CPD: Social value in public sector projects

Social value is inherently connected to construction. The homes, buildings and infrastructure we create have always been about providing societal benefit that we often describe in terms of community, aesthetics, accessibility and prosperity. Public sector organisations such as local authorities and housing associations are well placed as community anchors to support social value strategies and to lead economic and social cohesion at the community level.

For construction professionals, understanding and embedding social value into project delivery is not only a compliance requirement but also a means of improving community outcomes, workforce development and environmental sustainability.

Establishing a commitment to social value at the start of a project ensures that construction activities contribute positively to society, going beyond the physical infrastructure to address social mobility, employment, individual wellbeing and environmental concerns.

There are some important pieces of legislation relevant to this topic. These include:

The Procurement Act 2023

The Procurement Act 2023 is the newest piece of legislation, which came into force on 24 February 2025.

This sets out a move away from assessing bids on ‘most economically advantageous tender’ (MEAT) to ‘most advantageous tender’ (MAT), promoting a procurement approach which does not solely consider price. It also significantly increases opportunities for smaller businesses to win work in the public sector.

Public sector clients are required to consider social value in all their procurement decisions, ensuring that projects contribute to community development and sustainability goals.

The act mandates a minimum 10% weighting for social value. And while 10% is the minimum, contracting authorities can choose to apply a higher weighting depending on the specific procurement and its social impact potential.

In England, the Cabinet Office has produced a wide range of guidance for businesses looking to take on public sector work (available on Gov.uk), and the Welsh government has published its own guidance on Gov.wales.

National Procurement Policy Statement – England

This policy statement sets out the principles that apply to public sector clients. One of the key principles is focused on using procurement to deliver social and economic value, taking into account local and regional economic growth plans and working in partnership with other contracting authorities, the private sector and local communities.

Procurement Policy Note 002 (PPN 002) – Social Value Model

The new social value model is a menu of options to help public sector clients select the most appropriate social value outcomes, criteria and standard reporting metrics for their contracts. These are the sorts of social value outcomes construction professionals are most likely to see in tender documents.

The Public Services (Social Value) Act 2012

The Social Value Act came into force in 2013. It requires central government departments, executive agencies, local authorities and non-departmental public bodies to consider social value within procurement – particularly focused on improving social, economic and environmental impacts within a specific community. Its principles have been widely adopted in construction procurement.

Wellbeing of Future Generations (Wales) Act 2015

This act requires public bodies in Wales to consider the long-term impact of their decisions on social, economic and environmental wellbeing. In addition to a minimum 10% social value weighting, there are eight Welsh wellbeing goals which can be met by:

Social Partnership and Public Procurement (Wales) Act 2023

Among many initiatives, this law puts a statutory duty on certain public bodies to consider socially responsible public procurement when carrying out procurement, to set objectives in relation to wellbeing goals, and to publish a procurement strategy. They also have to carry out contract management duties to ensure that socially responsible outcomes are pursued through full supply chains, not just tier 1 suppliers and contractors.

National Performance Framework (Scotland)

Supported by the Scottish Procurement Policy Handbook, the National Performance Framework helps to ensure public bodies conduct procurement activities in a way that is good for businesses and their employees, good for society and good for places and communities.

The framework sets out national indicators for wellbeing that cover communities, children and young people, culture, economy, education, environment, fair work and business, health, human rights, internationalism and poverty.

The framework also includes a Sustainable Procurement Duty which says that public bodies must consider how they can use procurement processes to improve the economic, social and environmental wellbeing of the area in which they operate.

For construction businesses working with public sector clients, there are several key challenges and issues to consider:

Early engagement

Integrating social value starts at the earliest stages of a project, and runs through to completion, handover and even future maintenance.

In many cases, public sector clients will set out their requirements at the start. Look out for your local council’s social value strategy which you can usually find on its website.

Try to focus contributions to that project on areas that align with your own organisation’s CSR (corporate social responsibility) or ESG (environmental, social and governance) strategies.

In essence, know what you want to do as a business to help improve the world, and develop social value activities that deliver that mission, having conversations with the client as early as possible to understand local needs and to model the best possible outcomes.

Collaboration

No one organisation can do it all on their own. Collaboration between contractors, public sector clients and procurement framework providers like LHC Procurement Group (LHCPG) is key to driving long-term positive impact in social housing and public infrastructure.

It should also involve looking for opportunities to work with local charities and voluntary groups and bringing together local SMEs to be part of the supply chain.

Meaningful measurement

There have been several methodologies developed that enable organisations to measure the social impact of their activities.

HACT’s UK Social Value Bank measures the value of increasing wellbeing of individuals and communities, while the other leading methodology provider is Social Value Portal, whose national TOM System, launched in 2017, is used across various local authorities and built environment organisations.

Broadly speaking, these measure activities across five key themes:

However, a perceived lack of standards around the range of available methodologies has resulted in confusion among users and increasing scepticism from some contractors, who view social value as little more than a tick-box exercise.

There is also the growing realisation that genuine social value is not just outputs – it’s the combination of the benefits of the work you do, the services you provide, the programmes you deliver and the impact on people and communities. And in this sentence ‘impact’ is the key word.

Measurement of outcomes and impacts means taking a longer-term approach – for example, comparing the results of community or resident surveys carried out before work starts and after completion of the project.

Examples of measurement

Increasing numbers of commissioning frameworks require social value reporting. Indeed, this is an essential part of Gold Standard frameworks – that is, public sector frameworks accredited by Constructing Excellence’s verification scheme designed to improve value, reduce risk and achieve net zero.

For example, some of the reporting required of appointed companies on LHCPG’s new N9 framework (a Gold Standard verified framework for retrofit and decarbonisation consultancy and construction work) includes:

Quantitative measurements:

Qualitative measurements via resident survey feedback:

LHCPG will monitor and report on the overall performance of the N9 framework and, to assist contractors, it provides further CPD-approved training, social value guides and technical support to accompany all new frameworks.

For construction managers and contractors working on public sector projects, embedding social value is no longer optional – it is a fundamental requirement. Understanding the legislative context, accessing the support of Gold Standard public sector frameworks like those delivered by LHCPG, and employing robust performance metrics will ensure projects deliver meaningful and measurable social benefits.

Michael McLaughlin is group social value manager at LHC Procurement Group.

Wheatley Homes South (formerly known as Dumfries and Galloway Housing Partnership) is Scotland’s second-largest social landlord, with more than 10,370 affordable homes across Dumfries and Galloway.

With support from LHCPG, Warmworks Scotland and the SP Energy Networks’ Green Economy Fund, the housing association delivered a £2.8m decarbonisation and renewable project to 150 homes which saw battery storage technology, solar panels and air source heat pumps installed to replace coal heating.

Contractors installed Tesla Powerwall batteries in off-gas homes that were in, or at risk of falling into, fuel poverty. The results included:

The project helped the landlord better understand what impact a decentralised storage facility would have on managing demand and reducing carbon emissions.

It continues to provide valuable insights for grid management and the incorporation of future-facing technologies, allowing long-term evaluation of the real-life performance and reliability of battery storage equipment and controllers.

More importantly, by helping to make customers’ energy bills more affordable, the project had a significant positive impact on their lives.

This was evidenced through pre- and post-retrofit surveys of residents to understand how positive this activity has been to their wellbeing and wider social, economic and environmental indicators.