The government has unveiled new guidance recognising shipbuilding, steel, AI and energy infrastructure as critical to national security, prioritising contracts for British businesses where necessary.
Departments will now be required to use domestic steel where possible or provide justification if sourcing overseas, reinforcing the UK Steel Strategy launched last week.
The reforms aim to strengthen supply chains, safeguard key sectors, and ensure long-term economic resilience. Officials say this marks the first time the government has issued clear guidance on protecting the UK’s economic and national security simultaneously.
The initiative forms part of a wider package to back British business, workers and communities, reduce waste, and encourage domestic investment in line with the Modern Industrial Strategy.
It also complements the recently published National Security Strategy, aligning economic growth and national security priorities in a way not seen since 1945.
Cabinet Office Minister, Chris Ward said: “This Government is backing British businesses and the working people who power them. These reforms are about using the full weight of Government spending to support British jobs, protect our national security and grow our economy.
“Whether you make steel in Scunthorpe, build ships on the Clyde or run a small tech firm in the Midlands, this Government is on your side.”
For decades, previous governments have relied on outsourcing public services without thoroughly evaluating whether these services could be provided more effectively and cost-efficiently by public sector workers.
This approach will change with the introduction of a new Public Interest Test. Departments will now be required to assess whether outsourced service contracts valued over £1 million could be delivered more effectively in-house. This test will apply to over 95% of central government contracts by value, ensuring that taxpayers receive a fairer deal and ending the practice of outsourcing by default.
The government believes that its spending should accomplish more than just procuring a product or service; it should also create jobs, develop skills, and strengthen communities.
As a result, community impact will now be central to purchasing decisions. Companies will be encouraged to incorporate national and regional initiatives into their bids, thereby creating local jobs and apprenticeships.
To enhance accountability, departments will publish and report annually on specific social value goals for all contracts valued over £5 million, covering over 90% of central government contracts by value.
Additionally, a new suite of AI tools has been developed to streamline the commercial process. Contract terms will be simplified, and relevant business information will be integrated into a central platform. This means that small businesses will not have to submit the same information multiple times when bidding for different contracts.
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