**London**: The Labour government’s new National Procurement Policy Statement aims to streamline public procurement practices, fostering inclusivity for SMEs and VCSEs, while driving economic growth and social value through updated guidelines that set three-year targets for SME spending and minimum weighting for social value in tender evaluations.
The Labour government has introduced a new National Procurement Policy Statement (NPPS), which outlines strategic priorities aimed at enhancing public procurement practices across the UK. This initiative comes alongside a series of new and updated Procurement Policy Notes (PPNs) designed to guide best practices for public sector procurement, particularly in promoting inclusivity for small and medium-sized enterprises (SMEs) and voluntary and community sector organisations (VCSEs).
Shamayne Harris, head of procurement at Pagabo, a company that manages frameworks for public sector contracting authorities, elaborated on the implications of these changes. Speaking to UK Construction Online, he noted, “Through the NPPS, the government aims to maximise the impact of the £400 billion spent each year on essential goods and services.” The government seeks to leverage public procurement to support various missions, including economic growth, the establishment of Britain as a clean energy superpower, and the enhancement of NHS capabilities.
Contracting authorities are required to consider the goals outlined in the NPPS, which focus on delivering value for money, driving economic growth, providing social and economic value, and developing commercial capacity. The NPPS applies to all contracting authorities defined by the Procurement Act, with some exemptions, including private utilities and contracts governed by devolved authorities in Wales and Northern Ireland.
The release of new PPNs includes PPN 001 and PPN 002 which specifically target inclusivity for SMEs and social value respectively. PPN 001 aims to facilitate the entry of new suppliers into public procurement. While the previous target for SMEs to secure 33% of central government spending was merely aspirational, the new guidance sets a framework for establishing three-year targets for direct SME spending, beginning from 1 April 2025. This targets accountability and progress, even though it does not impose legal obligations.
Harris highlighted that “while there isn’t a mandated target, there is reference to setting a three-year target for direct SME spend,” indicating a notable shift towards long-term commitment rather than immediate outcomes. It is anticipated that this framework will encourage wider industry participation, leading towards best practices aligned with government standards.
On the topic of social value, PPN 002 stipulates that from 1 October 2025, central government authorities must apply a minimum weighting of 10% to social value considerations when evaluating tenders. This provision applies to evaluations linked to procurements initiated under the Procurement Act 2023 prior to this date, allowing organisations the choice to either adopt the new PPN or follow previous guidelines during the transition period.
The updated PPNs have primarily focused on aligning terminology with the new legislative framework, although several positive developments have been highlighted in terms of inclusivity strategies for SMEs and VCSEs. Harris remarked, “Our immediate reaction to the new NPPS and PPNs is that we are pleased to see positive steps being taken in supporting the SME and VCSE inclusive agenda.” He noted that the NPPS expects public sector entities to ensure transparency and collaboration, which will be facilitated by new mandated notices introduced under the Procurement Act 2023.
Contracting authorities have been advised to familiarise themselves with the NPPS and PPNs promptly to align their operational strategies with governmental procurement goals. The current reforms mark a significant evolution in public procurement practices within the UK. For more information on the ongoing reforms, interested parties can visit the Pagabo website.
Source: Noah Wire Services
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