The government has announced new rules for public contracts, aiming to ensure that public spending supports British jobs and skills in local communities. Under the changes, the importance of creating local benefits will double when the government procures goods or services.
For contracts valued at £5 million or more, the score for bringing benefits to the local community will increase from 10% to 20%. Businesses bidding for these contracts, which represent a £90 billion annual market, will be judged on their commitment to creating high-quality British jobs, addressing local skills shortages, and supporting young people into apprenticeships and work placements.
First Secretary of State Louise Haigh stated that the new rules will ensure the £90 billion spent each year through government contracts supports British jobs, skills, and people in every postcode. Cabinet Office Minister Mark Ferguson added that businesses benefiting from taxpayer money will now have to create more local jobs and opportunities for young people.
The reforms also aim to make it easier for smaller, scaling, and innovative businesses, as well as civil society organisations, to bid for contracts. Other assessment areas for businesses will be removed, and the threshold for certain rules has been raised to contracts of more than £1 million, meaning they will not typically apply to work smaller firms and local social enterprises bid for.
To ensure compliance, government departments will allocate a key performance indicator for major contracts and make annual progress reports publicly available. These new rules will apply to central government procurements, with implementation set for 1 January 2027, following detailed technical guidance in the Autumn.