The future of social value

The Government has recently announced a review of the Public Services (Social Value) Act, with a view to extending its remit. In this essay, Chris White MP, the architect of the Act, explores how its principles might be applied to the planning system to ensure developers are putting something back into the local community through their development, whether by training up local people, improving the environment, or reducing loneliness and ill health.

Social value is notoriously hard to define. We all know what it is when we see it or hear about it, but putting it into words can present difficulties. In short, its scope is broad and its application is wide. Extending the number and nature of situations to which it is applied, therefore, should be a challenge we can all embrace.

The Public Services (Social Value) Act came into force on 31 January 2013. As a result of the Act, all public bodies in England and Wales, including local authorities, are required to consider how the services they commission and procure might improve the economic, social and environmental well-being of the area. After almost two years of implementation, the Social Value Act is currently being reviewed. Chaired by Lord Young, the review panel will present its findings in February this year. This presents an opportunity to assess the impact of the legislation thus far.

Of course, social value is a concept which has existed for longer than the time this legislation has been in force. However, the role of the Act is to provide a blueprint for cultural change, building on the prevailing appetite for social value. Over the past two years since the Act was implemented, there has been great enthusiasm for the potential there is for social value to be applied in a range of circumstances.

Across the country, the implementation of social value is not limited to the public sector but has been enthusiastically embraced by the corporate sector. Private companies, big and small, are taking social value seriously and incorporating it into their structures. In the first years of the legislation’s existence, best practice examples of social value implementation have emerged. However, there is no one way to implement social value and there is potentially no limit to the ways in which it can be applied. The Act aims to get each organisation or local authority to develop its own approach to how social value can be embedded into its operations.

This essay will aim to reflect on the potential there is for social value to be applied to housing policy and, in particular, the planning system.

First, it is useful to examine what ‘socially valuable’ housing might look like. Social value comes in a variety of forms. It could be affordable housing. The houses in the development might be built by companies who provide employment to local construction workers or take on apprentices. Environmentally, the housing might be built to specific sustainability standards. The housing may be built in a particular location in order for it to encourage social inclusion. Adaptable housing for disabled people and older people would be another example of socially valuable housing. In short, there are different types of social value which can be created and it will vary according to the needs of the local community in which it is being developed.

With such a broad range of potential social value, it is important to be able to measure it in a consistent and transparent way. How to measure social value is often a contentious topic: there is no, single, widely accepted model for its measurement. It is often easy to articulate the benefits which accrue from socially valuable projects but it is not necessarily a straightforward process to quantify this. Some organisations prefer to use a matrix of their own while others may choose adopt an existing measurement tool such as Social Return on Investment (SROI).

There are many examples of the Social Value Act being applied by housing associations, which may have some bearing on or provide a basis for its application to the planning system. An example of a housing association actively implementing social value is Selwood Housing.

They have developed a clause in their procurement process, known as the Silva Procurement Clause. This means their purchasing decisions are based not just on price but on the quality outcomes of the solution offered. Through the Silva Clause, the social impact and community benefit can be measured.

Contributions are scored using a matrix system whereby the bidder is able to gain a maximum of 10 additional points based on:

  • Contribution to the Community Investment Fund as a percentage of the contract value.
  • Work placements and apprenticeships for their tenants.
  • Donations to fund tenant events and prizes
  • Community action days; and/or
  • Anything else the organisation would like to offer.

Using a method similar to Selwood’s matrix would be one way in which social value could be applied to the planning system. When granting planning permission, local authorities could consider the sorts of benefits outlined earlier as being characteristics of socially valuable housing and, in theory, give priority to those housing providers.

Another way to accommodate social value into the planning system could be to incorporate it into each local authority’s Local Plan. Local Plans are supposed to set out the housing and related needs of local populations and set local planning policies. A commitment to social value – and what that means for the local area – could be included in these plans. This would allow each local authority to have flexibility in creating the social value which suits their particular circumstances.

For example, a local authority with an ageing population may feel that it should prioritise older people’s housing. Another local authority might be particularly concerned about the level of unemployment amongst young people in the area, so employing local young people or from specific communities might carry more ‘weight’ in a social value calculation.

The most democratic way, of course, to determine what is regarded as being most socially valuable, would be to consult the local population on their social value priorities. This would involve balancing affordability, accessibility, local jobs, environmental protection and other socially valuable considerations, into a weighted list, by importance. Public consent for Local Plans is a particularly important issue for many councils and, indeed, has been the subject of a Westminster Hall debate in Parliament. Increasing public input into Local Plans and including the community’s views about the social value would be another to way to increase local ‘ownership’ of the development plans.

Once a method for measuring social value has been decided, and it has been determined how social value is to be calculated, then planning applications could be assessed accordingly. Currently, planning applications are assessed according to the criteria set out in each local authority’s Local Plan. It would be simple, therefore, to include social value elements in this criteria.

The current situation

As matters stand, local authorities design and implement their Local Plans, addressing and incorporating the specific requirements and needs of their area. Local Plans cover the development of public spaces, the provision of housing, transport and infrastructure, services such as recycling and addresses environmental concerns such as air quality.

By and large, affordability is the primary ‘social’ concern in Local Plans, which reflects a one-dimensional (though perhaps understandable) assessment of value and the need for affordable homes. Local Plans include a commitment to environmental quality, but do not necessarily include an undertaking to consider the environmental impact of the new development. Nor do they include a consideration of employment or accessibility, let alone many other potential factors, generated by new developments.

Croydon Council, typical of most councils, provides an example. Its Plan states that:

‘Overall just over a third of all new homes will need to be affordable rent, social rent or intermediate low cost shared ownership in order to meet the overall need for affordable housing.’

Croydon’s Plan specifies requirements such as quality space allowed per home (i.e. to prevent poor building) but makes no other demands for such developments to meet wider social needs.

Rewarding and recognising social value

To ensure that planning frameworks take into account social value in their developments, there would need to be a focus on embedding it into the national planning regime. Once the planning framework allows for developments to be assessed according to social value criteria, weighted to local priorities, this can then be translated into some form of priority system in planning. For example, this might involve a fast track process for socially valuable proposals, similar to the one given to ‘nationally significant’ infrastructure projects.

Another potential change could allow for exemption from section 106 (s106) contributions under the Town and Country Planning Act if the development reaches a certain threshold of social value. Despite it no longer being possible for s106 contributions to be charged after April 2015, authorities will still be able to charge a Community Infrastructure Levy (CIL) which can be used to fund infrastructure to support development in the area. Another potential change would be to set CIL at varying rates for different developments – very low for the most socially valuable, and the highest for the least socially valuable.

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There is certainly potential for the principles of the Social Value Act to develop further, and, in particular, for it to be extended to the planning system. But there is a variety of opinion regarding how this might occur and what this development may look like.

Some argue that the Act should be given ‘more teeth.’ That is, that the legislation should be extended to apply to goods and works and that there should be a formal obligation rather than merely a ‘duty to consider’ social value. There are also calls for more detailed guidance to be developed by the Cabinet Office to be utilised and disseminated by central government departments. This would ensure a consistency of approach and would avoid any confusion over conflicting legal advice.

As time passes, and as we reflect on the success of the Act so far and review its progress, these are propositions that may now be worthy of consideration and ones which would assist in the application of social value to the planning system. However, as the discussion above indicates, the best method for incorporating social value into the planning system might be to require each local authority to extend the principles of social value to their planning criteria and frameworks. Embedding the consideration of social value into each Local Plan, for example, would allow for a greater range of criteria to be considered when planning new developments.

The Social Value Act, above all, was intended to spark a culture change. If change has not developed as quickly as it might have, then we must work to see what can be improved. One way of doing this is thinking innovatively about different ways in which the Act can be applied. As this essay has hopefully been able to argue, the housing and planning sector is one in which it could have practical and positive implications.