Government contracts must back British jobs from 2027 – what it means for young workers
Key Points
- Social value weighting in central government contracts of £5 million or more doubles from 10% to 20% on 1 January 2027
- Bidders will be scored on local job creation, pay above the legal minimum and training, including 45-day work experience placements
- Support for NEETs, care leavers and people with long-term health conditions is specifically targeted
- The threshold for social value requirements rises to contracts above £1 million, exempting most smaller firms
- Departments will publish annual progress reports measuring suppliers against their commitments
Government departments will double the weight they give to local jobs, skills and training when scoring bids for public contracts worth £5 million or more from 1 January 2027.
The Cabinet Office announced the change on Wednesday (5 August), lifting the social value score in central government procurement from 10% to 20%.
The rules cover a contracts market the government values at £90 billion a year and apply to UK and international suppliers alike. Detailed technical guidance follows in the Autumn.
What bidders will have to prove
Suppliers will earn extra credit for creating local jobs that pay above the legal minimum and treat workers properly, and for offering training that plugs local skills shortages, including work experience placements of 45 days. Bids must show specific support for young people not in education, employment or training, care leavers and people with long-term health conditions.
The Cabinet Office has scrapped several other areas companies previously had to demonstrate action on, which it says makes the process simpler to navigate.
For major contracts, departments will set a key performance indicator against each supplier’s commitments and publish annual progress reports, measuring performance against what the winning bidder promised.
“Every pound of taxpayer money should be spent in a way that benefits local communities – creating good jobs and giving young people the skills they need for the future,” said Louise Haigh, First Secretary of State.
“For too long, securing government contracts has been a tick box exercise that fails to deliver the positive change that people feel in their pocket and see in the places they live,” she added.
Smaller contracts fall outside the rules
The government has also raised the threshold at which the social value requirements apply, to contracts worth more than £1 million.
That takes most of the work smaller firms, local social enterprises and civil society organisations bid for outside the regime entirely. The Cabinet Office said layers of red tape and burdensome requirements had locked those organisations out of contracts that larger competitors knew how to win.
“These changes will mean that businesses that benefit from the billions of taxpayer pounds spent by Government, will have to create more local jobs and opportunities for young people in their area,” said Mark Ferguson, Cabinet Office minister.
Central government contracts sit within a much larger pot. Public sector procurement from the private sector rose from £288.7 billion in 2019/20 to £394.8 billion in 2024/25, an increase of more than a third over five years.
Local authorities will run their own version of the approach. The Mayor of the West Midlands is using social value to move more young people into employment or training in the region, working with central government and industry on the 3,000 Futures initiative, which builds on the region’s Youth Guarantee Trailblazer.
“Catch22 very much welcomes the government’s commitment to ensure that public procurement reaches further through social value – delivering local growth, addressing youth unemployment, and supporting local communities,” said Andy Canniford, Chief Officer for Impact and Growth at Catch22.
The new rules apply to central government procurements only.
