UK Firms Must Embrace Net Zero and Diversity for Contracts

The UK’s public procurement landscape has experienced significant fluctuation under the new government.

Recent procurement changes - including the Procurement Act and the National Procurement Policy Statement - have meant many organisations must shift their focus to have a greater emphasis on diversity and net zero goals to win public contracts. 

This move to inclusivity and environmental sustainability replaces the past Conservative-led approach that favoured cost-effectiveness and simplicity.

What is The National Procurement Policy Statement?

The National Procurement Policy Statement (NPPS) details the strategic priorities for public procurement.

It came into effect on 24 February 2025 - at the same time as the new, revised Procurement Act 2023. 

It highlights how contracting authorities - like local councils, government departments, public bodies and local councils - can meet national goals through their procurement strategies.

The UK Government views public procurement as a vital catalyst for driving economic and social value across the commercial lifecycle by sourcing services and goods that deliver greater value for money. 

The NPPS details key principles of public procurement:

• Ensuring value for money
• Maximising public benefit 
• Acting with integrity
• Promoting innovation
• Ensuring value for money

Organisations must ensure that their procurement decisions and practices deliver value for money, social value, diversity in supply chains and skills and capabilities for procurement professionals.

The National Procurement Policy Statement is strengthened by the Procurement Act 2023 - a UK law that reforms public sector procurement to create a more transparent and simpler system.

Contracting authorities across the UK must now consider NPPS priorities (social value, sustainability and money) when making procurement decisions. 

Not only does the NPPS support the UK’s net-zero commitments by ensuring sustainability is integrated into procurement decisions but it also crafts a long-term approach to procurement - rather than concentrating efforts solely on cost. 

Political criticisms

The Labour Government’s procurement approach marks a significant shift from the past Conservative-led policy that discouraged sustainability and diversity requirements. 

Several critics have warned the shift to focus on ideology and social value over money could potentially increase costs for taxpayers. 

However, the procurement process has faced increasing criticism since allegations of wasteful spending and cronyism emerged during the pandemic, meaning change has continued to be difficult to implement. 

Sir Jacob Rees-Mogg, the former business secretary, explains: “The intention of the Procurement Act 2023 was to maximise value for money for taxpayers. When the public finances are under such strain trying to use it for woke virtue signalling is especially foolish and potentially unlawful.”

Andrew Bowie, Shadow Minister (Energy Security and Net Zero), states: “It seems this Government is more concerned with their eco-zealotry than delivering value for money for the taxpayer.

“By enforcing these mad targets on companies, the British public will face higher bills, and worse services – just to fuel Ed Miliband’s own ego and ideology.

“After their disastrous Budget, the Government should be prioritising value for money over eco-zealotry rather than taking another step in the wrong direction and lumbering costs on tax payers.”

How will the National Procurement Policy Statement impact the future of procurement?

The NPPS will help contribute to wider societal goals whilst ensuring public spending delivers greater value for money.

Despite wider political criticism, the National Procurement Policy Statement is set to deliver broader social, economic and sustainable value to society, such as:

• Integration of social value in procurement decisions
• Enhanced opportunities for VCSEs and SMEs
• A greater focus on ethical and sustainability practices
• Transparent and streamlined processes

A government spokesman explains: “Our entire focus is on growing the economy, creating high-quality local jobs, driving innovation and opening up opportunities for businesses.

“The National Procurement Policy Statement and Procurement Act does not place any unnecessary burdens onto business, instead it simplifies the procurement process, removing bureaucratic rules and regulations and re-focusing the £400 billion spent each year in procurement to deliver the Plan for Change.”

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