From 1 January 2027, central government will assess social value in contract bids using a new model set out in Procurement Policy Note 026, published by the Cabinet Office in August 2026. The model applies to central government procurements worth £1 million or more, including VAT, and social value requirements will no longer apply below that level. Above it, social value will carry a minimum weighting of 10% on contracts between £1 million and £5 million, rising to at least 20% on contracts of £5 million or more. The model has also been narrowed to two outcomes: good jobs and skills.
For SMEs bidding for central government work below £1 million, this removes a layer of documentation that many smaller firms have found difficult to evidence. For those bidding above the threshold, or supplying larger contractors who do, jobs and skills commitments will carry considerably more weight in the scoring. The rules apply to central government departments and their agencies. Local authorities may adopt the model, but are not required to.
The Federation of Small Businesses, which worked with government on the change, has said that lifting the threshold to £1 million should see many more small firms winning contracts, since smaller businesses often struggle to demonstrate the social value they deliver.
Detailed technical guidance is due this autumn, ahead of the January start date. If public sector work forms part of your pipeline, it is worth reviewing how your bids present jobs and skills commitments.