Companies bidding for government contracts worth £5m or more will be scored on the jobs and training they create rather than on net zero, equality and diversity measures, under changes to the £90bn public procurement system announced by the Cabinet Office on Wednesday.
The weighting given to the wider benefits a bidder brings, known as social value, will double from 10 per cent to 20 per cent of the assessment for contracts at that level. The new 20 per cent score will be based on job creation, replacing the previous set of measures, which covered areas including equality and diversity, net zero and the post-Covid recovery.
Bidders will be given extra credit for creating local jobs that pay above the minimum wage, for training that plugs local skills gaps and, in particular, for offering 45-day work experience placements for young people.
The rules will apply to both British and international firms bidding for central government contracts and take effect from 1 January 2027, with detailed technical guidance due in the autumn, the Cabinet Office said.
The changes come as the government seeks to tackle youth unemployment, with the prime minister, Andy Burnham, saying he wants to create “growth in every postcode”. Burnham used a similar initiative during his time as mayor of Greater Manchester.
Figures from the Office for National Statistics 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 already appointed the former Marks & Spencer chief executive Marc Bolland to rally employers behind 300,000 work experience and training placements for young people.
First Secretary of State Louise Haigh, who is effectively Burnham’s deputy prime minister, said the procurement process in its current form was a “tick-box exercise”.
“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,” she said.
“These new rules will ensure the £90 billion that is spent each year through government contracts supports British jobs, skills and people in every postcode.”
Cabinet Office Minister Mark Ferguson said businesses that secure government contracts “have a responsibility to give back”.
“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,” he said.
The Cabinet Office said the threshold for the requirements has been raised to contracts worth more than £1m, so that they do not typically apply to the work smaller firms and local social enterprises bid for. The change follows guidance issued last year urging public sector buyers to award more contracts to small businesses.
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.”
For major contracts, government departments will set a key performance indicator and publish annual progress reports measuring suppliers’ performance against their commitments, the Cabinet Office said.
Green groups criticised the plans. 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”.
“Companies should be held to account with environmental targets to help achieve a better future without leaving young workers behind,” they added.
