Ministers have announced plans to let English councils, police and fire authorities ring‑fence some lower‑value procurements for UK‑based or local suppliers. The Cabinet Office estimates more than £1 billion of spending a year could be reserved if public bodies use the option. The change would be delivered by disapplying section 17(5)(e) of the Local Government Act 1988 for below‑threshold competitions.
Section 17 currently classifies a contractor’s location and the country of origin of supplies as non‑commercial matters that authorities must ignore when awarding contracts. The Procurement Act 2023 created a regulation‑making power at section 116 to relax that duty for defined authorities; today’s announcement indicates that power will be used for below‑threshold procurements.
For central government, location‑based reservations have been available since 24 February 2025 under Procurement Policy Note 005. The guidance allows competitions to be reserved UK‑wide or to a single county (or London borough) and, where appropriate, to SMEs and VCSEs-though SME/VCSE reservations cannot be used on their own. Today’s plan would extend comparable flexibility to local government bodies.
The policy applies only to ‘below‑threshold’ procurements. For 2025, thresholds (VAT‑inclusive) include £214,904 for goods and services for sub‑central authorities such as councils and £5,372,609 for works, as set out in Schedule 1 to the Act and aligned with GPA values. These thresholds determine when the lighter below‑threshold regime can be used.
When using a location reservation, authorities must still run a competition rather than a direct award, record the rationale, and ensure there is sufficient competition. ‘Location’ should reflect where a supplier is based or established with substantive business operations; reservations cannot be set by UK nation and only one county (or a London borough) may be specified.
Cabinet Office guidance also sets limits on use. Authorities should consider open competition where the local market is thin to protect value for money, and avoid applying location reservations where a procurement of goods into Northern Ireland could attract cross‑border interest.
The move sits alongside the National Procurement Policy Statement introduced in February 2025, which asks contracting authorities to support wider social and economic value through procurement. Business groups and the Local Government Association welcomed the direction, highlighting opportunities for small firms and VCSEs to win local work.
For procurement teams, the operational tasks are immediate: update Contract Procedure Rules and sourcing templates to capture if and when a reservation will be used, and keep decision records covering market analysis, proportionality and value for money. Where an authority intends to advertise a ‘notifiable’ below‑threshold opportunity, it must first publish a below‑threshold tender notice on the Central Digital Platform and publish contract details after award.
Next steps depend on secondary legislation under section 116 being made and commenced. Once in force, the option will remain voluntary and can be applied case by case. Central government will continue to use PPN 005; local bodies would be able to adopt the same approach to support supply chain resilience and local job creation, within procurement law and value‑for‑money tests.