Social value is something everyone should be interested in. It is increasingly important within the public sector where economic, social and environmental benefits to the community must be considered as part of every procurement.
Real social value

Recent guidance in the Procurement Policy Note 06/20i issued in September 2020 provided new guidance on this subject, making it clear that every above threshold procurement for certain Governmental departments must now attribute a percentage of award criteria in a procurement to social value. How long will this guidance be for select parts of the Government only?

As an ethical company, Gallagher strives to add value to its communities at all times. Our sponsorship of the Rugby Premiership has allowed us to become more involved with local communities and our sponsorship of the Special Olympics demonstrates a real desire to celebrate the achievements of all sections of society. However, we are often asked about how we provide social value during formal tenders with examples relevant to the provision of insurance services. This is often difficult, but, our colleagues in Gallagher Re have just announced the arrival of a new mortgage indemnity solution which exemplifies how Gallagher is able to deliver social value through the design of innovative insurance solutions.

In 2013, the UK Government launched Help to Buy – a shared equity scheme which allowed home buyers to purchase a new build home with only a 5% deposit, a government loan for 20% and a 75% loan to value (LTV) mortgage for the remainder. Help to Buy has been hugely successful, facilitating over 272,000 sales since launch and accounting for around 40% of all new build salesii.

In early 2021, the scheme changed by reducing coverage to first time buyers only and restricting maximum house prices on a regional basis. In 2023, Help to Buy will be shut down completely. The Home Builders federation (HBF) has calculated that the first cut will effect up to 25,000 sales per annum. Naturally there is concern from a number of stakeholders as the scheme not only ensured a strong construction industry, but it all but eradicated high loan to value mortgages in the new build sector for almost a decade. Not something anyone wishes to see return given the current economic climate.

Working with builders, mortgage lenders and trade bodies, Gallagher Re has designed a viable mortgage indemnity solution to replace the existing scheme. In essence builders pay around 2. 5% of the purchase price of a new build house into a fund. That fund is used to offer protection to the lenders for the risk of reposition through a combination of cash and an excess of loss insurance policy. Modelling has ensured that the cash fund in combination with the excess of loss protection is large enough for the worst economic forecast.

Both lender and house builder response to the project has been extraordinary. The proposition is now live in the UK with the Newcastle Building Society and has been branded by the house builders as Deposit Unlock. We have 25 UK lenders engaged in the project and expect another five or six to be live this year with a top three lender in the market by the end of the summer.

This innovative approach will help deliver social value benefits:

  • Economic - a strong and vibrant construction industry employing locally, and delivering affordable housing for every community.
  • Social – creating strong communities through property ownership and a real desire to be part of something.
  • Environmental – creation of new housing stock built to high environmental standards with low carbon footprints and using sustainable materials.

For those organisations currently engaged with or planning house construction projects who wish to find out more please make contact with your Gallagher representative.



The sole purpose of this article is to provide guidance on the issues covered. This article is not intended to give legal advice, and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and/or market practice in this area. We make no claims as to the completeness or accuracy of the information contained herein or in the links which were live at the date of publication. You should not act upon (or should refrain from acting upon) information in this publication without first seeking specific legal and/or specialist advice. Arthur J. Gallagher Insurance Brokers Limited accepts no liability for any inaccuracy, omission or mistake in this publication, nor will we be responsible for any loss which may be suffered as a result of any person relying on the information contained herein.