Insights
A significant but narrow update. PPN026 takes effect January 2027 and is the third revision to the UK Government's Social Value Model in 18 months, but this one is far more substantial, narrowing scope to just 2 outcomes (from 8) and raising the contract threshold to £1m+.
Enforcement just got real. For the first time, KPIs will be contractual and reported centrally, with poor performance able to exclude suppliers from future tenders, a particular risk for SMEs who make up most of the sector.
Weighting is going up, not down. Social value's minimum weighting in bid evaluation rises from 10% to as much as 20% on contracts over £5m, raising the bar for what "good" looks like even as the scope of outcomes narrows.
A UK procurement change, not a global one. PPN026 only reshapes one procurement mechanism in one country, it doesn't touch the broader definition of social value or the international activity that never relied on UK government contracts in the first place.
The advice for now: don't panic! Until supporting guidance is published, there's little value in overhauling reporting or delivery models. The sensible move is to keep monitoring, then run a gap analysis once the detail lands.
The social value world has been aflutter following publication of PPN026, the latest update to the UK Government's Social Value Model. Effective from January 2027, the changes have been described by some as “gutting” social value and by others as “a positive shift”. Across the sector, webinars and discussions are attempting to make sense of what comes next.
Taking a global perspective, our Social Value Lead, Cara Kennelly, cuts through the noise to summarise what has changed and what it means.
A new version of the UK Government's Social Value Model will come into force in January 2027, focusing exclusively on employment and skills outcomes. It introduces stricter reporting requirements and commercially punitive measures for organisations that fail to deliver their commitments.
The UK Government has amended its Social Value Model for the third time in 18 months. This update is considerably more substantial than previous revisions, with changes falling into three core categories:
Before: No statutory penalties for poor performance.
After: KPIs will be contractual across all relevant contracts and reported on a central digital platform annually. Poor performance could exclude suppliers from future tender opportunities
The way we record and account for contractual social value will need to be more robust than most businesses are currently ready for – and if they don’t get ready before PPN026 goes live it could impact commercial pipeline in the public sector in the medium and long term. This is particularly risky for SMEs (i.e. most businesses)
Before: Applied to any central government contract above £139,688 (inc. VAT) and covered 8 outcomes with 17 award criteria.
After: Applies to central government contracts above £1m (inc. VAT) and covers 2 outcomes with 6 award criteria.
Under the previous model many businesses have developed broad social value strategies and initiatives to deliver diverse outcomes. The new model appears to make all but a few of those programmes defunct, however the stakeholders those programmes serve, and their needs, remain despite the PPN update.
Before: Minimum 10% weighting of social value when evaluating all central government bids
After: Minimum 10% weighting of social value when evaluating bids for contracts over £1m (inc. VAT), increasing to minimum 20% for contracts over £5m
The minimum weighting is, more often than not, what ends up in the final social value requirements for each tender. Increased minimum standards raises the expectations of the UK Government’s procurement and commercial teams across the board.
There is no doubt this is a significant change. However, it impacts only a small fraction of the social value delivered globally.
While procurement requirements and definitions have changed, the wider concept of social value has not. Nor have the technical approaches organisations use to create positive outcomes or the initiatives that communities value most. It is important to distinguish between changes to the Social Value Model and changes to social value itself. One has evolved; the other remains as relevant as ever.
Opinion is divided. Critics argue that narrowing outcomes could reduce the impact generated through central government procurement. Others welcome the increased accountability placed on suppliers to deliver and evidence their commitments.
The reality is more nuanced. Whether PPN026 delivers better or worse outcomes than its predecessor will depend largely on the wider policy and procurement landscape around it. Social value remains one of several levers available to drive positive impact, and those mechanisms will continue to evolve.
More importantly, the social value industry now extends well beyond procurement. Globally, most social value activity has never relied on procurement commitments. Reduced scope within one procurement framework does not reduce the scope, potential or ambition of the sector as a whole.
As a global business, our view of social value extends beyond its UK procurement roots. Procurement may be a particularly powerful lever in the UK, but that does not stop organisations from supporting local SMEs, employing local people, engaging young people in skills and employability programmes, or volunteering in their communities around the world.
It is easy to become focused on developments in the UK, particularly given its influence on the industry's growth since 2012. However, social value has matured to the point where changes to a single PPN in one country do not derail its direction as a concept or force for good.
The needs of customers, communities and stakeholders have not changed. Responsible businesses will still need resilient supply chains, environmental stewardship and meaningful community investment, regardless of how one procurement model evolves.
The short answer is: nothing right now.
Until the supporting guidance is released, there is little value in making major changes to reporting systems or delivery models. Instead, continue with existing review and improvement activity.
When further detail is published, undertake a gap analysis to understand any new reporting, delivery and data requirements. That assessment will provide a clear roadmap for any changes needed to remain compliant and manage contractual risk.
We remain confident in our industry and our ability to prioritise impact and outcomes. We remain confident in our clients' ability to use procurement as one of many tools to drive meaningful change.
PPN026 changes the rules of one procurement mechanism, not the purpose, potential or future of social value. With the right context, greater accountability and a little patience, it could help drive stronger outcomes across the sector.
If you would like to discuss the PPN026 in the built environment in more depth, we are here to help.
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