Andy Burnham’s British jobs-focused social value shake up has met a mixed response from channel partners, with some applauding the philosophy behind it and others wary of its practical implications.
Under the new ‘PPN 026’ rules, central government departments will from January 2027 be required to double the weighting they apply to social value from 10% to 20% on contracts worth over £5m.
At the same time, the emphasis will shift from environmental and social impact to local jobs creation.
“When applying for a contract from the government there will now be one simple test: are you creating British jobs? And are you giving young people the skills they need for the future?,” the new Prime Minister wrote in a LinkedIn post yesterday (see below).
The social value weighting will remain at 10% for contracts worth between £1m and £5m, with the requirement removed altogether on sub-£1m contracts to help cut red tape for SMEs.
Bidders can gain 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.
Although the move has been criticised by various environmental groups including Greenpeace, multiple channel partners we spoke to welcomed the fresh emphasis on local jobs and communities.
The changes have a direct bearing on several awards categories of the upcoming Oxygen Awards, including the Social Impact, Organic Growth and Grow-Your-Own awards (see more here).
Dan Kitchen, Founder and CEO of Stockton-on-Tees-based IT solutions provider Razorblue Group, argued that public sector procurement has “long needed a reset that considers the impact on UK employment, skills and tax income – not just price”.
“For us, we are 80-90% services revenue and when we lose out on something to a competitor who is delivering half the service from South Africa or the Philippines it’s pretty infuriating,” he told IT Channel Oxygen.
Michelle Cope, Sales Director at Hove-based Trustco – which generates around half of its business from the public sector via Crown Commercial Service and NHS SBS frameworks – also welcomed the shake up.
“We’re already investing in those areas and have been for some time now. We work closely with a Brighton school, providing both financial and practical support wherever we can,” she told IT Channel Oxygen.
“We’re fully supportive of environmental responsibility, but the current carbon reporting model can sometimes prioritise accounting over actual outcomes in my opinion. In a technology supply chain involving manufacturers, distributors, resellers and customers, measuring impact consistently isn’t always as simple as it appears.”
Daniel Ward Murphy, Marketing Director at Circular Computing – which last year won a 34,000 unit remanufactured laptop deal with Defra – also characterised the new emphasis on British jobs and skills as “understandable”.
“On this announcement, it is worth noting the full guidance hasn’t been distributed yet and we understand environmental sustainability will continue to be addressed through other mechanisms like Carbon Reduction Plans, and the proposed Government Buying Standards drafted by Defra,” he told IT Channel Oxygen.
David Furby, Founder and CEO of Novatech – a Portsmouth-based PC builder and VAR whose recent sustainability-focused efforts ensure it now exports more energy to the grid than it imports – acknowledged the announcement came as curveball for his business.
“I suppose it will stop all the ‘we’re green because we use green electricity and plant the odd tree’ brigade,” he added, however.
“The investment in our HQ to make it an A+ rated building which export more energy to the grid than we import and not use any gas has probably just about paid for itself. My warehouse staff loved the fact when it was 36 degrees outside and a cool 21 inside. So we have had so many positives from our investment.”
“The interesting question is where do they want the jobs creating? If we’re looking at a £2m contract which is for supply and support of a big SAN in Manchester we typically wouldn’t create any jobs there delivering and supporting it,” Furby added.
“We employ and train lots of young people and offer a fair amount of school work placements.
“My nearly 40 years running Novatech has taught me when government changes the rules you just suck it up and get on with it.”
Dean Mason, Managing Director of Rochdale-based Teqex, was less sanguine, saying as an SME his company “can only grow with the addition of securing new business”.
“I’m not sure how we create more jobs without movement in another area or some sort of incentive from the government like they did in the past with apprentices,” he said.
The plans have received a thumbs down from environmental and green campaign groups, which said that job creation should not be an either-or with protecting the environment.
Ben Caddy, Senior Analyst at Omdia, was more philosophical over the removal of environmental targets, however, stressing that the change “doesn’t appear to be a massive concession to the UK’s wider sustainability ambitions”.
“Although it seems that sustainability will have a lesser role as a differentiator for companies looking to win major public sector contracts in the UK, there are still plenty of major customers that incorporate sustainability into their RfPs,” he told IT Channel Oxygen.
A recent poll from Omdia found that 41% of partners say sustainability comes up in over 30% of the RfPs they receive, up from 31% of partners in 2023, Caddy pointed out.
“From what we’re seeing, sustainability is embedded in the way many of these major partners do business – so the rollback of this rule won’t have a major effect that undermines the channel’s sustainability focus,” he said.
