The Local Government (Exclusion of Non-commercial Considerations) (England) Order 2026 has taken effect, enabling best value authorities and parish councils to reserve certain competitions to suppliers based in the United Kingdom or within a defined local area. The instrument was made on 3 February 2026 and came into force on 4 February 2026. (legislation.gov.uk)
The Order carves out a narrow exception to section 17 of the Local Government Act 1988, which ordinarily bars authorities from acting by reference to non-commercial matters such as the location of a contractor’s business activities. For below‑threshold procurements only, the location criterion ceases to be treated as a non‑commercial matter where an authority has decided in advance to reserve participation to UK‑based or locally based suppliers. (legislation.gov.uk)
The scope is expressly confined to below‑threshold contracts as defined in section 5 of the Procurement Act 2023. In practice, many council procurements under the main thresholds fall into this category; separate notice rules apply where the opportunity is a “notifiable below‑threshold contract”, set at not less than £30,000 for local authorities and £12,000 for central government authorities. (legislation.gov.uk)
Authorities must take the reservation decision before inviting tenders. If an authority intends to rely on the UK‑only route, it must determine that contractors not based in the UK may not participate. If it opts for a local reservation, it must determine that contractors not based in the defined local area may not participate. These pre‑tender determinations are conditions of using the new flexibility. (legislation.gov.uk)
The Order explains what “based within” means for this purpose: a supplier is based in a location if it is based there or has established substantive business operations there, and the location of corporate ownership or control is disregarded. This ensures the focus is on operational footprint rather than parent‑company domicile. (legislation.gov.uk)
Defining the “local area” is also prescribed. For a single authority, it may be the authority’s own area, or that area together with bordering counties or London boroughs; where the authority sits wholly within a single county or London borough, it may instead treat that whole county or borough as the area. For joint procurements, the relevant areas may be combined and extended to adjacent counties or boroughs. (legislation.gov.uk)
Transparency requirements mirror the reservation choice. Where the contract is notifiable, the authority must state in the below‑threshold tender notice whether the procurement is reserved to UK‑based suppliers or to the local area and, if local, specify the extent of that area; for other relevant contracts, the same information must appear in any advertisement. Regulation 24 of the Procurement Regulations 2024 is amended to reflect these notice fields. (legislation.gov.uk)
The change sits alongside existing below‑threshold duties under the Procurement Act 2023, including the requirement to publish a below‑threshold tender notice before advertising a notifiable opportunity and to apply reasonable, equal time limits. Those duties continue to apply irrespective of any UK or local reservation. (legislation.gov.uk)
Government guidance published on 3 December 2025 sets out how to plan and document use of the new option, including how to define a local area, evidence supplier location, and combine area reservations with measures to support SMEs or VCSEs where appropriate. Authorities should align templates and workflows so that any reservation and local area definition are settled before notice publication. (gov.uk)
The instrument was laid before both Houses on 2 December 2025 and approved by resolution. It is signed by the Minister of State at the Ministry of Housing, Communities and Local Government. No full regulatory impact assessment was prepared, with the Explanatory Note stating no impact on the costs of business and the voluntary sector. (statutoryinstruments.parliament.uk)