● Councils, police and fire authorities
in England to now be able to reserve bidding for lower-value
contracts to just local and UK suppliers.
● Reforms pave way for more than
£1billion of potential spend to be reserved every year for local
and UK firms.
● Latest in a series of reforms to open
up government work to small businesses and create skilled local
jobs.
Small businesses are set to benefit from £1billion of funds every
year through laws proposed today allowing local authorities to
reserve some contracts for suppliers in their area.
These reforms are the latest in a series to unlock growth by
slashing commercial red tape, simplifying the public contracts
regime and removing barriers for smaller firms to work with
government.
Under the changes, councils, fire and police authorities in
England will now be able to reserve competitions for their
lower-value contracts to UK-based suppliers and suppliers in a
defined local area.
, Parliamentary Secretary at the
Cabinet Office, said:
"We're changing the rules that have held back councils from
investing in local businesses that are the lifeblood of local
economies.
“This will put power back in the hands of our communities to
drive growth, unlock skilled jobs and create local investment
that rewards working people.”
, Minister of State for
Local Government and Homelessness at the Department for Housing,
Communities and Local Government said:
"We want councils to help create jobs, opportunities and growth
right across the country.
"Making sure they can prioritise our brilliant local businesses
is a huge step forward in achieving that, and will mean more
money going to firms that know their areas best and can invest in
the communities they serve."
The move, disapplying section 17(5)(e) of the Local Government
Act 1988 in certain circumstances, gives local authorities the
tools to support growth in their communities, while maintaining
the core principles of fair competition and value for money when
awarding below-threshold contracts.
The new voluntary rules also brings the public sector in line
with the flexibility that Whitehall has to buy goods and
services.
It follows a new National Procurement Policy Statement published
in February, which set out an expectation for public bodies to
provide wider social and economic value when awarding their
contracts. Over the summer, the Government also consulted on
proposals that would utilise spending by public sector
bodies when buying everyday goods and services to create
more opportunities for local small businesses and social
enterprises, deliver social value by creating good local
jobs, open up work opportunities and boost skills.
Further quotes
Tina McKenzie, Policy Chair of the Federation of Small
Businesses, said:
“It's great to see the Government listening to small businesses
and taking action. This is exactly the kind of practical reform
we called for - giving local authorities the tools to make it
easier for small firms to take on public work.
“Small firms bring deep local knowledge, strong community ties
and specialist skills. When the system clears unnecessary hurdles
and lets them compete on fair terms, the whole community
benefits. Today's announcement is a welcome sign that those
barriers are finally starting to come down."
Cllr Dan Swords, Chair of the LGA's Public Service Reform and
Innovation Committee, said:
“Councils have a key role in driving local growth and these
changes will give them greater freedoms to buy local, keeping
more of what they spend in their local communities.
“Local suppliers, SMEs and voluntary and community organisations
will all benefit from councils being able to reserve
below-threshold contracts for them, creating jobs and increasing
supply chain resilience, to help meet our shared ambition with
government to boost inclusive local and national economic
growth.”
Notes to editors:
● The Local Government (Exclusion of
Non-commercial Considerations) (England) Order 2026 has been
laid in Parliament on 2 December 2025. Following debates and
approval from Parliament, local authorities will be able to use
the new reform from early 2026.
● Below-threshold contracts are those
valued under £214,904 for goods or services, or under £5,372,609
for works (for local government authorities)
● Section 17(5)(e) of the Local
Government Act 1988, which prevents local authorities from
implementing boycotts against foreign countries, will continue to
operate as intended as the Order only disapplies that section
when authorities choose to reserve competitions for
below-threshold contracts to suppliers based within UK or local
area.
● Comprehensive statutory guidance
detailing how the geographical reservation will work in practice
is published today at www.gov.uk/regional-and-local-government/local-government.
This will help authorities prepare for implementation in early
2026.
