Healey’s Budget signal: public contracts will reward firms that train

John Healey, chancellor of the exchequer since 20 July, used his first Labour Party conference speech in the post on 28 September to set the terms for his first Budget. He told delegates that “through the core of the Budget I deliver a month today will be fiscal discipline”. That Budget is due on 28 October, the date he gave the Treasury Select Committee on 31 July. The speech made no tax pledge in either direction.

The British Chambers of Commerce (BCC), responding the same day, called it a significant speech but wanted more. It said policy-related operating costs for a typical small or medium-sized enterprise (SME) had risen by more than 70% in 10 years. Shevaun Haviland, its director general, asked the chancellor to avoid further tax rises and to cut employer National Insurance contributions for under-25s. The room for either is tight. Trustnet reported fiscal headroom of £10bn–£15bn, down from £23.6bn earlier in the year, attributing the estimate to the Office for Budget Responsibility. It quoted Lizzy Galbraith, senior political economist at Aberdeen Investments, who said that “given recent spending announcements, further tax rises are likely”. Valentin Boboc, senior economist at the Institute of Economic Affairs, said in the same piece that the Budget should instead cut taxes and energy costs and clear barriers to investment.

What Healey did announce was narrower. An extra £100m over two years will extend local apprenticeship services to all 14 Mayoral Strategic Authorities with directly elected mayors from spring 2027, according to HM Treasury’s note on the speech. The Union Learning Fund returns in England with £15m a year and a focus on AI. And the chancellor pledged to use public procurement to “direct more of British taxpayers’ money to British business, British jobs, and British innovation”.

Read together, those are one policy. The state wants to buy from employers that train, and it is building local services to supply them with trainees. For leaders of UK technology businesses, the signal ahead of 28 October is not a tax break to wait for but a scorecard to prepare for.

The scorecard changes in January

The Cabinet Office published that scorecard on 5 August. From 1 January 2027, the score for bringing benefits to the local community in central government procurement rises from 10% to 20% on contracts worth £5m or more. Bidders will be judged on their commitment to creating high-quality British jobs, tackling local skills shortages and supporting young people into apprenticeships and work placements, with extra credit for offers such as 45 days of work experience. On major contracts, departments will set a key performance indicator and publish annual progress reports. The rules were also simplified and their threshold raised to contracts of more than £1m, to help smaller bidders. The Cabinet Office puts the government contract market at £90bn a year.

Healey described the aim then as backing British “not just if possible but by design”. Technology is already in view. The release cites the National Cloud Infrastructure Programme, which is exploring how to coordinate public-sector cloud demand and help young people not in education, employment or training (NEETs) build digital and AI skills. On 31 August the government launched the first four competitions under a separate £100m Sovereign AI R&D Procurement Scheme, from health service productivity to security testing for AI agents, and winning firms keep their intellectual property.

The skills money points the same way

The apprenticeship expansion works through small employers: the Treasury says local leaders are ideally placed to match them with young people, and Healey described local teams working “a bit like football scouts for apprenticeships”, approaching firms that have never taken on a trainee. It sits alongside full funding of training and assessment for eligible apprentices aged 16 to 24 and the £3,000 Youth Jobs Grant.

The Union Learning Fund carries the AI message. Healey said its new focus would be “to help British workers harness Artificial Intelligence, not be outrun by it”, and called AI “the greatest innovation of our time”. The Treasury says employees will not need to be union members to benefit, with support ranging from basic English, math and digital skills to training for growing industries. The fund previously generated 180,000 learning opportunities a year, it says.

The BCC welcomed the apprenticeship expansion but warned that it would succeed only “if the voice of business is heard”. That is the opening for tech employers. The risk for firms that sit out the local schemes is arriving at a central government tender worth £5m or more in 2027 with little to show against a fifth of the marks.

What boards should do before 28 October

First, plan the Budget without relief. Healey promised discipline and made no tax pledge, so boards should treat any cut to employer costs as upside. The BCC’s under-25 National Insurance ask is the measure to watch, because it fits the chancellor’s focus on young people and work.

Second, if the business sells to central government, or intends to, audit now what it can evidence against the new criteria: apprentices, work placements, local hires and support for NEETs. The Cabinet Office said detailed technical guidance would follow in the autumn, which leaves little time before the rules take effect in January.

Third, get in front of the local mayoral authority before the expanded service starts in spring 2027. The Budget will set out how both schemes are funded from Department for Work and Pensions savings, the Treasury says.

The chancellor has said where public money will go: to firms that hire, train and build in Britain. Tech businesses that treat their apprentice and graduate intake as part of the bid, rather than a cost line, are the ones positioned to collect it.