Public contracts to be scored on British jobs and apprenticeships from January

Businesses bidding for government contracts will be judged on the jobs, skills and apprenticeships they create in the communities where the money is spent, under changes to procurement rules announced by the Cabinet Office on 5 August. The changes take effect on 1 January 2027 and apply to a public contract market that ministers put at £90 billion a year.

The mechanism is the social value weighting that already exists in public procurement. For contracts worth £5 million or more, the score for benefits to the local community rises from 10 per cent to 20 per cent of the evaluation. Bidders will gain credit for creating well-paid local jobs, treating workers fairly, responding to regional skills shortages, and offering apprenticeships, training or work placements. The threshold below which simplified rules apply is raised to £1 million.

The politics

The announcement is the first significant procurement decision of Andy Burnham's government, and it carries his signature. Louise Haigh, the First Secretary of State, said 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. John Healey, the Chancellor, said the government had made it a leading priority to back British, not just if possible but by design, so that procurement supports British jobs, British apprenticeships and British innovation.

The Cabinet Office minister Mark Ferguson put it more directly: businesses that benefit from the billions spent by government will have to create more local jobs and opportunities for young people in their area. Public sector procurement spending was £394.8 billion in 2024-25, against £288.7 billion in 2019-20.

What it means for the supply chain

The large systems integrators, outsourcers and consultancies that hold most government technology contracts will now be bidding on the strength of their local employment record as well as their price and their technical answer. A firm that delivers a departmental programme with a contract workforce sourced through agencies and umbrella companies will need to decide how that workforce counts. The rules reward employment, training and apprenticeships. They say nothing yet about the flexible workforce that delivers a large share of public sector technology work.

That silence matters to this industry. The off-payroll rules, which the Treasury reaffirmed as a compliance priority in June, already push public bodies towards engaging contractors inside IR35 or through umbrellas. A procurement regime that scores bidders on direct employment adds a second pressure in the same direction. A contractor who has spent a career delivering government programmes as an independent specialist may find that the prime contractor would now rather have them on the payroll, for reasons that have nothing to do with tax.

There is an opposite reading. Regional skills shortages are named as a criterion, and the fastest way for a bidder to answer one is to engage specialists who live there. Contractors outside London and the South East, where the public sector is a larger share of technology demand, may find that their postcode has become an asset.

The Social Value Model and the policy note that accompany the announcement will be applied to procurements starting from 1 January. Bids in preparation now for contracts that run past that date will be written with the new weighting in mind.