Government Procurement Rules Overhauled to Back British Jobs and Skills

The government has announced a significant overhaul of the government procurement rules used to assess social value when major central government contracts are awarded. From 1 January 2027, the revised framework will place substantially greater emphasis on good British jobs, fair working conditions, skills development and opportunities for young people and others who face barriers to employment.

The changes are contained in Procurement Policy Note PPN 026 and a new Social Value Model published by the Cabinet Office on 5 August 2026. The policy defines social value for central government contracts by reference to how suppliers will work with communities to provide good British jobs, skills and opportunities in every postcode. For employers and suppliers, the new government procurement rules will make workforce planning, recruitment, pay, training and progression increasingly important to both tender preparation and contract delivery, particularly where contracts can provide employment, apprenticeships or skills opportunities for young people.

The announcement also represents a rapid political and policy reset. PPN 026 was published shortly after Andy Burnham became Prime Minister on 20 July 2026 and will replace PPN 002, which became mandatory only on 1 October 2025. Businesses that regularly bid for central government work must therefore prepare for a second substantial change to the government procurement rules within a relatively short period.

How the Government Procurement Rules Are Changing

The revised government procurement rules will apply to covered procurements commenced on or after 1 January 2027 by central government departments, their executive agencies and non-departmental public bodies. A procurement is treated as commencing when the tender notice is published.

PPN 026 applies only to covered procurements with a total contract value of at least £1 million, inclusive of VAT, commenced under the Procurement Act 2023. It does not apply to private utilities contracts or contracts whose primary purpose is overseas delivery. Other public-sector contracting authorities may choose to adopt the approach, but local authorities and other public bodies are not automatically required to do so.

For contracts valued at £1 million or more but below £5 million, social value must carry a minimum weighting of 10% of the total tender score, or an equivalent measurement. For contracts worth £5 million or more, the minimum weighting rises to 20%. The government procurement rules will therefore double the minimum influence of social value on the largest procurements.

Contracting authorities must still select criteria that relate to the subject matter of the contract, are proportionate, do not create unnecessary burdens or barriers to participation and do not discriminate against treaty-state suppliers. The higher weighting does not give authorities an unrestricted power to favour local or UK-owned bidders.

A Much Narrower Social Value Model

The new government procurement rules substantially simplify the model they replace. PPN 002 was aligned with five government missions and contained eight policy outcomes, 17 Model Award Criteria and 33 Standard Reporting Metrics. It provided a considerably broader framework from which contracting authorities could select outcomes and criteria relevant to individual procurements.

PPN 026 reduces that structure to two outcomes and six Model Award Criteria. The outcomes are:

• Good Jobs: fair pay, good working conditions and opportunities to obtain work, remain employed and progress; and
• Skills: training, retraining and development intended to address skills shortages and improve access to employment.

Detailed sub-criteria, target cohorts, community programmes and guidance on evaluation and measurement are due in autumn 2026. The published model does not reproduce PPN 002’s extensive list of standard reporting metrics.

This is therefore more than a modest adjustment. The government procurement rules are being refocused around employment and skills as the principal forms of social value assessed in central government tender competitions. For bidders, the government procurement rules may be simpler in form, but they will be more concentrated in substance.

The Emphasis on British Jobs

The express focus on British jobs is central to the policy. The government says it wants public procurement to support British businesses, strengthen local economies and deliver jobs, skills and opportunities in every postcode. Young people are a particular focus of that approach, with the Government expressly seeking to use major public contracts to increase access to apprenticeships, work placements and routes into employment.

Under the new government procurement rules, suppliers may receive credit for creating or retaining high-quality jobs in the area relevant to the contract, adapting recruitment and retention procedures to improve access to work and creating employment in innovative or high-growth sectors. The model is concerned not only with the number of jobs created, but also with whether those jobs offer fair pay, security, progression and good working conditions.

The “British jobs” language does not, however, permit contracting authorities simply to exclude overseas bidders or reserve contracts for UK-owned businesses. PPN 026 requires award criteria to be proportionate, contract-related and non-discriminatory, including towards suppliers protected by the United Kingdom’s trade agreements. International suppliers remain able to compete, but may need to explain how performance of the contract will deliver jobs, skills and opportunities within UK communities.

Good Jobs, Fair Pay and Working Conditions

The first outcome under the government procurement rules covers the creation and retention of high-quality jobs, fair working conditions and fair pay.

Contracting authorities may give credit to suppliers that go beyond statutory minimum requirements. PPN 026 refers to pay above the National Minimum Wage, progressive remuneration policies and measures intended to improve the financial wellbeing of the contract workforce.

Working conditions may also be assessed. The model expressly identifies the availability of trade union representation, flexible working arrangements, a positive workplace culture and measures supporting workforce health and productivity. Suppliers may also receive credit for supporting workers who face barriers or challenges in performing their duties or remaining in employment.

For employers, these criteria may bring practices previously treated as internal HR matters directly into the competitive tender process. Pay structures, contractual security, retention measures, workplace support and career progression may all need to be explained, evidenced and connected to delivery of the particular public contract. These government procurement rules may therefore turn the quality of employment practices into a material point of competitive distinction.

Supporting Young People Into Employment

Youth employment is a prominent part of the new government procurement rules. Office for National Statistics estimates show that 1,012,000 people aged 16 to 24 were not in education, employment or training between January and March 2026, equivalent to 13.5% of that age group. The estimate was 89,000 higher than a year earlier and 55,000 higher than in the previous quarter, although the ONS advises caution when interpreting short-term movements in Labour Force Survey data.

The Social Value Model identifies people who are not in education, employment or training (NEET), people moving from education into employment, care leavers and people with long-term health conditions or disabilities as groups to be addressed in the detailed guidance.

Suppliers may strengthen their bids through apprenticeships, pre-employment training, placements and other educational or development opportunities. PPN 026 itself cites 45 days of work experience as an example of the type of social value the Prime Minister is seeking to see delivered through the policy.

The aim of the government procurement rules is therefore broader than creating entry-level vacancies. Suppliers will be expected to show how they can help young people and other target groups gain experience, develop relevant skills, enter work and progress towards sustainable careers.

Addressing Local and Sectoral Skills Shortages

Skills form the second main outcome under PPN 026. The government procurement rules allow contracting authorities to examine whether proposed training or retraining will address identified shortages in the relevant area, sector or contract workforce.

The model encourages suppliers to work with communities, anchor institutions and representative organisations to identify needs and co-design appropriate interventions. Depending on the contract, this might include apprenticeships, recognised qualifications, workplace learning, retraining, career-development programmes or partnerships with colleges and specialist training providers.

A separate talent-pipeline criterion focuses on developing the future workforce. Suppliers may be assessed on how they identify potential within disadvantaged communities and remove barriers to pre-work training, placements and apprenticeships.

For organisations that bid regularly for public contracts, the government procurement rules may require closer coordination between procurement, HR, learning and development and operational teams. A credible workforce and skills plan may become a material component of bid strategy rather than merely an internal business document.

Reducing Barriers for Smaller Suppliers

The £1 million threshold is intended to reduce the administrative burden on smaller businesses, voluntary organisations and social enterprises competing for lower-value work. PPN 002 generally applied to covered procurements above the relevant Procurement Act thresholds, whereas PPN 026 confines the revised model to contracts with a total value of at least £1 million inclusive of VAT.

When selecting award criteria, contracting authorities are expected to consider market conditions, including whether SMEs, voluntary, community and social enterprises or international bidders are likely to participate. The chosen requirements should not create unnecessary burdens or barriers.

The government procurement rules are therefore designed to simplify the model while preserving substantial social-value requirements for larger contracts. Smaller suppliers bidding for opportunities above the threshold will still need to provide credible and measurable employment or skills commitments.

Whether the changes materially improve access will depend on how contracting authorities implement the forthcoming guidance. Simplification should help, but smaller organisations may continue to face practical difficulties if evaluation requirements are overly complex or demand sophisticated data and contract-management systems.

Greater Accountability for Tender Commitments

The revised government procurement rules place particular emphasis on converting tender promises into measurable contract outcomes.

For contracts with an estimated value of £5 million or more, including VAT, PPN 026 states that at least one social-value key performance indicator should be set. Where the contract is worth more than £5 million and the section 52 duty applies, that social-value indicator should be additional to the three or more KPIs generally required under section 52(1) of the Procurement Act 2023.

The threshold distinction matters. A contract valued at exactly £5 million falls within PPN 026’s social-value KPI provision, but not the separate section 52 duty, which applies only where the estimated value is more than £5 million. The government procurement rules should therefore not be described as imposing four KPIs on every contract worth exactly £5 million.

All social-value commitments made during tendering should be monitored and measured through appropriate contractual mechanisms and communicated to contract managers. Where the statutory KPI publication regime applies, KPIs must be published and performance assessed and reported at least once in every 12-month period through a contract performance notice. If that regime does not apply, PPN 026 says arrangements should be made to publish the social-value KPI elsewhere.

The annual reporting and exclusion framework is not wholly new. It operates through the Procurement Act 2023’s existing contract-performance and discretionary-exclusion provisions. What the new government procurement rules add is an express social-value KPI expectation for major contracts and a clearer connection between employment and skills promises, contractual monitoring and future procurement decisions.

Evidence of poor performance against social-value KPIs may be taken into account when considering whether an existing statutory ground for exclusion applies. Employers should therefore avoid making ambitious commitments merely to improve a tender score. Proposed jobs, apprenticeships, placements and training programmes should be costed, measurable and realistically deliverable throughout the contract term.

Using Public Spending to Back British Jobs

The financial scale of the policy is considerable. Central government contracts represent around £90 billion of expenditure each year. Across the wider public sector, procurement spending from the private sector increased from £288.7 billion in 2019/20 to £394.8 billion in 2024/25.

The government procurement rules are consequently being used as an instrument of economic and labour-market policy, rather than solely as a system for purchasing goods, works and services.

First Secretary of State Louise Haigh said the £90 billion spent annually through government contracts should support British jobs, skills and people in every postcode. Cabinet Office Minister Mark Ferguson said businesses benefiting from taxpayer-funded contracts have a responsibility to create local jobs and opportunities for young people. The government has also described the reforms as part of a wider effort to support British businesses, strengthen domestic capabilities and improve supply-chain resilience.

The political message is deliberately national as well as local: government purchasing should produce visible employment and skills benefits across the United Kingdom, while remaining consistent with the legal requirements governing equal treatment and international suppliers.

Regional Programmes and Digital Skills

The launch announcement connected the government procurement rules with wider regional and digital initiatives, although those programmes are not requirements created by PPN 026 itself. In that sense, the government procurement rules sit within a broader policy programme linking public purchasing, regional growth and workforce development.

The National Cloud Infrastructure Programme is exploring how public-sector cloud demand can be coordinated and used to support long-term digital capability. Through the associated Cloud Challenge Book 2026, the government has linked its purchasing power with the development of cloud and AI infrastructure and opportunities for young people, including those who are NEET, to gain digital and AI skills.

The government also cited the West Midlands’ 3,000 Futures initiative, under which central government, local leaders and industry will explore how procurement and social value can support more young people into employment or training. The programme builds on the region’s Youth Guarantee Trailblazer.

These examples illustrate the wider policy direction, but suppliers should distinguish between programmes referenced in the launch announcement and the binding government procurement rules contained in PPN 026 and its forthcoming guidance.

What Happens to Environmental Priorities?

The removal of environmental sustainability from the principal Social Value Model is one of the most significant aspects of the government procurement rules. PPN 002 contained a specific sustainable-procurement outcome covering carbon reduction, waste, clean energy, green technologies and environmental improvement. PPN 026 contains no equivalent outcome.

That does not mean environmental requirements have disappeared from central government procurement. Separate policies remain in force, including requirements concerning Carbon Reduction Plans for applicable major government contracts, together with other specifications, selection criteria and contract terms dealing with carbon reduction and sustainability.

The accurate position is therefore that environmental considerations are being removed from the Social Value Model’s principal award framework, not abolished from public procurement altogether. Employers may still need to satisfy environmental requirements alongside the employment and skills criteria introduced by the new government procurement rules.

The narrower model may nevertheless attract criticism from organisations that consider employment, skills and environmental objectives complementary rather than competing priorities. Its practical effect will become clearer when the detailed guidance explains how PPN 026 is intended to operate alongside the government’s remaining environmental procurement policies.

What the Government Procurement Rules Mean for Employers

Employers that tender for central government contracts should begin preparing before the detailed guidance is published.

The government procurement rules are likely to require evidence showing how proposed employment and skills activity relates specifically to delivery of the contract. General corporate policies or unsupported statements may carry limited weight unless they are translated into clear, measurable and time-bound commitments.

Businesses should review:

• Recruitment and retention practices;
• Pay, contractual security and working conditions;
• Apprenticeships, placements and work-experience programmes, particularly those providing routes into employment for young people and other priority groups;
• Training, retraining and career-development arrangements;
• Partnerships with colleges, employment services and community organisations; and
• Systems for measuring and reporting contract-specific outcomes.

Procurement teams should involve HR, learning and development, finance and operational managers before employment or training commitments are included in a tender. Where bids include commitments concerning young people, employers should ensure that any proposed apprenticeships, work placements or training opportunities are properly resourced and capable of providing meaningful experience. Those responsible for contract delivery must also understand what has been promised, how it will be funded, how the commitments will be delivered in practice and how performance will be evidenced.

International suppliers should also prepare to address the policy’s British-jobs focus. The government procurement rules cannot lawfully be applied so as to discriminate against protected overseas suppliers, but those suppliers may still need a credible plan for generating employment and skills benefits in the UK locations and communities connected with the contract.

Implementation From January 2027

The revised government procurement rules will apply to in-scope procurements commenced on or after 1 January 2027. Detailed guidance on sub-criteria, target groups, community programmes, evaluation and measurement is expected in autumn 2026.

The implementation period gives suppliers time to assess whether their existing employment and skills programmes can support future bids. Businesses affected by the government procurement rules should use that period to identify gaps in delivery capability, internal governance and reporting. Meaningful partnerships, training pathways and data-collection systems may take time to establish.

The government procurement rules mark a substantial attempt to use public purchasing to deliver British jobs, workforce skills and opportunities in every postcode, including clearer routes into employment and training for young people. Their effectiveness will depend on whether the stronger social-value weightings, contractual monitoring and KPI requirements translate those commitments into lasting jobs, apprenticeships, training and progression opportunities.

For employers, the practical message is clear. Employment practices and workforce development will increasingly influence not only the ability to recruit and retain staff, but also the prospect of winning, retaining and successfully delivering major central government contracts under the new government procurement rules.