The government is set to revise its public procurement system, redirecting its focus towards job creation as a primary criterion for awarding public contracts. Under the new regulations, companies seeking government business will need to prove their dedication to creating employment opportunities, particularly for young people and in areas facing local skills shortages.
This initiative is part of a broader government strategy to combat the youth unemployment crisis. Official figures indicate that over one million individuals between the ages of 16 and 24 are currently not engaged in education, employment, or training. First Secretary of State Louise Haigh stated that the current procurement process has become a "tick-box exercise" and that "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."
The changes will increase the weighting for community benefits in contract evaluations. For contracts valued at £5 million or more, this weighting will double from 10% to 20%. Previously, this segment of the evaluation considered social value through measures such as equality, diversity, net zero commitments, and post-COVID recovery efforts. The revised 20% measure will now specifically focus on job creation. Bidders will receive enhanced credit for generating local employment that pays above the minimum wage, for addressing local skills gaps through training programs, and notably, for offering 45-day work experience placements for young individuals.
Cabinet Office Minister Mark Ferguson emphasized that businesses benefiting from taxpayer-funded contracts have a "responsibility to give back." He added, "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."
The updated procurement model will be applicable to both domestic and international companies vying for government contracts. The government aims for these new rules to ensure that the approximately £90 billion spent annually on government contracts actively supports British jobs, skills, and communities across the country.
However, the shift in priorities has drawn criticism from environmental groups. Greenpeace UK's head of politics, Ami McCarthy, argued that environmental protection and youth employment are not mutually exclusive. "Companies should be held to account with environmental targets to help achieve a better future without leaving young workers behind," McCarthy stated, suggesting that supporting young people into work should not come at the expense of environmental goals. The government, however, maintains that focusing on job creation aligns with its aim to foster "growth in every postcode."