United Kingdom

Since 2010, the UK has faced unprecedented political and economic upheavals, some of which it has shared with other liberal market economies, and some which have been wholly unique. The upshot of all these developments, such as the global financial crisis and cost of living crisis, has been a pressure on government to cut spending, while trying to improve national productivity and worker participation rates which have stagnated in recent years.

These circumstances highlight a pressing need for enhancement within the UK employability sector. Amidst these challenges, there emerges a clear imperative for strategic reforms to bolster the nation's resilience and efficacy in the face of ongoing economic and social transformations.

A work first approach

Based on the recommendations of the 2007 Freud report, the Work Programme was designed to further open up employment services to private providers. This initiative adopted a payment-by-results model, intending to offer a tailored approach for job seekers facing significant challenges and providing increased financial incentives for providers successfully placing individuals encountering substantial barriers to entering the workforce.

The fundamental objective was to enhance the support system for hard-to-help job seekers through a more personalised and outcome-driven approach. Results from the Work Programme were mixed, with employment services often falling into habits of “creaming and parking”, whereby the strongest candidates find jobs while those facing the greatest challenges are “parked”.

With greater control over employment support provisions being linked to conditionality clauses and the roll out of Universal Credit, the Work Programme was ended in 2016 and replaced by the Work and Health Programme. The Work and Health Programme has also seen a greater devolution of employment service provision, with London and Greater Manchester given the powers to develop, procure and deliver localised versions and part of the overall budget being devolved to Scotland (under Work First Scotland).

As part of greater government spending tied to Covid-19 recovery, the UK government launched Kickstart (2020), funded by the Department for Work and Pensions to provide jobs for 16 to 24 year old on Universal Credit. Restart (2021 PDF) is available to all jobseekers who have been unemployed for nine months or longer.

Job seekers are given access to coaching, CV building and interview skills, and training as part of mandatory requirements. As part of the government’s Back to Work Plan (2023), the Restart programme has been expanded and extended. In addition, the Back to Work Plan also puts in place stricter conditionality requirements, including tougher benefit sanctions for those not actively looking for work.

Adding social value to procurement

The UK has also witnessed a renewed emphasis on incorporating social value into procurement spending. The Social Value Act (2012) established the principle of social value, the idea that government spending should have indirect social and/or environmental benefits.

While the initial Act did not set concrete targets for contracting authorities in terms of social value, it led the way for further policy initiatives. Updated policy notes from the Cabinet Office have since dictated that social value must be “explicitly considered” in the procurement process and at least 10% of procurement bids must feature a social value component.

The 2023 Procurement Act has further codified this, by stating that award of contracts must be based on Most Advantageous Tender principles, dropping the Economic (cost based) priority of previous guidelines and strengthening the monitoring of Key Performance Indicators in government contracts.

While the Westminster government has made strides towards maximising social value in public contracting, similar initiatives, also including the principle of Fair Work have been put forward in Holyrood and Cardiff. The Procurement Reform Act (Scotland) 2014 states that procurement contracts must take into account the potential to deliver community benefits, such as targeted employment and training opportunities for disadvantaged groups, upskilling existing workers and working with anchor institutions to provide work experience opportunities.

Similarly, the Welsh government outlined its strategy through the Well-Being for Future Generations Act (WBFG PDF) 2015 which provided a framework for sustainable procurement for contracting authorities. The Social Partnership and Procurement Act 2023 solidifies the socially responsible procurement duty, reinforcing reporting obligations for contracting authorities. This includes setting up procurement plans for subcontractors. This is particularly crucial as labour rights violations are often most pronounced at the subcontractor level.

Both nations involved have pledged allegiance to Fair Work principles, urging public contractors and employers at large to uphold high work standards, including the commitment to paying a Real Living Wage. This signifies a joint commitment to fostering fair and equitable employment practices throughout the procurement process.

Devolved governments and local authorities are leading the way in using (local) government spending to promote good employment practices. Major cities and combined authorities such as Manchester, Greater London and Edinburgh have established Fair Work Charters. Charters are mostly voluntary stakeholder engagement forums where members pledge to commit to fair work practices, under the leadership of the local authority that has set up the initiative.

Benefits for employers include being part of a wider regional network which brings together government, employers and other local stakeholders in an economic strategy focused on delivering community benefits. However, employers who subscribe to such voluntary initiatives are not explicitly guaranteed preferential access to local authorities' grants and contracts. Progressive governments or Labour-led local authorities have stopped short of requiring grant holders to abide by fair work principles as a condition of grant receipt.

The only exception can be found in Scotland, where Fair Work First Guidance states that all grant holders after 1st July 2023 must “pay at least the real Living Wage and provide appropriate channels for effective workers’ voice”. The Fair Work First Guidance (PDF) employs language that challenges the traditional "Work First" philosophy linked to benefit receipt for public assistance recipients.

In contrast, it shifts the focus to grant holders, specifically contractors receiving public funds, making it mandatory for them to adhere to Fair Work principles. This reversal of the principle, which originally applied to benefit recipients expected to accept any available job as directed by the public employment service (such as Job Centre Plus in the UK), is a notable feature of the Fair Work First guidance.