From 1 January 2027, companies bidding for major central government contracts in the UK will need to prove they deliver tangible benefits to local communities, not just competitive pricing. A new Procurement Policy Note sets out a revised Social Value Model that makes good jobs, fair pay and skills development a scored part of the tendering process for contracts worth £1 million or more.
What the policy actually changes
The note applies to central government departments, their executive agencies and non-departmental public bodies - collectively termed "in-scope organisations" - for procurements run under the Procurement Act 2023. Contracts between £1 million and £5 million must now allocate a minimum 10% weighting to social value criteria in bid evaluation; contracts of £5 million or above must allocate at least 20%. Where authorities use methodologies such as Price per Quality Point, that weighting applies to the non-price quality score rather than the overall bid.
Two outcomes anchor the model. The first, "Good Jobs," covers job creation and retention, fair working conditions, and pay that goes beyond the statutory minimum. The second, "Skills," covers training, in-work progression and building a talent pipeline, with explicit encouragement toward apprenticeships, work placements and co-designed training with affected communities. Framework contracts will be assessed at both framework and call-off stage, with further guidance expected in autumn 2026.
Why this matters for suppliers and markets
Embedding social value into award criteria changes how contracts are won. Bidders will need to demonstrate concrete commitments - recruitment practices, wage policies, training pipelines - alongside price and technical quality. For large suppliers already running structured corporate social responsibility programmes, this may be a modest adjustment. For smaller firms or new entrants, it raises the administrative bar for competing on public work, even as the policy insists criteria must remain proportionate and non-discriminatory, including toward suppliers covered by UK trade agreements.
The accountability mechanism is significant. Contracts valued at £5 million or more must carry at least one social value Key Performance Indicator, published on the central digital platform and reported at least annually through contract performance notices. Poor performance against these KPIs can be factored into decisions on whether a supplier is excluded from future bidding - turning social value from a marketing claim at tender stage into a contractual obligation with consequences.
Context and limits
The policy sits within a broader push to use public spending as a lever for economic growth and labour market outcomes, rather than treating procurement purely as a cost exercise. It does not apply to private utilities contracts, overseas-delivery contracts such as embassy services, or procurements commenced before the January 2027 start date, though organisations are encouraged to transition early where practical. Guidance on sub-criteria, evaluation methodology and training resources - including a published list of community programmes bidders can reference - is due in autumn 2026, meaning much of the operational detail is still to come.
For an industry accustomed to scoring bids primarily on price and technical merit, this represents a structural shift in how value is defined and measured, with implications likely to ripple into how contracting authorities train staff and monitor delivery long after contracts are signed.