With Public Authorities increasingly turning to public private partnerships and LATCos to handle large, complex mixed-use developments, measurement and compliance with the Public Sector (Social Value) Act is becoming an increasingly challenging.
Long lead times and development periods can often mean social benefits aren't fully quantified, measured or captured. This is estimated to add up to a potential £15bn a year of lost social benefit.
A new report authored by Legal and General, the Social Value Portal and the BCO provides us with an interesting assessment and potential methodology for maximising social benefit from new developments.
Using large office and hospital developments as case studies, the report suggests that we could capture the lost social benefit through an established route; Section 106 agreements.
If developers and planners could focus s106 on community outcomes, as opposed to using them to top up dwindling Authority funds in other areas, then we could see more emphasis on collaboratively delivered social outcomes. By encouraging developers and building owners to get more involved with local communities, Authorities can in turn experience cost savings and significantly better outcomes for communities.
The report argues "If this is to be achieved, it is essential that all parties develop a new framework for negotiation that focuses on ‘value creation’ and social outcomes, rather than just cash contributions."
But I argue that to make this work, we need common and understandable measurement of social value and social benefit. This is something we are lacking as an industry.
I'm encouraged by the work of organisations such as the Centre for Citizenship, Enterprise and Governance (www.cceg.org.uk) and the Social Value Portal (https://socialvalueportal.com/), who are starting to provide the framework which makes a common measurement system a reality, but we are many years away from having something that is truly understandable and can be applied fairly by cash and time-strapped Public Authorities.
It is encouraging to see professional bodies and major investors starting to consider social value as part of their research, and I believe this adds to the momentum building in the industry that will inevitably create a shift change in how we consider investments and developments in property.
The full report is linked below, but also check out the blog post by author Debbie Hobbs, Head of Sustainability at Legal and General and this short summary of the report by Herpreet Kaur Grewal of FM World.
It is nothing new that developers will look to incorporate the latest environmental technologies into new buildings. However, the real estate industry is starting to look beyond the green credentials of a building and beginning to think about the total social impact an asset could have. Savvy investors are increasingly aware of the long-term economic gain of creating socially-useful developments that contribute to local economies and help transform our UK landscape. Many investors are calling this “impact investing”. This is about how our real estate developments can support the local economy and community around an asset over the long-term.