Social value as a lever for achieving value for money and community outcomes in procurement

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:

• National Procurement Policy Statement (NPPS): Encourages contracting authorities to consider the full range of economic, social and environmental benefits when designing and awarding contracts (Cabinet Office, 2025b).

• Procurement Act 2023: Requires contracting authorities to “have regard” to public benefit and enables authorities to award contracts to the “most advantageous tender” rather than the previously required “most economically advantageous tender” (Cabinet Office, 2025a).

• Procurement Policy Notes [PPN 06/20 (Cabinet Office, 2020) and PPN 002 (Cabinet Office, 2025c)] Mandates that Social Value accounts for at least 10% of the evaluation weighting for in-scope central government procurements, with structured guidance on assessment.

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):

• 686,600 weeks of apprenticeships created.

• 2.4 million tonnes of carbon reductions achieved.

• £34.5m donated to charitable organisations.

• £181.6m contributed to broader community support initiatives.

• 1,680 jobs created for people with disabilities.

• £93.5m spent with impact-focused organisations.

• Over £9bn spent with local suppliers.

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:

• represent a growing majority of the population;

• make purchasing decisions aligned with their values; and

• tend to be younger, more educated, and higher income.

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:

• Ethical and inclusive sourcing: Encouraging suppliers to adopt standards such as ISO 20400 (sustainable procurement), conduct modern slavery audits and train staff on ethical practices. Prioritising suppliers that are local, diverse or operate as SMEs (small and medium-sized enterprises) and VCSEs (voluntary, community and social enterprises), and ensuring prompt payment.

• Fair employment and upskilling: Improving working conditions, providing meaningful employment opportunities, apprenticeships and training, especially for underrepresented or disadvantaged groups.

• Environmental responsibility: Collaborating with suppliers to measure and report Scopes 1, 2 and 3 emissions, support net zero transitions and demonstrate commitments to waste reduction, water efficiency and biodiversity.

• Community engagement: Working with suppliers to address local needs, including initiatives that support health and wellbeing, reduce crime, tackle homelessness or strengthen local voluntary infrastructure.

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:

1. 1 Engaging the market and community

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.

1. 2 Developing a measurement and management framework

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.

1. 3 Designing a clear Invitation to Tender (ITT)

A strong ITT should:

• reflect insights from market engagement;

• clearly define Social Value in context;

• include transparent evaluation criteria and timelines;

• specify staged remedies for non-delivery (including potential financial remedies); and

• Ensure accessibility for SMEs and VCSEs.

Supporting smaller suppliers through sufficient time, clear guidance and pre-bid support can improve participation and outcomes.

1. 4 Evaluating Social Value effectively

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.

1. 5 Delivering and managing Social Value

Social Value commitments should be monitored like any other contractual obligation. Buyers should:

• track KPIs and selected measures;

• intervene early if delivery challenges arise; and

• apply appropriate remedies when commitments are unmet.

1. 6 Reporting and continual improvement

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.

• Durham County Council: Through the “County Durham Pound” initiative, Durham County Council and partners aligned procurement to local priorities, resulting in over £300m in Social Value delivered in the first year (Social Value Portal, 2023a).

• Rotherham Council: Adoption of a formal Social Value policy increased local contract spend by 72% to £77m (Social Value Portal, 2023c).

• Harwich Haven Authority: Conducted a Local Needs Analysis and partnered with suppliers to deliver targeted community programmes and £4.3m in Social Value in 2023 (Social Value Portal, 2024f).

• Solihull Council and Ebsford Environmental: Delivered environmental regeneration works while surpassing Social Value commitments (Social Value Portal, 2023d).

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.

• Embed Social Value from the outset: Integrate Social Value into every stage of the commercial lifecycle, from early market engagement and needs assessments to evaluation and contract management.

• Align Social Value to local priorities: Use tools such as Local Needs Analysis and frameworks like the TOM System (or others) to understand community needs and shape procurement accordingly. Approaches based on ‘theory of change’ help connect interventions to measurable local outcomes.

• Support supplier inclusion and readiness: Ensure suppliers of all sizes, including SMEs and VCSEs, can compete fairly. Offer clear guidance, sufficient preparation time and capacity-building support.

• Set clear, measurable expectations: Establish transparent evaluation criteria and KPIs. Monitor delivery closely, address underperformance proactively and publish outcomes to maintain accountability and public trust.

• Create long-term, collaborative relationships: Treat suppliers as strategic partners through joint initiatives, shared learning and co-created community impact projects.

• Make Social Value core to strategy: Embed Social Value into governance, operations and culture, supporting both resilience and long-term growth.

• Align with buyer and community goals: Understand the priorities of public sector clients and local communities; tailor contributions accordingly.

• Invest in your supply chain: Collaborate with suppliers to improve ethical sourcing, inclusion and environmental performance; provide support through mentoring and joint initiatives.

• Measure and validate impact: Use robust, recognised frameworks to quantify contributions. Ensure claims are additional, attributable and independently verified, building confidence among buyers and internal stakeholders.

• Communicate transparently: Share measured impact clearly in bids, reports and communications. Use data and evidence to build trust and strengthen market positioning.