Government orders that public spending must back British jobs and skills in every postcode

Government backs industry to create new British jobs and support local communities with new weighting in public contracts.

• Government backs industry to create new British jobs and support local communities with new weighting in public contracts.
• Organisations will now be assessed on how they help local people develop new skills and support young people into apprenticeships or work placements.
• Other areas businesses had to prove they were acting on will be scrapped, making it easier for smaller firms to bid for contracts.

Businesses bidding for government contracts – a market worth £90bn per year – will be judged on their commitment to creating high-quality British jobs, tackling local skills shortages, and supporting young people into apprenticeships and work placements.

The Government wants every young person to have the chance to earn or learn. New rules will double the importance of creating local benefits when the government buys goods or services – ensuring spending directly creates training, work experience, and jobs in every postcode.

Under the changes, the score for bringing benefits to the local community will be raised from 10% to 20% for contracts worth £5m or more, ensuring procurement, whether from UK or international providers, helps support communities.

The changes will also help smaller, scaling and innovative businesses and civil society organisations who have so much to offer the public sector, but often find themselves locked out of contracts because of layers of red tape and burdensome requirements, which larger organisations know how to navigate. The rules have been simplified and the threshold raised to contracts of more than £1 million so they don’t typically apply to the work smaller firms and local social enterprises are bidding for. This will better allow both smaller businesses and civil society to showcase their innovation and the benefits they are already delivering in communities.

First Secretary of State Louise Haigh said:

“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.

“For too long, securing government contracts has been a tick box exercise that fails to deliver the positive change that people feel in their pocket and see in the places they live.

“We are doing things differently. These new rules will ensure the £90 billion that is spent each year through government contracts supports British jobs, skills and people in every postcode.”

Bidders can get extra credit for creating local jobs that pay above the legal minimum and treat workers properly, as well as helping to plug local skills gaps by offering training such as 45 days of work experience. These changes will give young people and underrepresented groups a better chance at starting a good career.

Suppliers will be assessed on their commitment to backing British jobs, skills and opportunities, and specifically targeting support for young people not in education, employment or training (NEETs), care leavers and individuals with long-term health conditions.

To ensure companies honour their pledges, for major contracts, government departments will allocate a key performance indicator and make annual progress reports available publicly. Suppliers’ performance will be measured against their commitments.

The announcement builds on the government’s commitment to use its £90 billion annual purchasing power as a lever for economic growth, working hand-in-hand with local and mayoral authorities to match contracts to regional priorities. In cash terms, public sector procurement from the private sector has increased by over a third in the last five years, reaching nearly £400 billion in 2024/25.

Cabinet Office Minister Mark Ferguson said:

“We believe that if you benefit from something you have a responsibility to give back.

“These changes will mean that 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.

“This is about using every tool we have to help people in every postcode live a better life.”

Chancellor of the Exchequer John Healey MP said:

“I want every government department to be a growth department.

“We have made it a leading priority to back British, not just if possible but by design, so that procurement supports British jobs, British apprenticeships and British innovation.

“This is an active, hands-on government determined to support British businesses and make our country more resilient.

This approach is already being reflected across government, including through the National Cloud Infrastructure Programme (NCIP), which is exploring how government can better coordinate cloud demand across the public sector and work with industry to support long-term digital capability. Through the programme, supported by the publication of the Cloud Challenge Book 2026, the government is consolidating its buying power, working with industry to help build the digital infrastructure needed for the AI era and create opportunities for young people, including those not in education, employment, or training (NEETs), to develop their digital and AI skills.

Supporting the Prime Minister’s ambition to deliver good growth and opportunity in every postcode, NCIP will in turn help bridge the digital divide, boost opportunities, and ensure the benefits of the digital economy are felt across the whole country, not just in the South East.

In line with the principle of devolution by default, local government will lead the way. The Mayor of the West Midlands is leveraging social value to develop a new, preventative approach to supporting additional young people into employment or training in the region. Local leaders will work in partnership with central government and industry on the 3,000 Futures initiative, enabling those who know their communities best to support young people into work and training through harnessing the potential of public procurement. This builds on the region’s Youth Guarantee Trailblazer and wider work, testing innovative approaches to tackle youth inactivity in the region.

The changes come as part of a major package of reforms that will back British jobs and communities by protecting national security, cutting waste and boosting local economies.

This will support our Modern Industrial Strategy to provide the certainty needed to drive long-term investment across the country, including our skills pipeline, and ensure our supply chains are more resilient and that government adopts a stance that supports good risk taking in support of innovation, rather than stifling it through our procurement processes.

Read more latest news from the Government here.

06.07.2026