English local authorities will be able to reserve some contracts for suppliers in their area under new government reforms.
The changes, which will be introduced in early 2026, will apply to contracts for goods and services valued under £214,904 procured by councils, fire and police authorities in England. They will also cover contracts under £5,372,609 for works by local government authorities.
The rules are part of the Local Government (Exclusion of Non-commercial Considerations) (England) Order 2026 which has been laid in Parliament today.
It follows the government’s National Procurement Policy Statement published in February, alongside the introduction of the Procurement Act, which set out an expectation for public bodies to provide wider social and economic value when awarding their contracts.
The government said the new voluntary rules will bring the public sector in line with the flexibility that Whitehall has to buy goods and services.
Chris Ward, 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.”
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.”