The government has announced a major overhaul of how it will select organisations for its contracts, including construction projects
The most important change to the government bidding assessment process is that bidders will now be judged on how much they help local people to develop new skills and bring apprenticeships or work placements to young people.
This is an effort to stimulate job growth and support local communities and economies.
Former judgement areas to be scrapped
An organisation’s commitment to local people will be the only criteria that the government will assess, as the score for bringing benefits to local communities is being raised from 10% to 20% for contracts worth £5m or more.
Other criteria that organisations were judged on in the past will no longer be applicable, allowing many smaller organisations to have a solid chance of acquiring government contracts. The threshold has also been raised to contracts of £1m or more, meaning smaller firms and enterprises have fewer rules to worry about when bidding.
Suppliers will also be assessed on their commitment to backing jobs, skills, and opportunities, especially for those not in education, employment, or training (NEETs), care leavers, and those with long-term health conditions.
For larger contracts, government departments will allocate a key performance indicator and make annual progress reports available to the public to ensure performances are taken seriously.
These rules will apply to central government procurements and will take effect from 1 January 2027. Technical guidance will be coming in Autumn 2026.
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.
“We are doing things differently. These new rules will ensure the £90bn that is spent each year through government contracts supports British jobs, skills and people in every postcode.”
Big changes to boost economies
Since Andy Burnham took the reins of government, he has pledged to make several large changes to try to not only support, but boost local economies and stimulate industry, especially the construction industry.
One of these major changes comes as part of the continuing policy of devolution of powers from Westminster to local authorities. For the first time, mayors will be allowed to keep a portion of their area’s income tax and business rates revenues to put towards construction and industry funding.
It is intended that this boost to local funds will in turn boost transport infrastructure and maintenance, housebuilding, and skills training.
Prime minister Andy Burnham said: “I said we’d take power out of Westminster and carry it into every postcode in the country. Today, we make good on that promise.
“Under our plans, more of the taxes raised in a community will stay in that community. Soon, every local leader will have the power and resources to improve public transport, build homes and create jobs.
“I know what it’s like to be ignored by politicians in Westminster. I’m not going to make that same mistake now I’m PM.
“The whole of government will now pull together behind the people and places that desperately need our support. This is how we’ll bring back hope and bring power home to you.”
Peter Ware, Partner in procurement and Head of Government at UK and Ireland law firm Browne Jacobson, said: “This intervention reflects the significant weight that public sector procurement carries in the national and local economy, and the new Prime Minister’s commitment to leveraging greater social value from government contracts.
“This continues a trajectory that has been in motion since the Procurement Act 2023 was implemented in February 2025, and strengthened by the Procurement Policy Note 024 guidance published by the Cabinet Office in June this year, which introduced a mandatory public interest for contracts exceeding £1m that must consider key economic and social considerations.
“What is different, though, is the government’s eagerness to give procurement such prominence in its policy agenda under Andy Burnham, who has made tackling the youth unemployment and economic inactivity crisis one of his defining missions.
“This should therefore focus minds among not only contracting authorities but also businesses that hope to win high-value public sector work. They will need to demonstrate tangible ways in which they are creating jobs and work experience opportunities, and upskilling or reskilling the existing workforce locally.
“Businesses should also take note of Whitehall’s focus on deeper devolution, with skills budgets set to be controlled by strategic authorities where these exist. This provides a great opportunity for employers to work closely with mayors on to access skills funding when rolling out new training initiatives.”
