Titled "Public Procurement: Growing British Industry, Jobs and Skills", the consultation published on 26 June 2025 sets out a package of legislative and policy proposals aimed at aligning procurement practices with the Government's wider industrial strategy and building on the changes introduced in the Procurement Act 2023.
The proposals seek to leverage the UK's annual £385 billion spent through public procurement to support small and medium-sized enterprises (SMEs), voluntary, community and social enterprises (VCSEs), and to promote local job creation and skills development. The consultation document can be found here.
Key proposals
The consultation outlines numerous reforms across three broad themes:
- Supporting small businesses and social enterprises
- Requiring large contracting authorities (those with an annual spend over £100 million) to publish their own three-year target for direct spend with SMEs and VCSEs and report against it annually, as well as extending spend reporting requirements;
- Clarifying in primary legislation where it may be appropriate to award contracts for certain services delivered to vulnerable citizens (such as adult and children's social care) so that decisions can be driven by the needs of the individuals and vulnerable groups; and
- Requiring contracting authorities to exclude suppliers from bidding on major contracts (over £5 million) if they cannot demonstrate prompt payment of invoices to their supply chains. The measure would be implemented on a 'comply or explain' basis so that authorities would not be required to apply it where they can demonstrate it would reduce competition or jeopardise value for money.
- Supporting national capability
- Giving Ministers powers to designate specific services, works or goods as critical to our national security and direct contracting authorities to take this into account when considering whether the national security exemption applies to a particular procurement to protect the UK's national interests (the Government is not inviting public consultation on this proposal but has stated that it will engage with relevant national security stakeholders as necessary); and
- Requiring contracting authorities to make a standard assessment before procuring a major contract (over £5 million) in order to test whether service delivery should be inhouse or outsourced.
- Supporting good quality, local jobs and skills
- Requiring contracting authorities to set at least one award criteria in major procurements (over £5 million) which relates to the quality of the supplier's contribution to jobs, opportunities or skills. Contracting authorities would need to apply a minimum weighting of 10% of the scores available to social value award criteria;
- Requiring contracting authorities to set at least one social value key performance indicator (KPI) relating to jobs, opportunities or skills in major contracts (over £5 million) and report on delivery performance against this KPI in the contract performance notice;
- Requiring contracting authorities to use standard social value criteria and metrics selected from a streamlined list (to be co-designed with the public sector and suppliers) in their procurement of public contracts; and
- Allowing contracting authorities to specify the area in which the social value is to be delivered by choosing between the location of a contracting authority's area of responsibility, the location where the contract will be performed, or the location where the supplier is based.
Comment
The Government's latest consultation marks a clear shift in the purpose and power of public procurement. No longer just a mechanism for ensuring transparency and value for money, procurement is increasingly being positioned as a means to drive broader policy goals such as supporting SMEs, VCSEs, enhancing national capability and fostering local jobs and skills.
This evolution reflects a post-EU landscape, where the UK is now free to tailor its procurement rules to align more closely with domestic priorities. While the core principles of fairness and accountability remain, the emphasis on social value and industrial strategy signals a more interventionist approach. For businesses and public bodies alike, this means adapting to a procurement landscape that is not only about compliance, but also about contribution to communities, to capability, and the UK's economy.
Next steps
The consultation closes on 5 September 2025. Responses can be submitted via an online survey, with the Government seeking views on whether the proposals meet their intended policy objectives.
If implemented, the proposals would mark a significant evolution in the UK's procurement framework, with a stronger emphasis on social value and local impact.
We have released two podcast episodes exploring how businesses can engage with and influence policy development.
- Part 1 explores the formal and informal mechanism available to shape policy; and
- Part 2 considers how to challenge policies that may adversely affect your business.
These and other episodes are available on our Policy Matters Podcast page and Public Law Notes blog.
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