Ministers will scrap the requirement for companies to prove their green and progressive values before they are awarded government contracts, and instead ask firms to prove they will help young people back into work. Louise Haigh said taxpayer money must benefit local communities, as the move was set to redirect the focus of public procurement toward job creation and regional growth.
As part of a government push to reduce the number of people in the UK and boost regional growth, public sector buyers will double the consideration they give to whether companies will get more people into jobs, rather than if they can show they are improving social and environmental wellbeing. Government procurement contracts account for about £90bn of taxpayers’ money spent each year.
Why are the rules being changed?
The government says the change is designed to help small businesses that are often locked out of contracts because of the current requirements, which big businesses know how to get around. Louise Haigh, the first secretary of state, said the new rules would help ensure that public spending delivers visible benefits for local communities.
“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 Haigh. “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.
“We are doing things differently. These new rules will ensure the £90bn that is spent each year through government contracts supports British jobs, skills and people in every postcode.”
Central government departments are currently required to weigh up the social value of government contracts, which counts for 10% of the decision. Under the new measures this will be increased to 20%, but instead of considering social good, government buyers will be pushed to secure contracts with companies creating local jobs that pay above the minimum wage, offer training, work experience or plug local skills gaps.
Contracts worth less than £1m will be exempt from the requirement, which ministers hope will make it easier for smaller companies to compete.
How have campaign groups responded?
The plans were criticised by environmental and green campaign groups, which said that job creation should not be treated as a trade-off with protecting the environment.
“Protecting the environment and helping young people into good work are mutually beneficial and one shouldn’t come at a cost to the other,” said Greenpeace UK’s head of politics, Ami McCarthy. “Companies should be held to account with environmental targets to help achieve a better future without leaving young workers behind.”
Friends of the Earth’s head of campaigns, Rosie Downes, said: “Encouraging companies to create good local jobs is crucial, but it shouldn’t be an either/or with efforts to safeguard our environment.
“Communities are already paying the price of environmental inaction, with the UK on course for record levels of heat-related deaths this summer and our natural world in sharp decline.”
Sarah Williams, the director of strategic partnerships at Green Alliance, said: “The UK is facing a growing youth unemployment crisis, so businesses should be encouraged to create good jobs and opportunities for young people. But scrapping requirements on climate and sustainability is simply not the answer. It’s not an either/or choice.”
The move is also likely to spark concern among anti-trafficking and equality campaigners. A source said the government knew it would face criticism for scrapping some of the current social value indicators.
“What companies have to do at the moment feels too much like a box-ticking exercise and it’s just red tape instead of being useful,” they said. “We are trying to make sure that the government pound is being used to invest in companies that want to invest directly in young people in their areas, and it brings real results and doesn’t just look good on paper.”
Suppliers will be assessed on their commitment to backing British jobs and developing skills, and specifically targeting support for young Neets, care leavers and people with long-term health conditions.
What will suppliers need to show?
Suppliers will need to demonstrate that they can create local employment opportunities, including jobs that pay above the minimum wage, training, work experience and support for filling local skills gaps. The government says this approach will put more emphasis on outcomes that are directly visible in communities while still leaving contracts below £1m exempt to help smaller firms compete.
How does this fit into wider government policy?
The plans form part of a broader effort to reduce the number of people in the UK and boost regional growth by directing more procurement spending toward companies that can show direct social benefits in employment terms. Ministers argue that the change will make public spending more effective, while critics say the removal of climate and sustainability requirements risks weakening accountability on the environment and other social outcomes.
Government procurement contracts account for about £90bn of taxpayers’ money spent each year, making the policy change significant for suppliers across the public sector. Ministers hope the revised rules will make it easier for smaller companies to compete, while also encouraging businesses to support British jobs, skills and people in every postcode.
Key Facts
- Ministers will replace green and progressive value requirements with a stronger focus on job creation in government contracts.
- Public sector buyers will double the consideration given to job creation, from 10% to 20%.
- Contracts worth less than £1m will be exempt from the requirement.
- The rules will prioritise support for young Neets, care leavers and people with long-term health conditions.
- Government procurement contracts account for about £90bn of taxpayers’ money each year.
