England councils can reserve below-threshold contracts

From today, 2 December 2025, councils, police and fire authorities in England can run competitions for lower‑value public contracts that are open only to UK‑based suppliers or to businesses in a defined local area. The Cabinet Office says more than £1 billion of spend each year could be steered to firms closer to home, with the aim of giving small businesses and community organisations a clearer route into public work.

Before we go further, a quick decode. In UK procurement, “below‑threshold” means the contract value sits under set national limits. For local authorities, that currently means goods and services under £214,904 and works under £5,372,609 until 31 December 2025. Above those amounts, competitions must stay open more widely under treaty rules; below them, authorities have more flexibility like this new reservation option.

This change fixes a long‑standing legal blocker. For decades, section 17 of the Local Government Act 1988 stopped councils from considering a supplier’s location, even on small buys. Ministers are now using powers in the Procurement Act 2023 to disapply that rule in specific cases, so local bodies can reserve below‑threshold competitions for UK or local suppliers while still running a proper competition.

So what counts as “local”, and who can be included? Government guidance for below‑threshold buying allows two main reservations: by supplier location (the whole UK, or a single county-or a single London borough), and by organisation type (SMEs and VCSEs). “Local” means where a supplier is genuinely based or has substantive operations, not just a postal address, and buyers cannot define the area by nation (so not “England‑only”). Today’s move extends that flexibility to local government.

It’s important to say this is optional. Buyers still have to run fair competitions and secure value for money, and this policy sits alongside, not above, wider duties. The National Procurement Policy Statement published in February 2025 asks all public bodies to consider social and economic value when awarding contracts, but that expectation does not cancel the need to spend wisely.

Process matters too. The below‑threshold regime is lighter than the full rulebook, but it is not an informal “three quotes and go” for everything. For councils, it typically applies from £30,000 upwards, and notices must be published on the central platform with clear criteria so bidders can see how they’ll be assessed. That transparency applies whether or not a competition is reserved.

Here’s a practical picture. Imagine a £120,000 parks maintenance contract. Your local authority could limit the competition to firms based in the county, or to SMEs, and still score quality, price and delivery. A social enterprise taking apprentices from nearby colleges might score well on both service and community benefit. No supplier gets a guaranteed win; the race simply starts with a local or UK‑only field rather than every potential bidder worldwide.

Where does “social value” fit? Central government now uses a Social Value Model with a minimum 10% weighting for social value in relevant procurements; this became mandatory from 1 October 2025 for departments and their agencies. Councils are not bound by that specific policy note, but all contracting authorities must “have regard” to the National Procurement Policy Statement, so most will still set out social value expectations where relevant and proportionate.

If you’re learning this for A‑level Politics or Business, keep three ideas in mind. Thresholds decide which rulebook applies; reservation shapes who can enter a competition; social value is about wider benefits-like skills or local jobs-when they genuinely relate to the contract. The test for good procurement is whether a fair process delivers a good outcome for the public.

Two final checks for your notes. This change covers England’s councils and certain local bodies; devolved governments set their own rules and Wales has consulted on a similar disapplication using the same 2023 Act power. And while business groups welcome easier access for smaller firms, some voices warn against box‑ticking or reduced competition-the safeguard is open criteria, price checks and evaluation that rewards real delivery.