By Graham Collie, director of product innovation, LHC Procurement Group (LHCPG)
Dropping social value from public sector procurement may sound like a simple way to cut costs, but in housing it would come with a heavy price.
Remember, with social housing decisions do not just affect budgets; they shape the quality of homes, the resilience of supply chains and the strength of local economies. In a nutshell, it would be a blow to the very communities procurement is designed to help.
Recent proposals from RE:State – which describes itself as Britain’s leading public services think tank – argued in its Procure and Simple report that social value could be removed entirely from procurement processes, returning the focus purely to quality and price.
It has also suggested replacing locally determined SME targets with a national requirement that 10 per cent of public spend goes to startups and scaleups.
At a time when public finances are under pressure, these arguments can sound attractive. Everyone in the housing sector understands the need for value for money. But this approach risks narrowing how “value” is defined at precisely the wrong moment.
This debate comes just as the Procurement Act 2023, which came into force on 24 February 2025, reshapes the landscape. The biggest overhaul of public procurement in a generation, it replaces EU-derived rules with a simpler framework that places renewed emphasis on public benefit and long-term value.
Because let’s be clear, cheapest is rarely best in construction and housing delivery. Lowest-cost tendering tends to reward size, balance-sheet leverage and the ability to absorb short-term losses, not long-term performance, financial resilience or commitment to local communities.
The collapse of Carillion in 2018 should still give the sector pause for thought. With £7bn of liabilities, thousands of job losses and hundreds of public projects thrown into chaos, it exposed the risks of over-reliance on large contractors simply because they appeared “safe”.
No single procurement policy caused that failure, but it highlighted what happens when scale and price are trusted more than delivery culture, due diligence and supply chain health. It was a reminder that procurement decisions can amplify systemic risk when resilience is undervalued.
Well-designed frameworks are a safeguard There are some frameworks, such as LHC Procurement Group’s, that are Gold Standard verified via an accreditation managed by Constructing Excellence with fully independent verifiers. This is a safeguard for fairness, transparency and consistent standards in supplier selection and management. We are one of only eight providers to have received this accreditation to date.
Well-designed frameworks add value. By pre-qualifying suppliers, embedding transparency and assessing more than cost alone, they reduce the risk of inconsistent or opaque decision-making. They also create routes for smaller firms to participate in public contracts that would otherwise be inaccessible.
Frameworks provide a consistent, auditable way to embed social value priorities – whether that is local employment, decarbonisation, skills, or community investment – into real contracts, not just policy statements.
That is how social value moves from aspiration to delivery: through repeatable, enforceable commercial mechanisms that suppliers understand and clients can manage.
Back to the Procurement Act; granted it moves away from the explicit language of the Social Value Act 2012, but it does embed social, environmental and economic outcomes within the statutory objective of delivering public benefit.
Under the new Most Advantageous Tender (MAT) approach, contracting authorities are expected to consider wider outcomes throughout the procurement and contract lifecycle, not treat them as a bolt-on. That reflects a shift from lowest price to best overall outcome.
In housing, that matters because the outcomes we care about are not short-term outputs, but long-term performance: safer homes, lower energy bills, reliable maintenance, stronger local supply chains and a workforce with the skills to sustain delivery over decades.
The act’s emphasis on public benefit and lifecycle value aligns procurement much more closely with how housing actually works: transformational, not transactional.
Social value – done properly – is simply the practical expression of that principle. It turns public benefit from a statutory objective into something that can be specified, measured and contract-managed over time.
That brings us to SMEs, and where RE:State’s position becomes less aligned with delivery reality. Placing such a focus on startups and scaleups risks confusing innovation policy with procurement reality. Startups and scaleups have an important role to play, but they are not the same as SMEs, and they are not always best placed to deliver core housing programmes. Our client base needs to be assured that they can trust the suppliers entering into their tenants’ homes.
Across the country, established local SMEs form the backbone of social housing delivery. They employ local people, train apprentices, understand local conditions and deliver repairs, retrofit and construction work year after year.
These are not speculative businesses; they are dependable operators with deep roots in their communities.
A rigid national mandate risks favouring a narrow subset of firms defined by growth stage rather than capability, track record or contribution to public benefit. In doing so, it could inadvertently sideline the very SMEs that public procurement has spent years trying to support.
Allowing contracting authorities to set their own SME targets is not an exercise in bureaucratic freedom. It reflects the Procurement Act’s intention to give authorities flexibility to design processes that suit local markets, capacity and delivery needs.
Value for money is of course essential
None of this is an argument against cost control. I am a quantity surveyor at heart so value for money is essential, particularly in the current fiscal climate. But even the most commercial quantity surveyor knows that it is not the same as lowest price.
When applied properly, social value is not a vague or sentimental add-on. It is a practical mechanism for ensuring that public spending delivers wider public benefit: sustained local employment, skills development, supply chain resilience, carbon reduction and long-term delivery capacity. These are not peripheral outcomes; they are risk controls that support stable delivery over time.
In other words, social value is not a distraction from delivery risk; it is one of the main ways to manage it.
A workforce pipeline reduces programme delays. Strong local supply chains reduce dependency on a small number of overstretched national providers. Investment in skills and capability improves quality first time and lowers whole-life costs. These outcomes are not soft benefits – they are the foundations of reliable, scalable delivery.
If procurement strips these considerations out, it does not become more commercial. It becomes more exposed.
Frameworks that understand regional markets and supply chains are often best placed to translate these principles into effective delivery. That’s why we have experts in each of the devolved nations as part of our evaluation process.
Building homes at scale will always require Tier 1 contractors. The question is whether procurement frameworks encourage those contractors to engage meaningfully with local SMEs, or whether poorly designed rules push work towards ever larger, more concentrated providers.
RE:State’s Procure and Simple analysis is right to say that procurement must deliver value for money. But stripping out social value – at a time when the Procurement Act has embedded public benefit at the heart of the system – risks narrowing competition and weakening local economies.
In social housing, where public money shapes lives, procurement should be judged not only by what it saves this year, but by what it brings to communities for years to come.
That is real value for money, pure and simple.
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