This week the Government has announced a new approach to social value in public procurement, changing both what it wants public bodies to focus on, and how much importance social value should carry when major contracts are awarded.

The idea behind social value is straightforward. Laws passed in 2012 required public bodies to consider how what they buy could improve the economic, social and environmental wellbeing of an area. Over time, social value developed into a much more formal part of procurement, with suppliers scored on the additional social value they promised alongside delivery of the contract.

At the heart of the change is a new, much shorter Social Value Model used by central Government to evaluate social value. The previous model covered eight outcomes and seventeen award criteria across a wide range of social, economic and environmental objectives. The new model concentrates on just two: good jobs and skills.

This is not simply about cutting back social value. The Government is also giving it greater weight in larger procurements. Social value will continue to account for at least 10% of the evaluation for contracts between £1 million and £5 million, rising to at least 20% for contracts worth £5 million or more. Larger contracts will also have to include at least one social value KPI, so that what is promised when a contract is awarded can be followed through into delivery.

Taken together, these changes suggest something more significant than a tidying-up of the Social Value Model. The Government is concentrating social value on fewer things, making them more important in major contracts and beginning to pay greater attention to whether they are actually delivered. We think that opens the door to a much bigger change in how we think about public procurement and how it should be conducted.

Social value was an important breakthrough. It established that public money should achieve more than simply buying a service. But over time we asked it to do too much: jobs, skills, carbon, wellbeing, equality, community engagement and much more. Particularly in local government, complex quantitative systems developed to measure and monetise those promises. An industry of consultants, calculators, portals and reporting systems followed.

The problem was not the ambition. It was where we put it.

Social value works particularly well as a way of asking commercial organisations what wider social and community benefit they will create alongside a contract. But for many community, social enterprise and not-for-profit organisations, that value is intrinsic to what they are and how they work. Asking them to invent something extra can miss the value already there and can turn a winning tender into a losing one.

Social value has brought wider social, economic and environmental considerations into public procurement. But after more than a decade, we should ask whether it has gone far enough. Has it changed the way public spending shapes local economies – who gets the work, the quality of the jobs created, which organisations can participate and whether communities continue to benefit after individual commitments have ended?

The next step is to move beyond what can be added to individual contracts and look at the wider impact of public spending itself. That is where public value comes in.

Public value asks a different question. Instead of asking what extra benefits can be added to a contract, it asks what kind of places and economies we want public spending to help create. This reframes public spending as an investment in community well-being rather than a transaction of the public purse.

Public value brings these wider ambitions into the heart of how public services are designed and commissioned. The things that have disappeared from the Social Value Model have not stopped mattering. They can instead be built into services, contracts and markets from the outset.

Environmental responsibility can be designed into the service and its specification. Inclusion can become part of employment practice and service design. If we want SMEs, community, social enterprise and not-for-profit organisations delivering public services, we need markets they can actually enter – with sensible contract sizes, lots, reserved contracts and opportunities for collaboration.

And this starts before the tender. Commissioners can talk to communities, workers and providers, understand what already exists and then decide what service is needed and how it should be commissioned. That is market shaping: using public spending to help create the market we want.

Local government reorganisation gives us an extraordinary opportunity to do this. Councils can simply combine services into bigger contracts in pursuit of economies of scale. Or they can think again about the services, jobs, organisations and communities they want to sustain – creating economies of place.

Add the Government’s ambitions for British businesses, good jobs and growth in every postcode and the direction becomes clearer.

The Starmer Government did not introduce the promised Procurement Bill in the King’s Speech. That left unfinished business. The Burnham Government should build on these proposals and bring together good work, sustainable procurement, market shaping, place, community participation and a diverse economy of providers into a more ambitious approach to public procurement.

We call this public good procurement. It means looking at public spending differently. Not simply as money spent on a contract, but as an investment in the places where we live and work. There is a once-in-a-generation opportunity to put public value at the heart of procurement. It should not be wasted.

You can find our more about the Government’s plans by reading our latest analysis report here.