Ben Pollock, Manager at 4C Associates
From April 2027, central government departments will need to run a Public Interest Test before awarding service contracts worth more than £1 million. The policy raises a reasonable question, but also some that are harder to answer.
The Cabinet Office has published PPN 024, a new policy note that requires central government departments, executive agencies and non-departmental public bodies to carry out a Public Interest Test before awarding service contracts worth £1 million or more. Organisations with an annual contract spend of £100 million or above will also need to publish a five-year Insourcing Strategy. Both requirements take effect from 1 April 2027.
On the surface, this looks like a sensible addition to the way the government buys services. Look a little closer, and it raises questions that are worth thinking through before the deadline arrives.
A familiar question, applied more widely
Consideration of insourcing, bringing delivery and resourcing in-house rather than relying on suppliers, is not a new idea in government procurement. Major contracts already require a proper analysis of this question through the Delivery Model Assessment required by the Cabinet Office. What PPN 024 changes is the threshold and the focus – the value at which this analysis becomes mandatory drops to £1 million, and the requirement is centred specifically on service contracts.
That is an important shift. A great many service contracts sit above £1 million without coming anywhere close to the scale that previously triggered this kind of scrutiny. Departments that have only occasionally needed to run a full sourcing assessment will now need to do so as a matter of routine.
A reasonable expectation, or an optimistic one?
Implicit in this policy is a preference for services to be delivered by permanent in-house staff rather than through supplier expertise. That is a legitimate position for government to hold, but it rests on an assumption that commercial staff across departments have a sufficiently clear understanding of the true impacts of recommending insourcing, and are appropriately skilled, experienced and confident to make that call.
That assumption may not hold as consistently as the policy requires. Sourcing decisions of this kind depend on a detailed understanding of market conditions, delivery risk and long-term cost, built up over time. Lowering the threshold to £1 million means many more of these assessments will now be needed, carried out by a correspondingly larger group of commercial staff, not all of whom will have had the opportunity to build that depth of experience.
A familiar phrase, in a new context
The phrase ‘Public Interest Test’ has a distinctly legal register, more familiar from inquiries and investigations than from procurement policy. Sir Kier Starmer used the same language recently when announcing the government’s plans to bring British Steel into public ownership. Seen in that light, PPN 024 fits a wider pattern than procurement policy alone. It reflects a broader reaction, visible across much of the developed world, against the assumptions of late twentieth and early twenty-first century globalisation, and a renewed preference for bringing economic activity and employment closer to home rather than relying on the comparative advantage of overseas markets.
It is also a policy that carries a political signature. A test of this kind, introduced by a Labour government, sits comfortably with a preference for a more active state. A different administration with more confidence in market delivery might well have taken a different view on whether such a test was needed at all.
The social value question
There is also a less obvious tension here that matters to anyone working in procurement. For years, the government has pushed suppliers to deliver social value through their contracts, creating employment opportunities and breaking down barriers to work, often for people who are otherwise underrepresented in the labour market. PPN 024 sits alongside that agenda somewhat awkwardly, since a successful Public Interest Test could remove suppliers, and the social value commitments built into their contracts, from the equation entirely.
If a service currently delivered by a supplier with genuine sector expertise moves in-house, it is worth asking what makes government the better employer for the people who deliver it, rather than a supplier that has built specific capability in that area over time. The answer will vary by service and by market, but it deserves a considered response rather than an assumed one.
PPN 024 also introduces a new reporting requirement, with in-scope organisations needing to submit quarterly returns and, where relevant, publish a five-year Insourcing Strategy. This lands at a moment when the visibility of departmental pipelines through Find a Tender is still incomplete across central government, which makes the scale of this undertaking harder to judge from the outside.
Taken together, this represents a further demand on commercial teams that are already stretched. The sourcing question this policy is designed to answer is not a new one, and it already has a home in the Delivery Model Assessment process. What PPN 024 adds is another formal step, a lower threshold that brings many more contracts into scope, and a reference framework that commercial teams will need time, training and support to apply with confidence.
Asking whether a service might be better delivered in-house is a reasonable thing for the government to do. Whether departments currently have the capability and capacity to answer that question well at the scale this policy now requires will determine whether PPN 024 achieves what it sets out to do.
