Shared Value: Helping local authorities unlock social value
The ground-breaking Social Value Act, which came into force in 2013, has changed the commissioning landscape. It marked a shift in attitudes towards how we assess value in the delivery of public construction and infrastructure contracts, by setting a requirement for all public procurement over a given threshold to have regard for social, economic and environmental wellbeing. It has rightly empowered those procuring and delivering public projects to look beyond the immediate end product to also consider innovative ways of delivering wider, positive benefits for people and local communities as a way of getting the best possible value from the public money being spent. For the construction and infrastructure industry, it also means a welcome move away from contracts awarded only on the basis of the lowest price towards those which offer the best long-term outcomes.
Social value can include a range of outcomes, such as leaving a skills legacy by employing locally and creating sustainable apprenticeships in the area around the scheme, and boosting local small, medium and micro businesses and social enterprise by ensuring they form a core part of the supply chain and that a high proportion of the project spend goes to local suppliers. Reducing air pollution, maximising green space and ensuring the value of materials is optimised through a circular economy.
Balfour Beatty believes that while the Act was visionary and is undoubtedly helping to deliver significant benefits, there is scope for commissioners and contractors to work together to go even further. This short paper considers ways to maximise the social value being delivered through the public projects being commissioned by local authorities.
- Individual schemes should be plugged into wider strategies for social change to multiply the benefits that can be achieved.
- Clear metrics are needed to determine whether success has been achieved.
- Commissioning authorities should consider increasing the weighting they give social value to ensure that those bidding for contracts have to give it serious consideration when putting tenders together.
- Public bodies and the Government should work more closely with employers on delivery of the overarching social value strategy for the whole area, rather than just on individual schemes to align thinking around demand and potential supply and use funding in a more targeted way.
- In order to deliver high-quality social benefit and drive the best outcomes, those in local government commissioning schemes need to be equipped with the right skills. This calls for high-quality training.
- Contractors should be embedding social value into their business principles and the way they operate. Only by ensuring social value forms part of their culture will the best, most sustainable outcomes be delivered.
- Contractors should be assessing schemes they have been involved in, collecting data, sharing best practice internally and setting themselves targets for continuous improvement.
- Social value should cover all forms of public spending and be fully embedded in all major construction and infrastructure contracts.
- The Government should take steps more broadly to promote commissioning based on outcomes and social value rather than based solely on lowest cost.
- The Government should use its central role to develop effective statutory guidance and highlight best practice, to ensure the potential of the Social Value Act is being maximised.
- We believe there are significant benefits to be reaped if the Social Value Act were made to apply to goods and works as well as to services, to maximise the benefits of public expenditure.
All social value is not equal. Those measures which are implemented to meet the basic need to “have regard” for social, economic and environmental wellbeing will inevitably have less impact than strategies which are designed by local authorities in collaboration with the whole delivery chain and partner organisations to bring the best possible outcomes.
In Balfour Beatty’s experience, to make sure the social value delivered matches the needs of the local community, commissioners must begin with a clear vision of what ‘good’ will look like, taking a bold, long term approach. Outlining clear social value priorities for the community from the offset, ensuring that they are embedded at the scheme’s concept and design phase and including all those involved in delivering the scheme in the process of designing the strategy, is a key way of maximising its potential. Clear metrics are also needed to determine whether success has been achieved.
Maximising community benefits can also be achieved by looking beyond the Social Value Act, which requires councils only to consider social value in commissioning. Plugging individual schemes into a wider strategy for social change, as Oxfordshire County Council and Somerset District Council have done, for example, multiplies the benefits that can be achieved by delivering social benefit on individual schemes. Commissioning authorities could also consider increasing the weighting they give social value to ensure that those bidding for contracts have to give social value serious consideration when putting tenders together.
Balfour Beatty would also welcome public bodies and the Government working more closely with employers on delivery of the overarching social value strategy for the whole area, rather than just on individual schemes. For example Balfour Beatty has been working with the West Midland Combined Authority (WMCA) HS2 Growth Delivery Programme to align thinking around demand and potential supply. This creates the opportunity for achievement of the better outcomes, and funding is therefore used in a more targeted way to achieve better outcomes for those concerned. Taking this approach, beginning with the end vision in mind, creates a virtuous circle. This approach increases the likelihood that better outcomes will be delivered and that the taxpayer gets greater value for money.
In a similar vein, strengthening and enhancing the delivery of social value can support outcomes across local authority departments, therefore helping reduce the costs of all services, not just those in the department responsible for the project. While local authorities have brought in Place Directorates, coordinating all infrastructure in one directorate, linking outcomes across directorates is not yet something which is widely done.
Finally, in order to deliver high-quality social benefit and drive the best outcomes, those in local government commissioning schemes need to be equipped with the right skills. This calls for high-quality training, for example, through an expansion of the Commissioning Academy programme.
Involved (Balfour Beatty’s community investment programme in the UK) was established in 2015 and focuses on three key areas where we can add value to our customers and local communities:
- local employment and skills
- community engagement including charitable fundraising, volunteering and mentoring
- supporting local businesses.
Wherever Balfour Beatty operates it seeks to integrate within the neighbourhood, supporting the local community, its businesses and its workforce. Involved gives Balfour Beatty the opportunity to work within a framework whereby the results of its interventions are captured and the benefit to society shared with its customers and other interested parties.
Our activities support community organisations in delivering benefits and are typically focussed on helping the transition of disadvantaged people into the world of work by offering advice, training and education, as well as health and wellbeing, environmental regeneration and inspiring tomorrow’s workforce.
For responsible contractors, social value must not be an afterthought. It should be seen as an opportunity to invest in and enhance local communities, spreading the benefits of the scheme as widely as possible. Innovative ideas to deliver real economic, social and environmental benefit should therefore be at the heart of efforts to win and deliver public contracts. Developing these ideas requires contractors to listen to and understand the communities involved and their priorities, and to respond to them. Gaining an understanding of what the local needs are and what opportunities the scheme has to meet some of these needs is key, for example, considering when building a school, not only how that might help reducing unemployment levels, but also obesity, social cohesion, and high crime rates.
It also means that contractors should be embedding social value into their business principles and the way they operate. Only by ensuring social value forms part of their culture will the best, most sustainable outcomes be delivered.
Contractors should also be assessing schemes where the social value element has delivered tangible benefits, collecting data, sharing best practice internally and setting themselves targets for continuous improvement to ensure they are providing the best possible service to local communities.
Of course, not all of the social value-adding commitments need be innovative. Some, such as paying suppliers on time, supporting young people into sustainable employment and promoting equality by ensuring ethical employment practices and offering opportunities targeted at underrepresented and disadvantaged communities, should be a core part of the commitment all contractors make to the communities they operate in.
The Social Value Act empowers local authorities and other commissioning bodies to consider how to use social value to maximise their purchasing power and secure as much benefit as possible for their local area. However the Government also has a key role in making sure the legislation and accompanying guidance is fit for purpose and helps local authorities recognise what their local needs are how they can measure and evaluate different social value offering. It is also a key part of the Government’s role to broadcast and amplify the aims of the Act.
Balfour Beatty believes, along with many others1 that social value should cover all forms of public spending and be fully embedded in all major construction and infrastructure contracts, rather than just those that come in above the specified value (c.£170,000). In our view, the Government should also take steps more broadly to promote commissioning based on outcomes and social value rather than based solely on lowest cost.
The Government should also use its central role to develop effective statutory guidance and highlight best practice, to ensure the potential of the Social Value Act is being maximised, as recommended in the recent review undertaken on behalf of Social Enterprise UK2.
Balfour Beatty welcomes the fact that Social Value is already being embedded across mega projects such as Hinkley Point C and HS2, both of which we are involved in. We believe there are significant benefits to be reaped if the Social Value Act were made to apply to goods and works as well as to services, to maximise the benefits of public expenditure. We have therefore made Social Value a key metric of Our Blueprint, Balfour Beatty’s sustainability strategy.
The Balfour Beatty Building Better Futures Charitable Trust was formed to mark the company’s 100th birthday in 2009. It aims to help the most disadvantaged people in society by funding projects which support specific projects targeted at improving the employability and employment opportunities of disadvantaged people, motivating them, inspiring them and improving their quality of life.
Runshaw College, Lancashire
As part of the £5.5m contract to deliver a scheme including a new Science Engineering and Innovation Centre for Runshaw College, Balfour Beatty created and delivered a comprehensive local community engagement strategy in collaboration with those commissioning the project.
This resulted in work placements for college students, new apprenticeships for local people, community engagement events and regular projects with local schools, scout groups and community groups.
Balfour Beatty’s work at Runshaw is also cited as an exemplar of local supply chain best practice, as 92% of the staff and operatives on site and 85% of the suppliers came from within 30 miles of the projects.
Balfour Beatty believes that social value will rightly become an increasing priority for the local authorities, not least as it offers the best way of ensuring their increasingly tightened budgets are maximised to deliver for their communities. To ensure that commissioning authorities maximise their purchasing power, reap the benefit of the money being spent on public schemes and ensure that the ripple effect radiates as far as possible, all of those involved must play their part. For local authorities, this means setting ambitious targets and a clear vision as early as possible, and being inclusive from the concept and design phase onwards. Contractors must take social value seriously, bringing their best ideas to the table. And Government should use its weight to embed the principles more thoroughly, and across more schemes. This offers the best chance of securing social, economic and environmental benefits while building stronger, more resilient communities.
1 Community Business and the Public Services (Social Value) Act 2012, Power to Change Research Institute, July 2017
2 Our Money, Our Future, Chris White for Social Enterprise UK, December 2017