Government contracts to require job creation instead of green targets under new rules

As part of a government push to reduce the number of people not in education, employment or training (Neets) in the UK and boost regional growth, public sector buyers will double the consideration they give to whether companies will get more people into jobs, rather than if they can show they are improving social and environmental wellbeing. Government procurement contracts account for about £90bn of taxpayers’ money spent each year.

Louise Haigh, the first secretary of state, said the move would help small businesses who often find themselves locked out of contracts because of the requirements, which big businesses know how to get around.

“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,” said Haigh. “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 £90bn that is spent each year through government contracts supports British jobs, skills and people in every postcode.”

Central government departments are required to weigh up the social value of government contracts, which counts for 10% of the decision. Under new measures this will be increased to 20%, but instead of considering social good, government buyers will be pushed to secure contracts with companies creating local jobs that pay above the minimum wage, offer training, work experience or plug local skills gaps.

Contracts worth less than £1m will be exempt from the requirement, which ministers hope will make it easier for smaller companies to compete.

The plans were criticised by environmental and green campaign groups, which said that job creation should not be a trade-off with protecting the environment.

“Protecting the environment and helping young people into good work are mutually beneficial and one shouldn’t come at a cost to the other,” said Greenpeace UK’s head of politics, Ami McCarthy. “Companies should be held to account with environmental targets to help achieve a better future without leaving young workers behind.”

Friends of the Earth’s head of campaigns, Rosie Downes, said: “Encouraging companies to create good local jobs is crucial, but it shouldn’t be an either/or with efforts to safeguard our environment.

“Communities are already paying the price of environmental inaction, with the UK on course for record levels of heat-related deaths this summer and our natural world in sharp decline.”

Sarah Williams, the director of strategic partnerships at Green Alliance, said: “The UK is facing a growing youth unemployment crisis, so businesses should be encouraged to create good jobs and opportunities for young people. But scrapping requirements on climate and sustainability is simply not the answer. It’s not an either/or choice.”

The move is also likely to spark concern among anti-trafficking and equality campaigners. A Labour source said the government knew it would face criticism for scrapping some of the current social value indicators.

“What companies have to do at the moment feels too much like a box-ticking exercise and it’s just red tape instead of being useful,” they said. “We are trying to make sure that the government pound is being used to invest in companies that want to invest directly in young people in their areas, and it brings real results and doesn’t just look good on paper.”

Suppliers will be assessed on their commitment to backing British jobs and developing skills, and specifically targeting support for young Neets, care leavers and people with long-term health conditions.