One paragraph in Cabinet Office's new guidance on PPN 026 says that where social value costs money, the cost should be shown in the supplier's cost model, justified in the authority's business case and monitored through the contract. For years social value has been treated as something suppliers provide within the price they would have charged anyway, and under commercial pressure that has squeezed it down to whatever costs least to promise. If authorities write their tenders to take this paragraph seriously, whoever wins will arrive with social value commitments that are priced, budgeted and contractual. The guidance opens the door to that, and our view is that social value practitioners should step through it with confidence and purpose.
PPN 026 is Cabinet Office's procurement policy note on social value. Strictly, it binds only central government departments, their executive agencies and non-departmental public bodies, on contracts worth £1m or more, and other public bodies may choose to adopt it. But it sets the government's definition of social value, and that shapes how social value is understood across the wider public sector and by the suppliers who bid for its work, so it matters well beyond the bodies it binds.
PPN 026 applies to procurements whose tender notice is published on or after 1 January 2027.
PPN 026: The Social Value Model, Cabinet Office, paragraph 10
The paragraph sits in section 4.3 of Cabinet Office's guidance on using PPN 026, published in October 2026, under the heading "Social Value and Tendered Price":
Procurements for high-value contracts will normally be expected to require suppliers to provide a clear and transparent cost model that can be monitored during the contract lifecycle. If there are costs associated with delivering social value they should be detailed within the cost model and justified through your business case. The delivery of social value should also not be in the form of financial donations either to your contracting authority, a Community Programme, or other organisation that delivers social value outcomes.
Three things in it are new, or at least newly said out loud. Social value that costs money belongs in the cost model, alongside everything else a supplier prices. Those costs should be justified through the authority's own business case, which means the authority is expected to decide what it is paying for before it goes to market; our first article argued in August that this budget decision has to come first, and the guidance now points the same way. And the cost model should be one that can be monitored during the contract, so a priced commitment can still be seen and checked after award.
The last sentence needs careful reading. Social value is not to be delivered in the form of a financial donation, to the authority, a community programme or anyone else. On our reading, that means a supplier cannot meet its social value commitment simply by giving money away. It does not mean that funding a community programme, or anyone else who helps deliver the outcome, is banned. Suppose a supplier funds a voluntary sector organisation to run pre-employment support that gets care leavers ready for work, and then employs one of them on the contract. The social value is the job, and that is what the KPI counts; the funding is how the supplier got there.
Much of what changes outcomes works like that. It is done in partnership and needs capacity beyond the contract: a training provider delivering a qualification, a small local business brought into the supply chain and supported to grow, or a programme the authority already runs that the contractor can support. In the POP Model, the framework we use to design procurement, this is the System Enablers dimension: the capacity beyond the contract that outcomes depend on.
All of that costs money, and the guidance does not yet say how community programmes, or that wider capacity, should be funded; the list of community programmes (the schemes the guidance says suppliers can support to deliver their commitments) has not been published. What section 4.3 does make possible is for those costs to sit as visible lines in the supplier's cost model, linked to the outcomes they pay for, rather than being absorbed and squeezed. Budget lines in the contract are what allow real work with real outcomes, and allow anyone to check it happened.
The paragraph is an expectation rather than a rule. It applies "normally", to contracts it calls high-value, and it does not define high-value. Nothing in it stops any public body, in central government or outside it, applying the same approach to any contract where social value costs money, and on our reading the logic applies to all of them.
When we say social value has been treated as free, we don't mean nobody paid for it. We mean it had no line of its own: suppliers were asked for commitments, price was scored hard, and nothing in the evaluation or the contract recognised that some of those commitments cost money to deliver.
At the tender, that has a predictable effect. A bidder can promise a careers talk, a few days of work experience or a letter of support from a local college for very little, and score well. A bidder that offers something with a real cost, such as better pay for the people on the contract, supervised placements or supported jobs for people a long way from work, either carries that cost in a price that may lose, or offers it and plans to find the money later by squeezing something else, or offers it and hopes it just gets quietly forgotten (which happens often).
Once the contract is running and margins tighten, the commitments with no budget behind them are the first to thin out. Most of them are not needed to deliver what the contract is for: the offices still get cleaned and the building still gets built whether or not the placements happen. So they can be dropped with no failure in the core service to draw anyone's attention, and because nobody priced them, nobody can say what was lost.
There are pockets of very good practice, and we are not saying none exists. But the system as a whole has rewarded the cheapest promise rather than the most useful one, and the result is social value that sits beside the contract rather than inside it: commitments with no defined budget and no commercial status, added to a procurement rather than changing how the public sector buys.
PPN 026 uses KPIs to stop commitments disappearing:
That makes a dropped commitment visible. Pricing is what makes it deliverable: a KPI on a commitment nobody funded measures a promise, while a KPI on a priced line measures something the authority has paid for.
If the invitation to tender asks for social value costs in the cost model, then whoever wins, their social value commitments arrive as priced lines, with a budget the authority has agreed to and a contract that holds them.
Fair pay shows why this matters. It arrives in the Social Value Model with PPN 026, as criterion 1c, and it is one of the most expensive commitments a supplier can make, because it runs through every hour worked on the contract. Our first article estimated that on a contract worth £5m a year where most of the cost is labour, paying for better pay properly is a £300,000 to £600,000 a year decision, built up from the Homecare Association's figures for the cost of employment. Without section 4.3, a sum like that would have had nowhere to go. A bidder offering better pay would either have put it in its price and risked losing, or absorbed it and looked for savings elsewhere, while a bidder offering less could still write a strong plan.
A year: the cost of paying for better pay properly on a contract worth £5m a year where most of the cost is labour.
Procure for Impact, PPN 026: The Budget Decision Comes Before the Social Value Decision (August 2026), built up from the Homecare Association's Minimum Price for Homecare 2026/27
Section 4.3 gives it a home: a line in the cost model, which the authority has decided in its business case whether to fund, which every bidder can see is expected, and which the contract manager can check was spent on what it was priced for. The same applies to an apprentice's salary and a supervisor's time, or to what a supplier pays a voluntary sector organisation or training provider to help it deliver a commitment.
When we say commercial, we don't mean social value becomes another cost to be cut. We mean it gets a budget, a price and a place in the contract, like everything else the authority buys. That is what moves it out of the space of good deeds and into the core of how contracts are designed, priced and managed.
1. Cost the outcomes before the tender, and get them into the business case. The guidance expects social value costs to be justified through the authority's business case, so the work starts there: deciding what the contract should deliver, what that will cost and whether the budget owner will fund it. That is a conversation about budget and price, and our view is that social value leads should be in it from the start rather than brought in once the tender documents are being written.
2. Ask for social value costs line by line in the cost model. The invitation to tender should require bidders to show the cost of each social value commitment separately, including what they will pay partners such as voluntary sector organisations or training providers, and link it to the commitment it pays for. The guidance expects this on high-value contracts; our advice is to ask for it on any contract where social value costs money, in proportion to the contract. On a small contract that can be a simple breakdown of what each commitment costs, so the request does not become a barrier for the small firms and voluntary organisations the guidance wants to see bidding.
3. Evaluate so that pricing honestly does not lose. Social value is scored in broad bands on the quality of a bidder's plan, while price is usually scored on a formula that moves with every pound. A bidder that prices its commitments honestly can therefore lose to one that promises the same and prices nothing. Two things help. Where the authority has budgeted for something, it can specify it, so every bidder prices it on the same basis. And where a bidder's commitments have no cost behind them, the authority can ask how it will pay for them, and take the answer into account when judging whether the plan will be delivered. How to design the scoring itself is the subject of our third article.
4. Manage it as a priced line. Because the cost model is monitored through the contract, the KPI for each commitment can be set against what was priced, and central government departments are expected to report delivery against social value KPIs to Cabinet Office every quarter (section 5.3). If something is not delivered, the conversation is about money paid for something the authority did not receive, which is a commercial conversation rather than a request for goodwill.
We are building three free tools to go with this series. A workforce cost model, which checks whether a bid's social value commitments, including pay, training places and supervision, are covered by its price, and which works across sectors rather than only where most of the cost is labour. A premium test, which shows how much more a better bid can cost under a given weighting and price formula before it loses, so an authority can calibrate its criteria to produce the balance between price, quality and social value it intends. And a checklist that follows the four steps above: whether the outcomes are costed and in the business case, whether the invitation to tender asks for social value costs line by line, whether the evaluation stops honest pricing from losing, and whether each commitment has a KPI set against what was priced.
All three will be free to use and adapt. If you would use them, send us a message and we will share them when they are ready; knowing who wants them and why helps us to design them right.
These are proposals. PPN 026 applies to procurements from 1 January 2027, and nobody has tested this on a live tender yet. If you have already budgeted for or priced social value in a tender, successfully or unsuccessfully, or you have questions or challenges on our take, we'd be delighted to hear from you.