“We want councils to help create jobs, opportunities and growth right across the country,” said Alison McGovern, the Wirral MP now serving as Minister of State for Local Government and Homelessness, as Whitehall confirmed new powers for local authorities to direct some smaller public contracts to local and UK suppliers. The Cabinet Office announced the change on Tuesday 2 December 2025.

Under the move, councils, police and fire authorities in England can run competitions for ‘below‑threshold’ contracts that are open only to UK‑based firms or to suppliers with a base in a defined local area such as a county. Ministers say this could put more than £1 billion of spend a year within reach of smaller firms. The policy is voluntary and is intended to align councils with flexibilities already used in central government.

In plain terms, ‘below‑threshold’ means deals that sit under the statutory trigger points where the full regime applies. For most council goods and services that figure is currently £214,904 including VAT; for works it is £5,372,609. The formal noticing rules for below‑threshold contracts generally bite from £30,000 for councils, creating a clearer pipeline of modest, locally relevant opportunities.

The Cabinet Office’s updated guidance (PPN 005) spells out the boundaries. A council may reserve a below‑threshold competition to the UK or to a single county (London boroughs count separately). Any reservation has to be justified, recorded, advertised on the Central Digital Platform and still deliver value for money; it cannot be used to make a quiet direct award.

Business groups were quick to welcome the shift. “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,” said Tina McKenzie, the Federation of Small Businesses’ policy chair.

Town halls also see advantages. “These changes will give [councils] greater freedoms to buy local, keeping more of what they spend in their local communities,” said Cllr Dan Swords, who chairs the LGA’s Public Service Reform and Innovation Committee.

The legal fix matters in the North. For years, Section 17(5)(e) of the Local Government Act 1988 stopped councils factoring in a supplier’s location. The Procurement Act 2023 created powers to disapply that restriction for lower‑value procurements, and the government’s guidance confirms the change is now in play for below‑threshold awards.

Officials stress what counts as ‘local’. The rules look at where a supplier is based or established and has substantive operations, not where corporate owners sit. That means a national chain with a depot in, say, Leeds or Sunderland could qualify alongside an independent Northern SME – one reason procurement teams must assess market depth before reserving a lot.

For suppliers across the North, the practical step is to get set up on the Central Digital Platform – the upgraded Find a Tender service – and use region filters and alerts for “below‑threshold” and county‑reserved notices. Authorities and vendors alike had to re‑register from 24 February 2025, when the new regime went live.

Chris Ward, the Cabinet Office minister leading the reforms, said the government is “changing the rules that have held back councils from investing in local businesses that are the lifeblood of local economies.” The stated aim is more skilled jobs and investment closer to where people live, delivered through cleaner, simpler competitions.

Context matters too. February’s National Procurement Policy Statement told public bodies to consider wider social and economic value when they buy – part of a wider overhaul that includes faster processes, clearer data and a single portal for notices. The consultation over the summer looked at further measures to boost SME participation and good local jobs.

What should Northern buyers do now? Sense‑check pipelines for categories that lend themselves to local delivery – building repairs, highways patching, estates, cleaning, catering, digital support and community services – and document the reasoning if a lot is reserved. Publish on the Central Digital Platform and keep competition brisk; the guidance is clear that reservations should not choke off choice.