“And… action!” Hardly a day goes by without the reconstituted Labour Government announcing measures aimed at improving people’s wellbeing and building an economy that works for everyone.

A new direction for the Social Value Model

Public procurement took centre stage on 5 August with the publication of a new Social Value Model under Procurement Policy Note 026. The PPN applies only to ‘in-scope organisations’ – in effect, central government. Other contracting authorities, such as local authorities and housing associations, are not bound by it but may choose to adopt the approach. It replaces the previous Social Value Model, PPN 002, and applies to procurements started on or after 1 January 2027.

PPN 002 gives in-scope organisations a menu of social value outcomes and criteria aligned with the Government’s missions:

• Kick-start economic growth;
• Make Britain a clean energy superpower;
• Take back our streets;
• Break down barriers to opportunity; and
• Build an NHS fit for the future.

The model in PPN 002 develops these missions through a detailed grid covering:

• Fair work;
• Skills for growth;
• Resilient, innovative and flexible supply chains;
• Sustainable procurement;
• Crime reduction;
• Employment and training for people facing barriers to work;
• Opportunities for the contract workforce; and
• Improving productivity through physical and mental wellbeing.

Jobs and skills take centre stage

With such a rich menu, impact may be wide but not necessarily deep. PPN 026 seeks to cure this by focusing entirely on two objectives: 

• Outcome 1 Good Jobs: good employment opportunities in every postcode;
• Outcome 2 Skills: learning and development activities to address skills needs and shortages such as apprenticeships and work placements. 

That does not make the wider PPN 002 themes irrelevant: Jobs and Skills are now the spearhead of the Social Value Model, with the remaining themes intended to support that core aim. The Note to the PPN expands this point, saying that further guidance will follow to help central government bodies apply the new Social Value Model in practice. That guidance will explain how to choose outcomes and criteria, evaluate bids, use performance measures, and consider targeted cohorts and skills.

It identifies likely priority groups, including:

• people not in education, employment or training;
• those moving from education into work;
• people with long-term health conditions or disabilities;
• care leavers; and
• other groups facing barriers to employment.

Future skills priorities will be drawn from government skills strategies, such as skills needed for clean energy jobs.

A key phrase is: 

‘Cabinet Office will also develop guidance to support procurement teams intending to take into account existing, inherent social value (e.g. the wider community benefits of retaining local jobs).’

This will need unpacking! 

Social value remains broader than the model

In response to concerns that the new Social Value Model somehow narrows the scope of social value in procurement, the answer is: it doesn’t! 

The underlying legislation of the Public Services (Social Value) Act 2012 requires every contracting authority to consider, prior to any procurement of services commencing:

'(a) how what is proposed to be procured might improve the economic, social and environmental well-being of the relevant area, and

(b) how, in conducting the process of procurement, it might act with a view to securing that improvement'.

This is primarily a public law duty on public bodies to think before they procure services about well-being in the three dimensions listed, not ask suppliers what they can do by way of added value.

The thinking developed from their consideration does not get applied only to the ‘social value bit’ but to the whole of the subject matter of what they are procuring. 

Equally, the Procurement Act 2023 sets out the objectives that a contracting authority must have regard to, including delivering value for money; maximising public benefit; sharing information about procurement policies and decisions, and being seen to act with integrity. There is the requirement also to have regard to the fact that small and medium-sized enterprises may face particular barriers to participation; and consider whether such barriers can be removed or reduced. Government guidance published amplifies this point: ‘in order to achieve value for money, contracting authorities should have a comprehensive understanding of their requirements and link them to their policy priorities (which may include wider economic, social and environmental considerations where they are relevant, proportionate and non-discriminatory).’

Furthermore, all contracting authorities must have regard to the National Procurement Policy Statement (NPPS) as mandated by section 13 of the Procurement Act. We can anticipate this statement being updated but, as this requires a statutory process, it will take longer. The current statement is in the meantime very much alive having been in force since 24 February 2025 alongside introduction of the new Procurement Act 2023. Its current focus is the same missions as the PPN 002 advances for the Social Value Model. 

As the NPPS extends to regional and local government, with their devolved remits, it would be sensible for any refreshed statement to set out a wider architecture for policy-led procurement. This should give strategic and local authorities (plus other contracting authorities such as housing associations) a route map for setting their own priorities to enable strong growth on the ground and a thriving business sector, where resilience in supply is enabled by a vibrant SME and VCSE local presence.

Embedding social value in procurement

By focusing on jobs and skills as the heart of social value, attracting a 10% weighting for contracts between £1m and £5m and a Mancunian 20% for contracts valued at £5m or above, central government contracting authorities have the opportunity to work collaboratively with their supplier base to increase access to good employment. This requires more than a contract management approach of ticking boxes. Good practice demands that the commissioner think through how it enables the provider to be successful in optimising real jobs enabled through the procurement exercise. There is plenty of good practice developed especially in the noughties that can be dusted off and repurposed to this end.

What happens to the elements on the Social Value Model in PPN 002 that are no longer highlighted, such as a resilient supply chain and good environmental outcomes? These do not go away but instead should be part of the entire procurement, built into the subject matter of the contract and assessed as part of the core of the specification with the overall weightings of 80%/90% of the quality element. 

Paradoxically the new Social Value Model could have the effect of real social value having to be embedded at the core of a contract specification, and not just as added value. 

The guidance to the PPN 02 Social Value Model states: ‘In-scope organisations must ensure that any benefit identified as social value in tenders or contracts under this policy is over and above the core deliverable/s of the tender or the contract’. The elements of well-being that are not prioritised by the Social Value Model now have every opportunity to be redesigned into the mainstream of a government department’s procurement. That requires a change in mindset but one that we believe is consonant with the renewed focus of the Government under Andy Burnham.

What this means for councils and housing associations

Councils and housing associations are not constrained by the Social Value Model but instead can take the good from what has been done with the new changes, to help them think through what will make the biggest difference to their communities. They can build the changes needed into their procurement and contract management processes, having been challenged to think for themselves, driving better outcomes for the benefit of people and place alike. 

For more information

For more information on the new Social Value Model, please get in touch with Mark Cook or Gayle Monk.