The Cabinet Office’s announcement last week that public spending must back British jobs and skills “in every postcode” contained a lot to welcome.
With more than a million young people not in employment, education or training, using £90bn a year in public procurement spend to prompt apprenticeships and work placements is sensible.
But the announcement also contained a quieter decision that deserves just as much attention: government has dropped supplier diversity from how it scores social value.
Charities and social enterprises bidding for, or supplying into, public contracts should read the small print carefully.
Some of this is genuine progress. The minimum weighting for local social and economic benefit rises to 20% on contracts worth £5m or more, building on the Social Value Act Social Enterprise UK helped pass in 2012.
KPI reporting also gets sharper teeth: poor delivery against social value promises can now count against a supplier bidding for future work. For too long, social value has been a box to tick rather than a promise kept, and it’s good to see this government put it at the heart of its agenda so early on.
But the new model, set out in Procurement Policy Note (PPN) 026, narrows what counts. Previously, buyers could score bids against several outcomes: jobs and skills, but also environmental benefit, supply chain resilience, and inclusion criteria like net zero delivery, modern slavery safeguards and equalities work.
Under PPN 026, only two outcomes remain: good jobs and skills. Everything else has gone.
Why diverse supply chains matter
Supporters will say a simpler model is easier to evaluate and less burdensome for suppliers. Fair enough; but simplification shouldn’t come at the expense of outcomes.
That matters most for supply chains. The old model rewarded large contractors for demonstrating social value through their supply chains, including engagement with small businesses and VCSEs.
This was one of the few mechanisms that pushed them to create opportunities for social enterprises (businesses with a social purpose), rather than delivering social value solely through their own workforce.
We know this works. Corporate partners in our Buy Social Corporate Challenge have created more than 8,000 jobs by choosing to spend with social enterprises rather than hiring directly, and one partner alone grew its reported social value from £211m to £248m last year.
Remove that incentive, and a large contractor can secure the full weighting through workforce commitments alone, with no obligation to diversify its supply chain at all.
Joined up policy?
It also sits oddly alongside a policy the same department already has in place. PPN 001, issued last year, commits central government departments to three-year spend targets with small businesses and two-year targets with VCSEs.
One policy sets the ambition; the other has just removed one of the main levers for delivering it. At best, that’s a disconnect. At worst, it makes one objective harder to reach while chasing the other.
Then there’s the £1m threshold. Framed as cutting red tape for small suppliers, it also means mandatory social value requirements stop applying below that level – precisely the tier where many social enterprises compete.
A rule meant to make bidding easier for small suppliers shouldn’t remove the very factor that encouraged buyers to look beyond price and scale, leaving social enterprises to compete on conventional terms against bidders with far bigger bid-writing budget and capacity.
None of this should need spelling out to government, because social enterprises are already generating the “good growth in every postcode and hope in every heart” Andy Burnham has promised.
Across the UK’s 100,000-plus social enterprises, the average employer takes on 72 people, 43% specifically from disadvantaged groups, and 83% pay the real living wage. They should be direct beneficiaries of this new weighting, not just intermediaries helping larger contractors hit their targets.
A way forward
Guidance on the detail is due this autumn, ahead of a January 2027 start date. That’s the window to fix this, and our ask is straightforward.
Reinstate supply chain diversity and VCSE participation as a scored outcome, whether standalone or built into the Good Jobs and Skills criteria.
Add sub-contracting transparency, so buyers can see where social value spend actually lands, and independent verification of KPIs rather than self-reporting.
Give buyers a simple, credible way to identify a genuine social enterprise, rather than any supplier attaching a social value story to a bid.
And extend the same standard beyond Whitehall: PPN 026 currently applies only to central government departments, agencies and public bodies, while most social enterprises trade with local government, the NHS and devolved administrations.
We’ve had more constructive engagement from this government on procurement than in previous years, and we’re glad of it. The ambition behind this reform is right.
What we’re asking for now is a seat at the table while the detail is finalised, so the small print doesn’t end up quietly undoing what the headline promised.
