The New Social Value Model: What PPN 026 Changes and When

On 5 August 2026 the Cabinet Office published Procurement Policy Note 026, a new Social Value Model for central government. It replaces the PPN 002 Model that has governed central government tenders since 1 October 2025 and applies to procurements commenced on or after 1 January 2027. It is the second overhaul of the Model in eighteen months, and the more far-reaching.

Here is what has changed, where it came from, and what happens next.

The signal came in June

On 30 June, in his first policy speech after Keir Starmer announced his resignation, Andy Burnham said in Manchester:

“We will make sure that all public contracts are subject to proper social value weighting, and we will do that to make sure that British-based companies are in a better position to win those contracts.”

Andy Burnham became Prime Minister on 20 July and PPN 026 followed sixteen days later.

How the government describes PPN 026

The launch announcement is built around one idea: British jobs, skills and opportunities “in every postcode”. First Secretary of State Louise Haigh said every pound of taxpayer money “should be spent in a way that benefits local communities”.

The Cabinet Office press release accompanying the Model points to the £90bn spent through government contracts each year and confirms that other assessment areas “will be scrapped” to make bidding simpler, particularly for smaller firms.

Five key changes from PPN 002 to PPN 026

• A new definition. Social value for central government contracts now means “taking account of how a supplier will work for our communities to provide good British jobs, skills and opportunities in every postcode”.
• A higher threshold. The Model applies only to covered procurements worth £1m or more including VAT. PPN 002 applied from the procurement threshold of £139,688 including VAT.
• Higher weightings on larger contracts. Contracts between £1m and £5m carry a minimum 10% social value weighting. Contracts of £5m or more carry a minimum 20%, double the previous floor. Where absolute methodologies such as Price per Quality Point are used, the percentage applies to the non-price score.
• A much smaller model. PPN 002 had 5 Missions, 8 Policy Outcomes, 17 Model Award Criteria (MACs) and 33 Standard Reporting Metrics. PPN 026 has 2 Outcomes, 6 MACs and no Standard Reporting Metrics. Outcome 1, Good Jobs, covers creating or retaining high quality jobs, fair working conditions and fair pay. Outcome 2, Skills, covers training and retraining, in-work progression and building a talent pipeline. Buyers select one relevant outcome per tender, attaching relevant community programmes from a forthcoming list.
• Harder accountability. Social value commitments should be monitored through contractual KPIs. Contracts of £5m or more must carry at least one social value KPI , published on the central digital platform and reported on at least once every 12 months. Evidence of poor performance can be taken into account when considering whether to exclude a supplier from future tenders.

What is out from PPN 002 to PPN 026

• The environment does not appear in PPN 026
• Also gone are the MACs covering domestic abuse reduction, supply chain diversity (start-ups, SMEs, VCSEs and mutuals), modern slavery risk management, representation of disabled people, tackling inequality in employment, and workforce health and wellbeing
• Disability now appears only in the target cohorts for future guidance, alongside NEETs and care leavers
• There is no mention of Standard Reporting Metrics; the implication is that measurement will instead run through contractual KPIs and the evaluation methodology due in the autumn 2026 guidance.

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How does PPN 026 affect SMEs and VCSEs?

Andy Burnham has publicly credited the Preston Model of procurement, which channels spending to local SMEs, cooperatives and social enterprises, yet PPN 026 removes the SME and VCSE award criteria that PPN 002 included and lifts the threshold so that most smaller contracts sit outside the Model – the threshold rises from £139,688 inc VAT to £1 million.

Nevertheless, the Model emphasises the responsibility of commissioning authorities to conduct Preliminary Market Engagement to ensure SMEs and VCSEs are not excluded:

“SMEs/VCSEs: In-scope organisations should research market conditions including whether there are small and medium enterprises (SMEs) and voluntary, community and social enterprises (VCSEs) and/or if the procurement is likely to attract international bidders, before selecting the appropriate model award criteria (MAC) to apply to their procurements. This ensures all organisations, including SMEs and VCSEs, and treaty-state suppliers can meet the criteria.”

How does this affect SMEs and VCSEs?

• The detailed guidance due in autumn 2026 is the most important date ahead. It will set out the sub-criteria for each MAC, the evaluation methodology, the List of Community Programmes and the full definitions of target cohorts .
• From 1 January 2027 the new Model applies to procurements commenced on or after that date; before then, during the transition period, either edition may apply, so both PPN 002 and PPN 026 will remain in use.
• Suppliers, particularly in construction and infrastructure where contracts routinely exceed the £5m line, can start mapping existing social value activity to Good Jobs and Skills and reviewing the workforce data behind pay, conditions and progression commitments.
• Contracting authorities can begin planning how they will set KPIs.

Q&A: The New PPN 026 Social Value Model

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