By: Sinéad Magill – CEO, Palladium

Britain is preparing to spend billions building the infrastructure its future depends on. The question is whether the communities hosting that investment will be stronger because of it.

The UK Government’s new Procurement Policy Note 026 suggests it wants the answer to be yes. From January, major central government contracts will be judged not only on what suppliers deliver, but on the good jobs, skills, and opportunities they create in doing so.

Britain has no shortage of things it needs to build. The government wants new homes, modern infrastructure, greater energy security, stronger defence capabilities, and better public services. Delivering those ambitions will require enormous public and private investment.

But behind almost every major investment is a people challenge. Skills shortages constrain employers and delay delivery, even while too many people remain disconnected from meaningful work. And communities asked to host major developments do not always see a clear relationship between billions of pounds of investment and opportunity in their own lives.

PPN 026 recognises that the people developed through public expenditure can be part of the return on that expenditure. In many ways, social value is becoming economic policy and infrastructure development is becoming a human capital impetus. Going forward, procurement will not simply buy services or build infrastructure, it will help address labour market shortages, improve participation and develop the workforce needed to support long-term growth. 

A railway can also build a generation of skilled workers. An energy project can create pathways to employment for people who have struggled to access the labour market. A hospital can strengthen local supply chains and businesses. A major government contract can leave a community with greater economic capacity that it had before the investment arrived.

It’s an ambitious concept that sharpens the current procurement rules’ broad definition of “social value,” and it will likewise require a more ambitious response from suppliers.

The danger of compliance

There is an obvious risk whenever a policy objective enters procurement: we begin optimising for the metric. As CEO of a major UK government supplier, I’ve had to resist the urge.

Apprenticeships, placements, training hours and jobs can all be counted. They are useful measures and can represent meaningful opportunities. But counting activity is not the same as creating lasting economic value.

The better starting point is the place itself. What does the local labour market look like? Where are the skills gaps? Which groups are disconnected from employment, and what is preventing them from participating? What will employers need in five or ten years? Which skills developed for one project will remain valuable when it’s complete?

The new model points in this direction. It asks suppliers to think about barriers to employment, progression and future talent pipelines, and about working with local communities to shape local solutions.

At Palladium, we have spent years investing in employability and skills, most recently by merging with Get Set UK. Our experience in the UK and internationally has repeatedly led us to the same conclusion: people’s ability to access skills, employment, and economic opportunity sits underneath many of the biggest economic and social challenges governments are trying to solve.

PPN 026 connects that challenge directly to the enormous purchasing power of government.

Building social licence

There is another reason this matters, particularly for infrastructure.

In sectors such as mining, companies have long talked about a project’s “social licence to operate.” Regulatory approvals may provide formal permission to proceed, but the long-term success of major investment also depends on the trust and acceptance of the communities affected by it.

That idea has much wider relevance. Infrastructure doesn’t happen to places; it happens in communities. A transmission line, railway, data centre, hospital or major development may serve a national objective, but people experience a £5B investment personally: Does my child have a chance of getting one of these jobs? Can a local business participate? Will people here acquire skills that remain valuable after construction finishes? Is this investment making this place stronger?

They also experience the disruption, environmental effects, pressure on services, and changes that major projects can bring. There’s a profound difference between a community watching investment happen around it and being equipped to participate in the prosperity that investment creates.

When people can see credible pathways from investment in their community to jobs, skills, careers, and stronger local businesses, they have a tangible stake in its success.

That doesn’t mean employment opportunities can substitute for genuine engagement or erase legitimate objections to a project. Social license depends on trust, participation, and a willingness to understand what communities value. But economic participation is an important part of that equation.

Make every pound work harder

The UK is preparing to spend enormous sums addressing infrastructure needs while simultaneously confronting skills shortages, economic inactivity, and persistent regional disparities. These are not entirely separate policy problems, and government already has an extraordinarily powerful intervention at its disposal: the money it is going to spend anyway.

A major infrastructure programme needs workers. Communities need pathways into meaningful employment. Employers need larger and better-prepared talent pools. Government wants growth, productivity, and national security. Properly designed, each can help solve the others, providing government and suppliers that understand the barriers people face in entering employment work together earlier.

PPN 026 gives this agenda real weight. For central government contracts worth £5 million or more, social value (newly defined) will represent at least one-fifth of the tender evaluation. Commitments will also need to make the journey from the bid into contract management and measurement, with real accountability as suppliers are contractually held to their promises.

For suppliers, PPN 026 raises the bar. The opportunity is to move beyond promising social value at bid stage and build the partnerships, capabilities, and local understanding required to deliver it in practice.