For more than a decade, public bodies have used social value requirements within procurement to ensure that public spending delivers benefits beyond the core purpose of a contract. This has been an important step forward, encouraging organisations to think more broadly about the impact of development and public investment.

In practice, this has often meant adopting a TOMs-based approach, where social value is translated into measurable commitments delivered alongside a project. These might include apprenticeships, volunteering days, community funds, work experience placements, amount of local spend or engagement activities.

Many of these interventions create genuine benefits. Apprenticeships, for example, can have a lasting impact on individuals and communities. However, they are also commonly tied to the life of a contract. Once the contract ends, so too do many of the activities.

This raises a broader question. Are local authorities and developers focusing their efforts on the forms of social value that create the greatest long-term impact?

At RealWorth, we have long argued that the greatest social value created by development is often embedded within a development itself. It is found in the quality of the places, the long-term opportunities they provide, the communities they support and the way they enable people to flourish over many years. Responsible, pro-social design of buildings, well-designed public spaces, thriving community facilities that strengthen social connections or a long-term stewardship programme are likely to continue generating value for decades after construction has finished.

This is not an argument against procurement-led social value. The TOMs framework has played an important role in making social value more visible and creates a consistent way for organisations to compare commitments. It remains a valuable procurement tool.

However, because procurement often focuses on activities delivered during a contract, they inevitably place greater emphasis on what is easy to specify and monitor than on the wider outcomes that developments can create over their lifetime.

Could resources be better allocated to create greater impact?

Historically, this has not necessarily been seen as a problem. Procurement-led social value has generally been viewed as an additional layer of benefit delivered alongside the core project. Even if short-term and contract-based interventions were not the largest source of social value, they were assumed to represent benefits that would not otherwise have existed.

A recent article from HACT challenges that assumption.

The article argues that social value commitments are often treated as though they come at no additional cost to the public sector. In reality, delivering apprenticeships, community programmes or volunteering initiatives requires resources. Those costs may be reflected through higher contract prices, reduced margins, cross-subsidies from elsewhere in the business or assumptions that commitments will not be fully enforced.

If social value is not cost-free, then could those same resources generate greater social impact elsewhere?

The opportunity cost of contract-based initiatives

Every financial decision involves trade-offs. Financial resources are limited, but so too is organisational capacity, staff time and management attention. Choosing one action or intervention inevitably means choosing not to invest those resources elsewhere.

Rather than asking whether procurement-led social value creates positive impact, which it clearly can, we should ask whether it represents the greatest possible social return from the available resources.

For example, imagine a developer investing £200,000 in volunteering programmes and community grants because these score highly within a procurement framework.

Could that same investment create greater long-term social value if it instead went towards creating a permanent community facility, improved public space or providing affordable workspace for local organisations?

There may not always be a single correct answer. Procurement-led initiatives are often relatively inexpensive compared with the overall cost of a development and frequently deliver genuine additional benefits. However, if some of the available resource even went towards a meaningful and inclusive community needs assessment to properly identify what is required, it may be a much better catalyst for the creation of genuine lasting impact.

We need to consistently challenge whether the current system encourages clients and developers to consider these trade-offs at all. If procurement processes reward contractual activities more readily than embedded place-based outcomes, there is a risk that organisations only deliver what fits this system in the belief that they are creating huge social returns as a result of their activities, when the reality isn’t always the case.

Measuring what matters

One of the reasons procurement-led social value has become so widespread is that it is relatively straightforward to measure. Outputs such as volunteer hours, apprenticeships, local spend or community events can be specified, monitored and reported consistently.

Embedded social value is more challenging. The long-term benefits of well-designed buildings, public spaces, stronger communities, better health or increased social connection often seem more difficult to quantify.

However, if the objective of social value is to improve the positive difference created through public investment, then we need approaches that compare different forms of investment based on the outcomes they generate, rather than simply the activities they deliver.

This is where Social Return on Investment (SROI) can play an important role. Rather than measuring outputs alone, SROI seeks to understand the outcomes created, the value those outcomes represent and the extent to which they are genuinely additional over time.

This makes it possible to compare the social value created through procurement commitments alongside the wider value embedded within the design, delivery and long-term operation of a development.

Ultimately, if social value is being created in addition to what would have otherwise happened, there is no right or wrong way. However, given the rapid rise of social value within procurement, authorities should take stop and ask given finite resources, which combination of investments creates the greatest long-term social value?

Answering that question requires us to move beyond measuring what is easiest to count and towards understanding what makes the greatest difference.