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Social Value Spotlight: How will the budget and Public Sector Procurement Act 2023 affect the development industry?
Tax reforms may have dominated the headlines from Rachel Reeves’ first budget (Autumn Budget 2024: Fixing the Foundations to Deliver Change), but the wider budget spending proposals have the potential to increase social value. These will have implications for the development industry and property. Here is what you need to know.
Reeves set out plans to restart a range of transport and housing-based capital projects as well as continuing with a programme of land disposals to raise revenue. Coupled with the forthcoming Public Sector Procurement Act 2023 (due to come into force 24 February 2025), which places emphasis on enhancing value for money and realising public benefit, there is a real opportunity for the Government to drive social value through its spending and programme of disposals.
Maximising public benefits in procurement decisions
The budget states that ‘capital investment will increase by £13 billion next year’, taking total departmental capital spending to £131 billion in 2025/26. The investment focuses, in particular, on transport projects and the delivery of 1.5 million homes.
These projects will be procured under the Public Sector Procurement Act 2023, as will all public sector land development bids. The Act will require commissioning authorities to have regard to maximising public benefits and to make procurement decisions beyond price as a sole criterion.
The Government’s own Social Value Model points to the types of benefits which would be expected, linked to the United Nations Sustainable Development Goals. This includes quantifiable indicators across themes such as:
- Tackling economic inequality;
- Fighting climate change;
- Equal Opportunity;
- and, Wellbeing.
The Act states that “In order to achieve value for money, contracting authorities should have a comprehensive understanding of their requirements and link them to their policy priorities (which may include wider economic, social and environmental considerations where they are relevant, proportionate and non-discriminatory) and any national priorities set out in the NPPS[1]”. We have already been directly involved in successful bids where a significant weighting was placed on demonstrating commitment to delivering social benefits in local communities.
The budget also mentions disposal of surplus Government estate to the value of £1 billion in receipts by 2030. Any subsequent planning application on the disposed land is likely to require demonstration of the social benefits as more Local Planning Authorities adopt social value requirements.
How will this affect the development industry?
Those operating in the built environment sector, from architects to developers to planners, will clearly need to consider and articulate social value contributions to be competitive when bidding for Government projects and on land. Those organisations that prioritise delivering social value through property are likely to be well placed to compete for contracts, land and other assets and will play a pivotal role in delivering the Government’s ambitions to ‘rebuild Britain’.
Similarly, those looking to acquire land disposals may need to factor in the cost of delivering social value requirements in their valuation of sites.
Please get in touch with Amy Gilham if you would like support on developing social value strategy or commitments, understanding local social needs and assessing the potential impact of your scheme. More information on our social value work is available here.
21 November 2024
[1] National Procurement Policy Statement