Social value as a lever for achieving value for money and community outcomes in procurement
Year: 2025
Type: article
Abstract: Public procurement is a cornerstone of the UK economy, with gross spending reaching £407bn in 2023 / 24 (House of Commons Library, 2024). Decisions about how this money is spent directly affect the economic, environmental and social wellbeing of communities across the country.While public contracts have traditionally been awarded based on price and quality, recent policy changes, including the Public Services Act 2012 (UK Government, 2012) and the Procurement Act 2023 (UK Government, 2025), have made Social Value an important evaluation criterion in evaluations.Social Value refers to the broader benefits created through a contract or business activity that extend beyond the immediate delivery of goods or services. These may include supporting local employment, enhancing skills and education, improving community wellbeing or reducing environmental harm.In the UK, the Public Services (Social Value) Act 2012 marked a pivotal step in formalising this concept. It requires public bodies to “consider” how the services they procure might improve the economic, social and environmental wellbeing of the area in which they operate. This has been further reinforced by PPN 002, which mandates a minimum 10% weighting for Social Value in above-threshold central government procurements (Cabinet Office, 2025d).The concept and terminology of Social Value vary internationally. For example, it is referred to as “social procurement” in some jurisdictions (European Commission, 2024) and as In-Country Value (ICV) in parts of the Middle East (UAE Ministry of Industry and Advanced Technology, 2024). Across sectors and regions, including large infrastructure projects, there are diverse frameworks and definitions, reflecting local priorities and policy contexts.Social Value is often compared to Environmental, Social and Governance (ESG) reporting, which emerged in the 2000s, becoming mainstream with the United Nations 2004 report, Who Cares Wins (Byrne, 2025).While the two concepts are related, there are several key differences:Scope and intent:ESG frameworks typically emphasise risk mitigation, compliance and long-term financial performance, while Social Value focuses on creating positive change.Standardisation:ESG reporting varies significantly depending on the chosen framework (for example, Fitch, Moody’s, MSCI, EcoVadis, LSEG, ISS, CDP, S&P and FTSE4Good) leading to varied metrics and scores. Social Value frameworks typically offer structured and locally focused criteria (although these too can differ across sectors and geographies).Audience:ESG reporting is primarily intended for investors and governance stakeholders, whereas Social Value serves a wider audience, including public authorities, suppliers and local communities.Although the Public Services (Social Value) Act 2012 marked an important milestone, many found its requirements broad and non-binding, leaving significant discretion to individual authorities and suppliers.In response, various frameworks have emerged to provide structure and facilitate measurable outcomes. One example is the Social Value TOM (Themes, Outcomes, Measures) System™, developed by Social Value Portal in partnership with the National Social Value Taskforce and adopted by over 190 public sector authorities across the UK as of 2025 (Social Value Portal, 2025h).It quantifies impact using both activity-based units (for example, weeks of volunteering) and “proxy values” – financial metrics derived from data sources including the Office for National Statistics, HM Treasury’s Green Book and the Unit Cost Database (Social Value Portal, 2025h).Different sectors and authorities use different methods to define and evidence Social Value. While this poses a challenge in some contexts, it also demonstrates an opportunity to align approaches more closely across supply chains and geographies.Since the Public Services (Social Value) Act 2012, Social Value has evolved from a loosely defined concept to an increasingly central pillar of UK procurement strategy.This evolution is reflected in a series of key policy and legislative milestones:Moreover, the Government’s 2025 consultation on procurement reform builds on the Procurement Act 2023 by proposing further statutory requirements for Social Value, including mandatory award criteria and KPIs (key performance indicators) for major contracts, a national standardised list of Social Value metrics, and new flexibility to target Social Value delivery based on specific local needs (Cabinet Office, 2025e).Embedding Social Value into procurement is not only a matter of regulatory compliance. It allows authorities to leverage purchasing power to deliver wider national and local priorities, including reducing health inequalities, supporting social mobility, enhancing local economic resilience and advancing net zero ambitions.Social Value Portal tracks and validates Social Value delivery across the UK through its digital platform. The metrics below, primarily delivered through collaborations between public buyers and suppliers, illustrate the scale of measurable outcomes achieved (Social Value Portal, 2025i):Since the introduction of the Social Value Act in 2012, it has become increasingly evident that businesses able to deliver strong Social Value outcomes are more successful in securing public sector contracts. This evolution has reshaped the relationship between public and private sectors.Local authorities have played a significant role in this transformation, with Social Value evaluation weightings rising from around 5% in 2013 to as high as 30% in some areas, such as Manchester City Council, where it is integrated with zero carbon commitments (Manchester City Council, 2025).Consequently, Social Value has become a key commercial differentiator for suppliers to government. Data indicates that bidders who perform best on the Social Value component are twice as likely to win contracts overall (Social Value Portal, 2023e). Incorporating Social Value into business strategy can also support price resilience, as higher Social Value contributions may justify stronger value propositions and pricing structures.Importantly, this change has not been driven by policy alone. The increasing focus on Social Value has also tapped into an inherent commitment within many businesses to support their local communities and workforce.While some businesses remain primarily focused on short-term financial performance and may view corporate social responsibility as peripheral, many others, such as Mars, have begun to adopt approaches that align with Social Value principles, maximising their positive impact in the communities where they operate (Mars, 2025).These organisations are increasingly embedding Social Value into their procurement and supply chain strategies, learning from public sector approaches that the lowest price does not always equate to the best overall value. For these businesses, procurement is a means to achieve strategic objectives related to brand reputation, talent retention and long-term sustainability.Beyond procurement, consumer expectations are driving businesses towards more purpose-led approaches. Research by the Brand Experience Group and Social Value Portal found that socially and environmentally conscious consumers:This data indicates that brands that fail to engage with this demographic risk losing market share and future competitiveness (Brand Experience Group and Social Value Portal, 2025). Similarly, research from Accenture suggests that consumer expectations are shifting, with 62% of consumers wanting companies to take a stand on social, cultural or environmental issues (Accenture, 2018).Legislation such as the Procurement Act 2023 and PPN 002 has supported the integration of Social Value into public sector supply chains.However, the opportunity extends well beyond the public sector. Aligning even a small proportion of private sector supply chain activity with Social Value outcomes – for example, through inclusive employment, targeted local investment or climate action – could deliver significant societal benefits.Key levers for embedding Social Value include:To fully realise the benefits of Social Value through procurement, both public and private sector buyers should embed Social Value considerations from the outset of the process through to delivery and post-project evaluation. The six stages below outline key steps:Buyers should undertake a Local Needs Analysis (Social Value Portal, 2024g) or other stakeholder engagement to identify where Social Value can make the most impact. Pre-market engagement (such as “meet the buyer” events) helps share priorities and assess market readiness.Internal alignment is essential to ensure that procurement, legal, commercial, and delivery teams understand their respective roles. This includes engaging suppliers who may be new to Social Value and supporting capability building.Developing a robust Social Value measurement framework is critical. While frameworks like the TOM system are commonly used, the key is ensuring that the chosen approach reflects local community needs and organisational policies.Public sector buyers should define objectives that are proportionate and achievable for supply chain partners, especially SMEs, which may have fewer resources and options.A strong ITT should:Supporting smaller suppliers through sufficient time, clear guidance and pre-bid support can improve participation and outcomes.In the UK public sector, PPN 002 mandates that Social Value accounts for at least 10% of evaluation weighting, though this may be higher depending on local priorities. Private sector organisations have more flexibility but should follow suit including similar or higher weightings to emphasise Social Value where appropriate.Proposals should be assessed for deliverability, proportionality and additionality, with clear documentation to support future contract management.Social Value commitments should be monitored like any other contractual obligation. Buyers should:Buyers and suppliers should collaborate on end-of-project reports, highlighting outcomes and lessons learned. This is a requirement where Social Value KPIs form part of public sector contracts.Embedding and delivering Social Value is an iterative process. Regular feedback and shared learning are essential to refine and improve future delivery.Analysis by Social Value Portal suggests that procurement projects run through its platform achieve, on average, a 20% Social Value-add relative to contract value (Social Value Portal, 2023b). While this varies by sector and context, prioritising Social Value has been shown to enhance overall value for money.The rise of Social Value has been supported by policy initiatives, but ultimately it depends on practical action by practitioners from all parties to the contracting spectrum. While the roles of these stakeholders often overlap, each has distinct opportunities to embed Social Value more deeply.The following considerations highlight key opportunities for making Social Value a core part of governance and business practice.
Source: Journal of Public Procurement
Author: Guy Battle
Language: English
Subfield: Strategy and Management
Domain: Social Sciences
Open Access status: bronze
OpenAlex ID: W7108337399
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