Small businesses across England are set to benefit from £1 billion in contracts every year under new laws proposed today, giving local authorities the power to reserve certain competitions for suppliers in their area.
The reforms aim to unlock growth by cutting commercial red tape, simplifying the public procurement regime, and removing barriers that have historically prevented smaller firms from working with government.
Under the proposed changes, councils, fire, and police authorities will be able to reserve competitions for lower-value contracts to UK-based suppliers and those within a defined local area. This flexibility, achieved by disapplying section 17(5)(e) of the Local Government Act 1988 in specific circumstances, will allow local authorities to support community growth while maintaining fair competition and value for money.
The new voluntary rules bring the wider public sector in line with the flexibility already available to Whitehall departments. They follow the publication of the National Procurement Policy Statement earlier this year, which set out expectations for public bodies to deliver social and economic value through their contracts.
Over the summer, the government consulted on proposals to leverage public sector spending on everyday goods and services to create more opportunities for local SMEs and social enterprises, generate good local jobs, boost skills, and deliver social value.
Chair of the Local Government Association’s Public Service Reform and Innovation Committee, Cllr Dan Swords, 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.”
These changes form part of a broader strategy to make procurement simpler, fairer, and more accessible – ensuring small businesses can play a bigger role in delivering public services and driving economic growth.
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