and to determine best practice. This has given rise to significant disparities in what counts as social value activities and how they are measured, with no requirement to focus on improving the wellbeing of those who are most disadvantaged.

In response, we have made five recommendations:

  1. Establish a Construction Social Value Centre of Excellence – working collaboratively with industry and public sector bodies to help capture, benchmark and disseminate good practice, and provide thought leadership, support and guidance.
  2. Agree a definition of social value, and what activities are within scope, for the construction sector – to allow robust comparisons of value, and help ensure social value requirements are proportionate, appropriate and give measurable additionality.
  3. Update the Treasury Green Book, the Social Value Act and initiate mandatory reporting – to improve Treasury guidance on the monetisation of social value metrics and enable assignment of different financial values to different social value activities.
  4. Upskill the public and private sector – to work collaboratively to offer targeted CPD: greater understanding of what social value is, how to procure it more effectively, and focusing on outcomes not outputs, will improve capacity, capability and impact.
  5. Upskill those not in the supply chain: SMEs and voluntary and community sector (VCS) organisations – to improve local SMEs and VCS organisations’ ability to compete, deliver and grow, and by doing so, leaving a more enduring local legacy.

Bev Hurley CBE is chair of the Institute of Economic Development

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