In theory, Section 106 obligations are a different beast to social value offers. They are put in place by local authorities to “mitigate the negative impacts of a development”, rather than add value that wasn’t there before.
They are legal planning requirements for local authorities to ensure developers consider their impact on local infrastructure and communities, and put in interventions, commitments and measures to ensure there is minimal disruption. This could look like financial contributions, new transport links, schools, roads or other facilities to support a change in the local population brought about by new developments.
Over the years, social value-related activities like employment initiatives and skills sessions have crept into Section 106 obligations – which is great!
But it does leave us with a conundrum.
What happens when part of your company’s social value efforts end up included in your Section 106 obligations? Should you still claim them as part of your social value reporting? Surely social value should be driven by your company mission and social value strategy, not something you have to do by law?
Unsurprisingly, developers approach this decision in wildly different ways. To add to the confusion, local authorities across the country will vary enormously on how many social value-related activities they include in Section 106. So companies working nationally may find their social value proposals are included in Section 106 in one location and not included in others depending on where the work is taking place. This makes it even harder to benchmark and measure good practice.
As a social value consultancy we get to peek under the lid of organisational thinking when it comes to making choices like this.
We see those who think the social value you claim should always sit outside Section 106. And we see organisations that claim as much as they possibly can regardless of whether it is within Section 106 or not.
Obviously, we are firm believers that doing as much social value as you effectively can as a business is a great thing, and gaming the system is not ideal. But this isn’t a comment piece about who is right and who is wrong. The issue we’re concerned with is the lack of consistency this creates. When everyone does things a little bit differently, it makes measuring your socio-economic impact even harder for local authorities, and for you as a business.
It also poses a challenge for social value practitioners within organisations who are trying to embody good practice – if there is a balance to strike, how much is too much? How little is too little? These questions are unlikely to be answered in exactly the same way twice.
Having discussed this with clients, we wondered whether creating some guidelines might help. This would give organisations looking for direction an idea of how much of the social value falling within Section 106 is a sensible amount to include in your reporting. And, while we’re definitely about “tools not rules” here at CHY, it might also nudge the sector into something of a more unified approach.
It would mean those currently claiming nothing at all would be put on a more equal footing with their competitors. And those claiming everything might get a better idea of what a more balanced approach looks like.
Here are our suggested levels of attribution. What do you think? Could this potentially be a helpful move? Would you do anything differently?
Direct Financial Contributions
We suggest that direct financial contributions to local authorities to support overheads or infrastructure programmes are not included in social value evaluations. This is because the outcome value of direct payments is difficult to quantify.
Negotiated Contributions
We suggest that negotiated contributions (usually enforced through Reasonable/Best Endeavours) intended to generate additional value and support the local authority to achieve their social objectives may be included in a social value evaluation, with relevant attributions applied.
A consistent approach here is key, regardless of the negotiated contribution agreed within the S106 and aligned delivery plans. The common areas of negotiated contributions are outlined below:
Social Value should be attributed as follows:
Social Value should be attributed as follows:
Social Value should be attributed as follows:
The above includes specific requirements for categories of spend. Commonly this includes requirements specifically to spend with Small to Medium Enterprises (SME).
We’d love to know what you think.
Chat with us on this topic over on LinkedIn or get in touch at info@chyconsultancy.com
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