NICs Hike: Why Social Value in Bid Submissions Has Never Been More Important
By Omar Hadjel MCIM
The UK government’s recent decision to increase Employer National Insurance (NI) contributions has sent ripples through businesses across all sectors, with particular concern for those supplying to the public sector. The shift—raising employer NI from 13.8% to 15% and lowering the threshold at which businesses start paying—places significant additional cost pressures on employers.
For public sector suppliers and those aspiring to secure government contracts, the challenge is twofold. On one hand, they must absorb higher employment costs; on the other, procuring authorities will likely place even greater emphasis on social value to justify spending and create tangible community benefits. In this evolving landscape, embedding social value as a strategic driver rather than an afterthought will separate those who thrive from those who struggle.
The Double Pressure: Rising Costs & Rising Expectations
The increase in employer NICs means businesses across the UK are reevaluating their cost structures, with some expected to slow down hiring, reduce staff, or shift towards outsourcing models. This is particularly concerning for labour-intensive industries, such as facilities management, construction, security, and social care—all of which rely heavily on public sector contracts.
At the same time, public sector buyers are under mounting pressure to justify procurement decisions, ensuring that spending delivers not just goods and services but broader social, economic, and environmental benefits.
Local authorities and central government departments are increasingly required to demonstrate social impact in their procurement choices.
The Social Value Model (PPN 06/20) remains a pivotal evaluation criterion in government tenders, often carrying a 10–30% weighting in bid assessments.
Public buyers must maximise value-for-money under fiscal constraints, often seeking suppliers who actively contribute to job creation, upskilling, and environmental sustainability.
In short, the cost of winning and delivering public contracts is rising—but so are the expectations around social value commitments.
What This Means for Suppliers and Aspiring Suppliers
For businesses looking to secure or retain public sector contracts, social value is no longer a tick-box exercise—it is a competitive advantage. The increased employer NIC burden makes it more important than ever to align social value strategies with business priorities, ensuring that commitments are both authentic and commercially sustainable.
Key Challenges for Suppliers
Absorbing Increased Costs Without Pricing Themselves Out of Bids
With higher employment costs, businesses will need to balance financial viability with competitiveness in tenders.
The solution? Strategically embedding social value—not just in bids, but in day-to-day operations—can make them more attractive to buyers without inflating costs.
Meeting the Rising Expectations of Public Buyers
Authorities are now looking for more tangible, measurable social value commitments, with a strong focus on job creation, apprenticeships, sustainability, and community impact.
Suppliers must ensure their social value offers are both compliant with PPN 06/20 and aligned with local authority priorities.
Communicating Social Value Effectively in Bids
Many businesses struggle to articulate their social value in a way that resonates with evaluators.
Authorities expect a clear, data-driven approach, with specific commitments, impact measurement methods, and long-term benefits.
Embedding Social Value: From Compliance to Competitive Edge
1. Align Social Value with Business Strategy
Rather than treating social value as an add-on, businesses should integrate it into core business practices. This means:
Developing structured social value programmes with clear objectives and impact measurement frameworks.
Aligning workforce strategies (e.g., apprenticeships, diversity & inclusion initiatives) with social value priorities.
Creating environmental sustainability plans that drive both compliance and cost savings (e.g., carbon reduction plans, circular economy initiatives).
2. Make Social Value Real & Measurable
Public sector buyers now expect more than just promises—they want evidence. Suppliers should:
Implement impact-tracking tools to measure their contributions (e.g., employment created, CO₂ saved, volunteering hours).
Link social value initiatives to relevant frameworks (e.g., the GRI Standards, UN SDGs, or the UK Social Value Model).
Provide case studies showcasing real-world impact from previous contracts.
3. Master the Art of Articulating Social Value in Bids
A well-articulated social value offer can differentiate a supplier and win contracts even when they are not the lowest-cost bidder.
To achieve this:
✔ Use procurement-friendly language—align with PPN 06/20 Social Value Model and PPN 002 priority themes.
✔ Be specific—provide quantifiable, measurable and auditable commitments.
✔ Demonstrate local impact—focus on how the initiative benefits the contracting authority’s local area - if they defined it.
✔ Link social value to financial resilience—explain how your initiatives contribute to a sustainable, future-proofed workforce.
Turning the NICs Hike Challenge into Opportunity
The increase in employer NICs is a significant challenge, but for astute businesses that understand how to integrate, measure, and communicate social value, it can also be an opportunity. Public sector buyers need suppliers who can help them justify spending, deliver real impact, and meet social value targets—those who do this well will have a competitive advantage.
In this new era of procurement, suppliers who develop a comprehensive social value framework and embed social value as a core business principle—rather than a last-minute bid-writing exercise—will be the ones winning high-value contracts and securing long-term revenue stability.
