Legal & General Homes is to be one of the first UK housebuilders to track and measure the social impact of its developments though the launch of a social charter.
Working with the Social Value Portal (see box, below), the firm aims to put a monetary figure on the social benefits its developments bring. Using the SVP’s tools, the monetary contribution of developments will be tracked and updated through a publicly accessible website.
The move comes amid growing calls for developments to benefit the wider community, not just shareholders.
At the Chartered Institute of Housing conference in June, Manchester mayor Andy Burnham struck a chord by promoting the possibility of non developer-led development. And in London, there has been a widespread backlash against unaffordable housing.
The aim behind these calls is to move beyond empty phrases such as placemaking and community engagement, and create lasting value for the community.
“You can go along to meetings with the local authority and land owners and say, ‘These are the nice things we can do…’. Everyone says them,” says James Lidgate, chief executive of Legal & General Homes.
“I wanted something with an evidential base: these are the commitments, this is how long they will last, and this is the monetary cost of these commitments,” he adds.
L&G is not the first company to try to implement initiatives of this nature, but it is one of the first to take the initiative this far and to openly commit to it.
What’s held it back?
Measuring and then monetising something as hard to define as a development’s impact on the health of children living nearby is, however, difficult.
“Social architecture is just as important as the physical architecture of regeneration. The difficulty is measuring it,” says Richard Fagg, director for Countryside Partnerships South. He says his company has been exploring ways of measuring social impact for a few years.
Nevertheless, companies are emerging that can calculate a specific figure for the effects of development, in order to enhance accountability.
RealWorth, a firm that is similar to the Social Value Portal, produces research that, according to its website, looks past the market-based and physical effects of a development to calculate its potential social and environmental outcomes. Founded by Erik Bichard, a professor of regeneration and sustainable development at the University of Salford, the firm’s aim is not only to derive a monetary figure, but also to ensure that similar metrics and benchmarking are used across schemes and developers, so that they can be compared.
Development firm Uncommon’s Martyn Evans says it will be important to have universal standards of measurement, such as those used to determine sustainability.
Longer-term factors
Another impediment to measuring and monetising social and environmental impacts is the short-term nature of development. Essentially, once a housebuilder has built a scheme, it moves on.
Evans says that although developers are getting better at thinking about place, they are still short-term investors. “They build, sell and repay shareholders,” he says.
He adds that there could be a much more complex policy under which developers can underpin schemes with some kind of ongoing financial responsibility, rather than just handing a scheme over to a community that does not have the experience to manage it.
Lidgate concedes that many of the measurements L&G is using are concerned with the build out, rather than the longer-term effects of development, but adds that this is a problem that is being addressed. L&G is, for example, tracking the benefits of employing contractors that hire unemployed workers or those with criminal records in order to enhance social benefit. But L&G will not, at lease initially, track factors such as the health benefits of a new park over a number of years.
Fagg points out that it is not just developers that focus on short-term change. Local authorities also usually choose the strategy that yields the highest potential monetary value when they sell, rather than take into consideration community benefits – despite a requirement for all authorities to commit to a social value charter.
Short-term cost, long-term gains
The costs of tracking such benefits will be higher for developers in the short term but, Lidgate says, the benefits will outweigh them. Furthermore, the longer-term advantages are huge.
“The beauty is that the more developers are forced to pay attention to [long-term social and environmental costs], the better their developments are going to be,” says Evans.
And in an era of growing distrust between authorities, developers and communities, being able to put a number on the value of your development could be invaluable for enhancing your reputation and winning new mandates.
Lidgate says: “Frankly, if we can trailblaze this, aside from mitigating the impact of your development through section 106, you can also add value, and you can take that on to different sites and other authorities.”
The social value charter
In partnership with the Social Value Portal, L&G has created a social value charter that will monitor and communicate how much value its developments produce.
It is being piloted at the Buckler’s Park development in Crowthorne, a 250-acre scheme in Berkshire.
Under the charter, the portal will provide an ongoing monetary figure, accessible online, that shows the value that the scheme has added to the local area. This is on top of what developers have to do to comply with section 106 and planning obligations.
For example, employing an out-of-work, ex-prisoner currently on employment benefit for one year has a contribution of £34,000 to the local community.
Tenders will also be awarded on the premise of the social value they add. For instance, the construction of a school on site has added nearly £3m in additional social value to the scheme’s £6m build cost.
The Social Value Act
The public sector has since 2012 been required to consider creating social value, alongside best values, though the Social Value Act.
According to the government website, “[The Act] requires people who commission public services to think about how they can also secure wider social, economic and environmental benefits.
“Before they start the procurement process, commissioners should think about whether the services they are going to buy, or the way they are going to buy them, could secure these benefits for their area or stakeholders.”
The difficulty has been in justifying lower receipts from sales against an unquantifiable social benefit.
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