English councils, police and fire authorities have been handed new discretion to reserve competitions for lower-value contracts to local and UK suppliers. The Cabinet Office says the change could channel more than £1 billion a year towards smaller firms, widening access to everyday public work while keeping value-for-money rules intact.

For SMEs, this matters because it increases the odds that bite-sized tenders stay closer to home. Think routine maintenance, catering, professional services and minor works-areas where local knowledge and quick response times carry weight and where micro-businesses can compete credibly.

What has actually changed is legal housekeeping. Ministers are disapplying section 17(5)(e) of the Local Government Act 1988 in defined circumstances, removing a barrier that stopped authorities from taking supplier location into account on below-threshold awards. The power is voluntary, applies in England and must still respect open competition and prudent pricing.

Crucially, this is not a blanket ringfence. Buyers may choose to reserve when it makes sense for delivery and resilience, or run open competitions as usual. The headline ‘£1bn’ is a potential annual flow if authorities adopt the option at scale-it is not a centrally guaranteed pot.

From Whitehall’s perspective the move aligns town halls with central government purchasing, which already has similar flexibility. It follows a National Procurement Policy Statement published in February that asked public bodies to look beyond the cheapest bid and consider wider social and economic value in awards. Over the summer, ministers also consulted on using everyday public spending to create more opportunities for local SMEs and social enterprises.

Ministers frame the shift as backing local growth and jobs. Cabinet Office minister Chris Ward argued the old rules held councils back from investing in the local businesses that keep economies moving, while DLUHC’s Alison McGovern said prioritising firms rooted in their communities should mean more money staying local and building capacity.

Business groups are onside. The Federation of Small Businesses called it the kind of practical reform they pressed for, noting that when unnecessary hurdles are removed and small firms compete on fair terms, communities gain. The Local Government Association expects councils’ new freedom on below-threshold buys to boost supply-chain resilience.

For procurement teams, the immediate task is to define what counts as a ‘local area’, decide when reservation is proportionate, and publish simple, transparent criteria. Authorities will still need to evidence value for money, keep records tight and avoid over-restricting competition. Good pre-market engagement will help.

For SMEs, preparation is mostly about basics done well. Refresh capability statements with nearby case studies, keep insurance and compliance documents current, and align bids to the social-value outcomes your council prioritises-from local jobs and apprenticeships to fair work and environmental standards.

Expect uneven take-up across England. Budgets and legal appetite differ, so some authorities will move quickly while others test and learn. For our readers, the practical takeaway is clear: more everyday public contracts could be structured in a way that gives nearby and UK-based suppliers a cleaner shot at winning repeatable work.