Social value weighting doubles to 20% in £90bn procurement shake-up
From 1 January 2027, bidders for large central government contracts will be scored on the jobs and training they create, not on net zero or equality measures. Small suppliers get a higher threshold before the rules bite.
The Cabinet Office announced on Wednesday that companies bidding for government contracts worth £5m or more will be scored on job creation rather than on net zero, equality and diversity.
Social value — the wider benefits a bidder claims to bring — will count for 20 per cent of the assessment at that level, double the current 10 per cent.
The whole of that 20 per cent will rest on job creation. The previous basket of measures, which included equality and diversity, net zero and post-Covid recovery, goes.
Extra credit goes to bidders who create local jobs paying above the minimum wage, who run training aimed at local skills gaps, and — the Cabinet Office singled this one out — who offer 45-day work experience placements for young people.
The rules take effect on 1 January 2027 and apply to British and international firms alike. Detailed technical guidance is due in the autumn.
For smaller suppliers, the more consequential number is £1m. The Cabinet Office said it has raised the threshold at which the requirements apply to contracts worth more than £1m, so that they should not usually catch the work small firms and local social enterprises bid for.
Craig Beaumont, executive director at the Federation of Small Businesses, said: "Lifting the threshold to £1 million ought to see many more small firms winning contracts, as small businesses deliver huge intrinsic social value but they can often struggle to demonstrate this in procurement processes."
The change follows guidance issued last year urging public sector buyers to award more contracts to small businesses.
First Secretary of State Louise Haigh called the current process a "tick-box exercise" and said the £90bn spent each year through government contracts should support "British jobs, skills and people in every postcode".
Cabinet Office Minister Mark Ferguson said firms that benefit from taxpayer money "will have to create more local jobs and opportunities for young people in their area".
The policy sits against youth unemployment figures. Office for National Statistics data show more than a million people aged 16 to 24 were not in education, employment or training in the first three months of 2026. The government has appointed former Marks & Spencer chief executive Marc Bolland to rally employers behind 300,000 work experience and training placements.
Prime Minister Andy Burnham, who ran a similar scheme as mayor of Greater Manchester, has said he wants "growth in every postcode".
Green groups objected. Ami McCarthy, head of politics at Greenpeace UK, said protecting the environment and helping young people into work are "mutually beneficial and one shouldn't come at a cost to the other".
Winning is not the end of it. For major contracts, departments will set a key performance indicator and publish annual progress reports measuring suppliers against the commitments they made in their bids.
For a founder selling to government, the practical work starts before the autumn guidance lands. A bid above the relevant threshold will need countable placements, named local roles and pay levels above the minimum wage — and a way of proving delivery a year later, in public. Suppliers whose social value pitch currently rests on carbon reporting will need a different answer by January 2027.