What is PPN 026, and why should I care about it?
PPN 026: what it means for PFI investors and social infrastructure contractors - a narrower and more measurable approach to 'social value'.
The government’s revised Social Value Model (PPN 026) changes how central government will assess “social value” in procurement from 1 January 2027. It applies to central government departments, executive agencies and non-departmental public bodies for covered procurements of £1 million or more (including VAT) commenced under the Procurement Act 2023. Other public sector bodies, including local authorities, are not required to adopt it, but may choose to do so.
For PFI investors and social infrastructure contractors, the most important shift is that social value is being narrowed and made more measurable. The new model focuses on two outcomes only: good jobs and skills. That means quality employment, fair pay, working conditions, training, retraining, progression and talent pipelines will sit at the centre of evaluation. According to the government model and supporting commentary, some themes found in the previous framework — including environmental outcomes, SME/VCSE participation, modern slavery and broader equality measures — have been removed from the new model.
The practical impact is significant. For contracts valued between £1 million and £5 million, contracting authorities must apply a minimum 10% social value weighting; for contracts of £5 million or more, the minimum rises to 20%. For central government contracts over £5 million, suppliers must also deliver at least one social value KPI, so promises made at bid stage become part of contract delivery and performance management. Poor performance against social value KPIs can also be considered in future exclusion decisions.
For social infrastructure contractors, this is likely to affect bid strategy, supply chain design and contract management. In sectors such as construction, infrastructure and facilities management, where many contracts exceed £5 million, social value may become a more material part of win/loss decisions.
Suppliers will need evidence, not generic statements: workforce data, apprenticeship and training activity, recruitment and progression plans, and local employment partnerships will all matter more.
For PFI-style investors, the main question is how these requirements interact with risk, pricing and delivery. The model does not directly apply to private sector procurement, but it is likely to shape market expectations, because public procurement often sets the standard for wider tender practice. In practice, that means bidders and investors should expect stronger scrutiny of how social outcomes are built into delivery models, how they are measured, and whether they can be sustained over the life of the contract.
The opportunity is that well-prepared bidders may gain an edge by showing credible, contract-specific social value. The risk is that weak or unmeasurable commitments will be discounted. For investors and contractors in social infrastructure, the message is clear: social value is moving from a “nice to have” to a scored, contractual and monitored part of procurement.
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