Andy Burnham will tell firms bidding for public contracts to prove they are creating jobs rather than meeting green and social targets in a bid to get more people into work.
The prime minister will overhaul the £90bn public procurement system so bidders have to show they are supporting young people into work and addressing local skills shortages.
It comes as the government seeks to tackle the youth unemployment crisis, with Burnham saying he wants to create “growth in every postcode”.
But green groups criticised the plans, arguing supporting young people into work should not come at the expense of the environment.
Companies bidding for government contracts are judged on a range of measures, including value for money and the extent to which they bring benefits to the local community.
Under the changes, the weighting given to the benefits brought by companies will be doubled, from 10% to 20% for contracts worth £5m or more, the Cabinet Office said.
Previously, this accounted for how companies created social value through measures such as equality and diversity, net zero and the post-Covid recovery.
The new 20% measure will instead be based on job creation. Bidders will be given extra credit for creating local jobs paying above the minimum wage, plugging local skills gaps by offering training and particularly by offering 45-day work experience placements for young people.
Office for National Statistics (ONS) figures show more than a million people aged 16 to 24 are currently not in education, employment or training (Neet).
Burnham used a similar initiative to oversee a rise in the latter during his time as mayor of Greater Manchester.
First Secretary of State Louise Haigh — who is effectively Burnham’s deputy prime minister — said the procurement process in its current form was a “tick-box exercise”.
“Every pound of taxpayer money should be spent in a way that benefits local communities — creating good jobs and giving young people the skills they need for the future,” she said.
The new model will apply to both British and international firms bidding for public contracts.
Haigh said: “These new rules will ensure the £90 billion that is spent each year through government contracts supports British jobs, skills and people in every postcode.”
Cabinet Office Minister Mark Ferguson said that businesses who secure government contracts “have a responsibility to give back”.
“Businesses that benefit from the billions of taxpayer pounds spent by government, will have to create more local jobs and opportunities for young people in their area,” he said.
But Greenpeace UK’s head of politics Ami McCarthy said protecting the environment and helping young people into work are “mutually beneficial and one shouldn’t come at a cost to the other”.
“Companies should be held to account with environmental targets to help achieve a better future without leaving young workers behind,” they added.
