Procurement in a Nutshell: The Budget: Using public procurement to back British business

This came on the same day that the Government published its guidance on using PPN 026: the Social Value Model, to be followed by central government, defining social value for that purpose as “taking into account of how a supplier will work for our communities to provide good British jobs, skills and opportunities in every postcode”.

You can read the guidance here.

Buy British

This direction of travel sits alongside the Prime Minister’s statements earlier tin the year that social value should be focussed primarily on job creation and taking young people off the NEET list.

But the Chancellor started to put a bit more detail on that yesterday, when he also said that he will be laying a new National Procurement Policy Statement before Parliament in early 2027, which will prioritise delivery of high-quality jobs, fair pay and skills opportunities, including pathways for young people. Section 13(9) of the Procurement Act requires all contracting authorities to “have regard to” the NPPS, and importantly this obligation applies to all procurements, not just those which are covered procurements under the Procurement Act.

The budget statement also said that the Government will publish a new definition for a “UK supplier” in the Procurement Act, taking action to better understand and track UK suppliers and subcontractors across public supply chains. The Chancellor feels that the current broad definition has allowed companies with little more than a UK post box to be classed as UK firms, giving them an equal chance to compete for UK public contracts.

The current definition of a UK supplier can be found in section 90 of the Procurement Act 2023 and includes any supplier that is:

• Established in or controlled or mainly funded from, the UK, a British Overseas Territory, or a Crown Dependency, and
• which us not also a Treaty State Supplier.

For some time, critics have been saying that this is too wide and open to abuse, so we wait to see what changes the Government will propose. They have, of course, to be mindful to the UK’s obligations under the WTO Government Procurement Agreement which requires the UK not to discriminate against suppliers from other GPA signatories in relation to certain categories of goods and services. In addition, the UK is bound by various treaty obligations, such as the EU Trade and Cooperation Agreement, which requires us to offer reciprocal non-discrimination and access for public contracts to EU suppliers.

The Chancellor tells us to expect that new definition as early as January 2027, so watch this space!

For further information please contact Tim Care or Melanie Pears in our Public Sector team.