News and views
Social Enterprise UK responds to government’s new procurement rules
Today’s government announcement that public spending must back British jobs and skills in every postcode, set out in new Procurement Policy Note (PPN) 026, is another important step in Social Enterprise UK’s work to ensure public spending strengthens communities. We’re especially pleased to see Andy Burnham’s government putting social value at the heart of its agenda so early in his premiership.
Raising the minimum weighting for local social and economic benefit to 20% on contracts worth £5 million or more builds directly on the Public Services (Social Value) Act we proposed, helped pass in 2012, and have continued to champion and evolve since (and similarly with the Procurement Act that followed). We also welcome the stronger KPI reporting, including the new provision that poor performance against social value commitments can count against suppliers bidding for future contracts. For too long, social value has been a box to tick rather than a promise to keep, and government is right to say so.
What’s changed?
Some of what’s been announced isn’t new. Procurement Policy Note 026 effectively supersedes PPN 002, which already covered fair work, skills for growth, employment for people facing barriers, and pipelines of opportunity for under-represented groups. What’s genuinely new is narrower: jobs and skills are now the only route to meeting the weighting, whereas before, authorities could previously use climate, wellbeing or supply-chain outcomes instead. The weighting rises meaningfully at the top end; and the threshold rises to £1 million.
That £1 million threshold is our first concern. Raising it is framed as cutting red tape for small businesses, and easier routes for social enterprises bidding directly are welcome. But it also means social value requirements simply stop applying below that level – a tier where many social enterprises compete. A rule meant to open the door for small suppliers shouldn’t quietly remove the lever that makes buyers choose them. It raises the prospect of a situation where a profit maximising private sector company with a large bid team outscores a social enterprise which focuses on job creation. We’d like a more proportionate approach below £1 million, rather than a blanket exemption.
It’s also worth the government remembering who already delivers exactly these priorities. Our latest State of Social Enterprise research shows social enterprises employ an average of 72 people each across the UK’s more than 100,000 social enterprises, with 43% specifically employing people from disadvantaged groups and 83% paying the Real Living Wage. Creating good jobs and routes into work for young people and those facing barriers isn’t a new ask for social enterprises, it’s what many were set up to do, and they should be direct beneficiaries of the new weighting, not just intermediaries helping larger contractors hit their targets.
Resilient supply chains
We’re also concerned about the loss of direction for commissioners that was in PPN 002: “Increase supply chain resilience”. That rewarded suppliers for a diverse supply chain, including SMEs, VCSEs and mutuals: the closest thing the current model has to incentivising large contractors to buy from social enterprises. PPN 026’s Annex A contains only two outcomes, Good Jobs and Skills, and neither scores supply chain composition. The only remaining mention of VCSEs is a note about ensuring the criteria chosen are ones VCSEs can bid against, which gives accessibility for bidders, but doesn’t reward the larger organisations buying from them.
We know the alternative works. Amey, quoted in today’s announcement, is a partner in our Buy Social Corporate Challenge, through which major businesses commit to spending on social enterprises rather than simply hiring directly. Amey’s reported social value rose from £211 million to £248 million last year, plausibly reflecting the very outcome PPN 026 has now dropped.
If that route disappears, government risks removing the lever pulling large contractors towards social enterprises even as it raises the overall score; a contractor could hit the full 20% weighting through direct hiring alone, with no obligation to touch its supply chain. With this government’s focus on jobs, it’s pertinent that nearly 8,000 jobs have been created by corporates procuring from social enterprises through the Buy Social Corporate Challenge.
That’s our central ask for the autumn technical guidance: reinstate supply chain diversity, including VCSE participation, as a scored outcome, whether standalone or built into the Skills and Good Jobs criteria. We’d also like sub-contracting transparency, so buyers can see where social value spend actually lands, and independent verification of KPIs rather than self-reporting.
The opportunity ahead
Public procurement is worth £90 billion a year. Getting this right could mean billions more reaching the organisations best placed to create good jobs and close skills gaps. Getting it wrong means large contractors meet the new weighting through direct hiring alone, while the route pulling spend towards social enterprises quietly closes.
We appreciate the new willingness of this government to engage with SEUK, which has led to meaningful dialogue with the Cabinet Office and No.10. We’ve spent over a decade proving what works, and we’d welcome the chance to bring that evidence into the guidance process before the rules take effect in January 2027.
5 August 2026
