Public procurement: A new consultation for growing skills and jobs in British industry

The Procurement Act 2023 came into effect on 25 February 2025. Contracting authorities and suppliers are still learning how to interact with the new Act, which was in itself arguably the biggest change to public procurement law in the UK in a generation. Therefore, there was a slight degree of surprise when last month (June 2025) the UK government published a new consultation that will introduce further wide-ranging changes to public procurement law. 

In this article, Michael Winder, a Partner in our public procurement team, reviews the consultation paper.

The consultation is stated to build on the changes introduced by the Procurement Act 2023 to ensure that public procurement plays a full role in improving domestic competitiveness, improving the UK’s economic resilience and strengthening supply chains and supporting British businesses. It is also intended to open up more opportunities for small and medium sized enterprises (SMEs) as well as voluntary, community and social enterprises (VCSEs) —  which the Government considers vital to driving the UK economy forward. This is part of the current Government’s manifesto commitment to use public procurement law to support their Plan for Change.

The proposals under consultation fall into several key areas, including supporting:

• Small businesses and social enterprises.
• National capability.
• Local jobs and skills.

Supporting small businesses and social enterprises

The proposals here include:

• Requiring large contracting authorities who spend over £100million in each year to publish a three-year target for their own direct spend with SMEs and VCSEs, and then report on progress annually. This would also include significantly extending the reporting requirements under the Act regarding payments for public contracts. This, in effect, requiring publishing of payments of all above threshold contracts and including notifiable below threshold contracts as well.   
• Requiring contracting authorities to exclude suppliers from the procurement of major contracts if they cannot demonstrate they pay their invoices in a timely manner. Here major contracts are suggested as being those worth over £5million per annum, and the timely payment threshold being an average of 60 days. Any decision not to exclude would have to be justified by the contracting authority.
• Clarifying where it may be appropriate for contracting authorities to award contracts for certain services delivered to vulnerable citizens without the need to go through a full competitive procurement procedure. The rationale is that decisions can be driven by the needs of individuals and vulnerable groups. Given there is already flexibility within the Procurement Act for certain user choice contracts, this would expand that flexibility further. 

Supporting national capability

There are two proposals here:

• Giving powers to ministers to designate that specific services, goods or works are critical to national security, and requiring contacting authorities to take this into account when considering whether the national security exemption in the Procurement Act applies to a relevant procurement. This is designed to protect the UK’s national interests and would allow for direct award with trusted suppliers. Interestingly, the UK Government is not inviting general public consultation on this particular point but will instead simply engage with national security stakeholders as necessary.
• Encouraging more in-house undertaking of contracts rather than an assumption they should be outsourced. The UK government is proposing to make contracting authorities go through a standard assessment before procuring a major contract (i.e. £5million+) in order to test whether that service delivery should be outsourced or remain inhouse. The intention is to address concerns regarding outsourcing (e.g. public accountability and cost effectiveness). It is designed to encourage public sector to take a long term view when delivering large scale public services and the consultation has some initial thoughts on what that test would include. Interestingly, contracting authorities would be required to publish the results of such tests in the tender notice if they subsequently decided to go out to tender. 

Supporting good quality local jobs and skills

There are several proposals here:

• Requiring contracting authorities to set at least one award criteria in major contract procurement (again £5million+) which relates to the quality of that supplier’s contribution to jobs, opportunities or skills. There will be a minimum weighting of 10% for social value award criteria.
• KPIs are already required on contracts over £5million under the Procurement Act. The next proposal would require contracting authorities to set at least one of those KPIs to relate to social value delivery, and report on the progress against this in the required contract performance notice.
• In order to improve the ease of bidding and reporting, to require the use of standard social value criteria and metrics they will be selected from a streamlined list (to be designed with input from the public sector and suppliers).
• Contracting authorities are able to specify the area in which the social value is to be delivered, allowing the contracting authority to choose whether the location of delivery of the social value is (i) the area of the contracting authority’s responsibility, (ii) the location of performance of the contract or (iii) the location where the supplier is based. 

What does this mean for public procurement?

Many of the proposals are a logical step forward from the existing provisions within the Act, while some of them are significant changes. It is clear that if the changes proposed are implemented as suggested in the consultation, they would require changes to both primary legislation i.e. the Procurement Act itself, and secondary legislation, e.g. changes to the Public Regulations 2024 or new secondary legislation. While the consultation is at the very early stages of the process in changing the law, this does mean that new fundamental changes are on the horizon for public procurement law. This would also undermine the original ethos of the Procurement Act which was to consolidate procurement legislation into one overall Act that was much easier to follow. It would also undermine some of the flexibility given to contracting authorities, which was again another guiding principle of the original Procurement Act.

Some of the changes would be welcome — indeed, many would argue that public procurement law can be bureaucratic and work against some of the needs of public authorities, and that economic resilience is paramount in these uncertain times. Furthermore, moving away from box ticking exercises for social value can only be of benefit, while a genuine joined up consideration of whether insourcing is appropriate is an interesting sea change from the general presumption towards outsourcing that has been prevalent since the 1980s (how budget-strapped councils manage insourcing and associated TUPE costs remains to be seen). 

As with all consultations we may see the proposals changing as the Government takes onboard feedback from stakeholders. The consultation is available here. The closing date for consultation is 5th September 2025. 

Talk to us

If you need guidance — or have any questions about the Procurement Act 2023, this proposed consultation or wider issues around public procurement or subsidy control — our expert Public Procurement Team is here to help.

Give us a call on 0333 004 4488, email us at hello@brabners.com or complete our contact form below.