Most of the 2026 story in FM is about buyer appetite running strongly in owners' favour. This piece is about the one development that runs the other way, and owners with heavy public sector exposure need to read it carefully rather than ignore it.
What Actually Changed in June
On 18 June 2026 the government set out an ambition to end the era of outsourcing by default across central government. In practice this means a new Public Interest Test must be applied before renewing expiring contracts over £1 million, weighing long-term service quality and public value rather than short-term price. Central government departments with more than £100 million in annual contract spend will draw up five-year roadmaps to rebuild in-house capability.
FM is named directly. The intention is to bring some building management services, including cleaning and security staff, back in-house as current contracts end, starting from 2028, with around 2,000 workers potentially returning to the Civil Service. This is a genuine reversal of direction, and it predates the existing commentary that treated outsourcing as a one-way trend.
Keep It in Proportion
It is important not to overstate the scale. Two thousand Civil Service roles is a signal of direction, not the whole market, and the public sector still accounts for over 68 per cent of the UK FM market on Baachu Rain's 2026 estimate. Public sector FM is not disappearing.
What has changed is narrower and more specific: the renewal certainty on public sector soft FM contracts has been repriced, and some horizons have shortened. A buyer modelling a book of public sector cleaning or security contracts now has to factor in a Public Interest Test at renewal that did not exist a year ago. That is a real change to how the risk is priced, even if the volume of work stays largely intact for now.
What It Means for a Sale
For a seller, the consequence is about concentration. A business whose revenue is heavily weighted towards public sector soft FM, on contracts now subject to review at renewal, carries a concentration risk that a buyer will price more cautiously than they would have last year. A business with a diversified book, or one weighted towards the hard, compliance-led services that are growing rather than being brought in-house, is far less exposed.
This is not a reason to rush. It is a reason for owners in the exposed category to understand their timing while the wider market for good FM businesses is as active as it is. If a large share of your revenue sits in public sector soft services, the practical work is to know exactly how concentrated you are, to diversify where you can, and to be able to show a buyer the parts of the book that are least affected.
There is a related workforce point that owners with public sector contracts should keep in view. A statutory two-tier workforce code is expected to take effect from October 2026, aimed at protecting staff who transfer out of, or alongside, the public sector, and TUPE itself is under review following a call for evidence. For a seller, the practical response is the same either way: clean, well-documented transfer records become a rising due-diligence premium, because they give a buyer confidence that the workforce attached to those contracts will transfer without dispute.
The insourcing turn is one of four forces reshaping FM valuations this year. The others, institutional appetite for hard FM, the full buyer map, and the primacy of recurring revenue, run in owners' favour, and I have set all four out together in my August market briefing for FM owners.
Concerned about public sector concentration in your book? A free, confidential valuation will show how a buyer would read it, at facilitiesmanagementbusinessforsale.co.uk/valuation.html.
Get a Free Valuation