Government procurement rules to put focus on UK jobs and skills

Businesses bidding for government contracts will have to meet fresh criteria over their contribution to UK jobs, local skills and opportunities for young people under new procurement rules announced by the government.

The changes will double the weighting given to local community benefits in public contracts worth £5m or more, increasing it from 10% to 20%.

Under the new rules, organisations bidding for government work will be assessed on their commitment to creating high-quality British jobs, tackling local skills shortages and supporting young people into apprenticeships and work placements.

Bidders will be able to gain extra credit for creating local jobs that pay above the legal minimum and treat workers properly. They can also receive credit for helping to address local skills gaps through training, including 45 days of work experience.

The government said the changes would specifically target support at young people not in education, employment or training (Neets), care leavers and individuals with long-term health conditions.

First secretary of state Louise Haigh 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 for the future.

“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.

“These new rules will ensure the £90 billion that is spent each year through government contracts supports British jobs, skills and people in every postcode.”

The reforms will also aim to make government contracts more accessible to smaller, scaling and innovative businesses and civil society organisations.

The government said requirements would be simplified and the threshold raised to contracts worth more than £1m, meaning they would not typically apply to work smaller firms and local social enterprises are bidding for.

For major contracts, government departments will allocate a key performance indicator and publish annual progress reports. Suppliers’ performance will then be measured against the commitments they made when bidding.

Cabinet Office minister Mark Ferguson said the changes would mean that businesses benefiting from the billions of taxpayer pounds spent by government, will have to create more local jobs and opportunities for young people in their area.

“This is about using every tool we have to help people in every postcode live a better life.”

The government said the reforms build on its commitment to use £90bn of annual purchasing power as a lever for economic growth, working with local and mayoral authorities to match contracts to regional priorities.

Public sector procurement spending rose from £288.7bn in 2019/20 to £394.8bn in 2024/25.

The new rules will apply to central government procurements, with implementation taking effect from 1 January 2027 following detailed technical guidance in the autumn.