Section 17 of the Local Government Act 1988 restricts local authorities from taking into account 'non-commercial considerations' when making procurement and contracting decisions. 

It has, over the years, been the subject of much debate and some revision. There has long been talk of repealing it entirely, but in the most recent policy shift, the Local Government (Exclusion of Non-commercial Considerations) (England) Order 2026 will give councils the ability reserve below-threshold contract opportunities to UK-based or even local businesses. 

This proposal is to be welcomed, especially in the context of the drive at a national level (through the provisions of the Procurement Act 2023 and the expectations of the National Procurement Policy Statement) not only to break down barriers to SME involvement in procurement processes, but to actively seek to maximise public sector spend on SMEs and the voluntary, community and social enterprise sector (VCSEs). 

The drafting of the Order, though, may well leave councils with a conundrum.  

Two options are given: Reserving contracts to a UK-base only, or to tenderers ‘based within the local area’.  ‘UK-base’ is straightforward enough, though won't achieve the local impact many are seeking. The challenge comes in the form of a convoluted definition of what ‘local’ might mean: If one council is procuring, the area can be that council’s area, or that area plus the areas of the county(ies) or London borough(s) that border that area. 

Where more than one council is procuring jointly, again ‘local area’ can mean the administrative areas of both/all procuring councils, or those plus the areas of the counties or London boroughs bordering them. 

‘Area’ is then ‘…determined by reference to where the authority primarily exercises its functions, disregarding any areas outside of the United Kingdom’.  

We can already see councils tying themselves in constitutional knots to determine where they primarily exercise their functions, for example, given that this may not be the same thing as their administrative area.  

A swift change to contract standing orders would be warranted to give clarity to council officers and SMEs and VCSEs alike as to how each council will interpret this. 

So, while the ability to ringfence competition for below-threshold contracts to local businesses is absolutely to be welcomed, the devil is (as ever) in the detail, and I can’t help but feel it really would be easier all round simply to repeal section 17.