Between June and September 2025, the Cabinet Office consulted on proposals to public procurement reform, which would see a pivot towards a more well-rounded approach where public procurement is used to provide a more active role in supporting British industry, local jobs, skills development, SMEs and social enterprises (the "Consultation," which can be found here). The Consultation forms part of the wider reform programme under the Procurement Act 2023 (the "Act"), which governs approximately £385 billion of public spending annually. On 26 March 2026, the Cabinet Office published the response to the Consultation (which can be found here).
Purpose and context
The National Procurement Policy Statement ("NPPS") sets out the Government’s strategic priorities for public procurement. To support implementation of the NPPS, the UK Government has already introduced a number of new measures, including SME spend targets for central government, prompt payment requirements, a streamlined social value model, and the development of an online register of commercial agreements. The Consultations aim to build on these measures to ensure that public procurement plays its full role in delivering the Government’s industrial strategy and fostering a resilient economy that supports British businesses and local communities. Specifically, the Consultation questions related to:
- supporting small businesses and social enterprises;
- supporting national capability; and
- supporting good quality, local jobs and skills.
Consultation engagement
The Consultation received 811 responses, with generally positive feedback. Respondents included contracting authorities (43.71%), suppliers (33%), and other stakeholders (such as legal advisers and trade bodies). SMEs and VCSEs were strongly represented amongst the suppliers who responded to the Consultation. Overall, the feedback appeared broadly supportive of the overarching objectives, but highlighted practical and proportionality concerns, including:
- increased administrative burden for contracting authorities;
- impact on existing suppliers, particularly SMEs, if insourcing becomes the default approach; and
- the potential for inequaltity between regions.
Proposed Reforms
In response to the consultation outcome, the UK Government has set out proposed reforms to the way government bodies conduct procurement, including:
Supporting British industry
The UK Government intends use powers under the Act to prioritise the UK’s national interest and back British businesses.
Departments will, for the first time, be required to confirm whether prime contractors are using UK-produced steel, or explain why they are not. In addition, a new shipbuilding framework will be developed to ensure that government contracts are retained with British firms where necessary for security or strategic reasons. The policy message is framed as supporting workers and businesses across traditional industries and newer sectors alike.
Ending outsourcing by default
The UK Government signals an end to what it describes as decades of “outsourcing by default” in public services. A new Public Interest Test will require departments to assess whether services can be delivered more effectively in-house before deciding to outsource. This test will apply to service contracts with a value of £1 million or more, covering the vast majority of central UK Government spend. Departments will also be required to publish insourcing strategies, with the stated aim of delivering the largest programme of insourcing in a generation.
Making procurement fairer and simpler
Procurement reforms are intended to better recognise social value, in particular, the contribution of organisations that create British jobs and support local communities. A new definition of social value will be developed in collaboration with trade unions and the business community. To reduce barriers for small businesses and charities, the UK Government proposes cutting bidding bureaucracy by introducing a “tell us once” principle, allowing suppliers to submit core information only once rather than for every bid. The use of AI tools is also proposed to reduce duplication and save bidders time.
Conclusion
These reforms are intended to create more opportunities for small and medium-sized enterprises (SMEs) and voluntary, community and social enterprises (VCSEs), reflecting their importance to economic growth. They are also designed to support the national interest in procurement, while remaining consistent with the UK’s international trade commitments.
