The government is set to overhaul its £90bn public procurement system, with Prime Minister Andy Burnham announcing a significant shift in how public contracts are awarded. Under the new rules, firms bidding for government contracts will be required to demonstrate their commitment to creating jobs, particularly for young people, rather than primarily meeting broader green and social targets.
Procurement System Overhaul Detailed
The changes will see the weighting given to the benefits brought by companies double from 10% to 20% for contracts valued at £5m or more, according to the Cabinet Office. This increased weighting will now be exclusively based on job creation. Previously, this 10% measure accounted for a range of social value initiatives, including equality and diversity, net zero commitments, and post-Covid recovery efforts. The new 20% measure will specifically reward bidders for creating local jobs that pay above the minimum wage, addressing local skills shortages through training, and offering 45-day work experience placements for young people.
Tackling Youth Unemployment Crisis
This strategic redirection is a direct response to the ongoing youth unemployment crisis. Official figures from the Office for National Statistics (ONS) reveal that more than a million people aged 16 to 24 are currently classified as Not in Education, Employment or Training (Neet). Prime Minister Burnham stated his ambition to create “growth in every postcode,” drawing on his experience as Mayor of Greater Manchester, where he oversaw a rise in work experience placements through a similar initiative.
First Secretary of State Louise Haigh, effectively Burnham’s deputy, criticised the existing procurement process as a “tick-box exercise.” She asserted, “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.” Haigh further emphasised that the new rules would ensure the “£90 billion that is spent each year through government contracts supports British jobs, skills and people in every postcode.” Cabinet Office Minister Mark Ferguson echoed this sentiment, stating that businesses securing government contracts “have a responsibility to give back.” He added, “Businesses that benefit from the billions of taxpayer pounds spent by government, will have to create more local jobs and opportunities for young people in their area.”
Environmental Concerns Raised
However, the plans have drawn criticism from environmental groups. Greenpeace UK’s head of politics, Ami McCarthy, expressed concern that supporting young people into work should not come at the expense of environmental protection. McCarthy argued that “protecting the environment and helping young people into work are ‘mutually beneficial and one shouldn’t come at a cost to the other’.” She further stressed that “Companies should be held to account with environmental targets to help achieve a better future without leaving young workers behind.”
The new model for public procurement will be applied to both British and international firms vying for government contracts. This marks a significant policy pivot, clearly signalling the government’s immediate economic priorities through its substantial spending power.
