New report into social value in construction

Under the Public Services (Social Value) Act, public sector construction projects must ensure that wider social, economic and environmental benefits are secured as part of the contract. The Social Value in Construction Benchmarking Report, now in its second year, uses the National TOMs framework reporting from these projects to provide an overview of how the sector is performing, and where further improvements could be made.

The key findings of the report include:

Increases in social and local economic value (SLEVA)

The SLEVA for 2021 was almost 14% higher than for 2020, increasing from £949m to £1.08bn. The SLEVA as a percentage of contract value also improved from 17.41% in 2020 to 19.55% in 2021. However, the split between ‘social’ and ‘local economic’ measures was heavily weighted towards economic value. In fact, the contribution from local economic measures represented nearly 95% of the total – £1.02bn compared with £58m. Although the report does acknowledge that this is not necessarily the whole value of social activities as these can provide longer-term benefits to individuals and the wider society.

A clear focus on a small number of measures

In the TOMs framework, there are ‘measures’ to capture the different approaches to delivering SLEVA and these are divided into ‘social’ and ‘local economic’. For example, the local economic measures include direct employment of local people and investment in local supply chains. Social measures include donations to community projects, accredited training, apprenticeships and volunteering by staff.

The report found that most projects only adopted between two and four measures to generate social value and notes that more could be done to expand the scope of social impact, especially on larger projects.

Smaller projects outperform larger ones

A further finding of the report is that smaller contracts delivered greater SLEVA as a proportion of the total spend. For projects less than £2.5m, the percentage social and local economic value was 37% compared to 22% for contracts valued between £20m and £75m and just 8% for those with a value over £75m.

Scotland and North West England lead the way

The performance of projects in different areas of the UK varied significantly. Scotland and North West England had the highest SLEVA percentage of total contract value with 38% and 37% respectively, followed by the West Midlands, Wales and East of England. The South West had the lowest at just 8%, however on ‘social’ value alone, the South West region was second only to Scotland.

Construction could have a greater impact

Finally, the Social Value in Construction Benchmarking Report suggests there is strong argument for encouraging social value activities on all construction projects. It highlights that with a total contract value of £5.5bn, public sector projects represent just a small percentage of all construction output in the UK, which had a total value of £177bn in 2021. The report highlights that if the same level of social and local economic value was achieved by the rest of the sector it would generate as much as £32bn worth of value generated.