Public sector contracts more likely to go to employers that ‘improve society’

Businesses will have to demonstrate their diversity credentials to secure public sector contracts

Companies that do more to employ people from diverse backgrounds and reduce modern slavery will be first up for public sector contracts, the government will announce today.

Cabinet Office minister David Lidington will announce today that businesses that want a share of the £49bn the government spends with outside organisations each year must do more to help improve society.

Lidington will say that it is “morally right” to make ethical demands of companies that take taxpayers’ money, and the government will look at:

  • Companies that employ people from diverse backgrounds, including those with disabilities and from ethnic minorities
  • How companies reduce modern slavery and cyber security risks in their supply chains
  • Businesses focused on environmental sustainability
  • Companies that boost workers’ employability potential through staff training.

As part of its procurement shake-up, the government also has a target of awarding one third of contracts to small- to medium-sized businesses by 2022. It has already committed to barring suppliers who cannot demonstrate they are paying their supply chains on time.

The Cabinet Office will stress that procurement processes will not be made more complex or costly by these demands.

“Every year, the government spends £49bn with external organisations and it is morally right that we make sure none of that money goes to any organisations who profit from the evil practices of modern slavery,” Mr Lidington will say.

“Similarly, it is right that we demand that the organisations we work with meet the high standards we need to protect our environment and employ workforces which represent our diverse society, including people with disabilities and those from ethnic minorities.

“By making sure that these social values are reflected not just across the government, but through all the companies we work with, we will take a major step towards our goal of creating an economy that works for everyone.”

Responding to the plans, Lord Victor Adebowale, chair of Social Enterprise UK, said: “It’s good to see the government showing leadership and taking steps to embed social value across its contracts.

“Social value should not be seen as a luxury in any part of the public or private sectors but common sense. People expect modern government and business to ensure that all spending considers the needs of our society and environment. Social enterprises have been pioneers, but it is important that every sector follows.

“This announcement will support the more than 100,000 social enterprises working in the UK which employ over 2m people. The social enterprise sector has been a great British business success story and it is right that the government does more to support it.”

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