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• British industries such as energy, steel and cyber are set to get more money from government spending under new plans being considered to protect UK national security.
• Central government departments will be told to consider UK-made steel for all public projects, and use exemptions for buying rules wherever possible to support steel makers, in new guidance issued today.
• New rules would also ensure the public sector excludes companies that have failed to pay small businesses on time.

Government will back British industries such as energy, steel and cyber - giving them more of the £400bn spent on government procurement each year and protecting our national security.

A consultation launching today will consider new rules to give the government greater power to back our national security through government buying and ensure the country retains a strong, homegrown industrial base.

The plans will allow Ministers to designate certain UK industries as nationally important to protecting UK national security – as part of our Plan for Change to secure Britain’s future.

Current rules require public sector buyers to consider bids from overseas suppliers that can undercut UK firms. Under the new designation, public sector buyers will be able to avoid normal buying rules to support national security, and award contracts to our industries. 

Chancellor of the Duchy of Lancaster, Pat McFadden said:

Strong industry is essential to our national security. The new rules being considered  will give us the power to protect our national industries, ensuring more money goes to them as we buy goods and services in government.

Our reforms will boost growth and ensure British industry is supported to deliver national security and our Plan for Change.

The move aims to harness the £400 billion spent by central Government each year on everyday products and services to boost British business - as the government rebuilds the country in a decade of national renewal and delivers the Plan for Change. 

The changes come following the publication of the government’s Industrial Strategy which set out a ten year plan to boost investment, skills and jobs and reduce the energy costs for business and industry.

New guidance will also require Government departments to consider UK-made steel in all future public projects, including those that form part of the £725bn of UK infrastructure spending over the next 10 years.

Industry Minister Sarah Jones said:

This is the latest win for our Steel Strategy, supporting jobs across the UK and building on the launch of our modern Industrial Strategy which will cut energy costs for steel firms.

By strengthening our procurement to back British industry, we’ll not only bolster national security but drive growth by filling up companies’ order books across the UK. Supported by up to £2.5 billion, our upcoming Steel Strategy will set out how we’ll boost growth and investment in the sector even further.

Cracking down on late payment and supporting SMEs

The new rules will also ensure public sector buyers exclude companies that cannot evidence a good record of paying businesses in their supply chains promptly and on time. 

Prompt payment is vital to a small business’ success, as they work to tight margins. By ensuring government supply chains are paying them quickly and on time we can remove uncertainty and fuel growth.

Alongside prompt payments, new rules will be introduced that would require all large contracting bodies to set three year targets for SME spending. 

The government previously announced that Government departments would have targets, and this expands that requirement to the wider public sector. Further prioritising and boosting spending with SMEs.

Supportive quotes;

Gareth Stace, Director-General of UK Steel said:

This is unequivocally positive news for the UK steel industry. These changes rightly recognise the strategic importance of steelmaking to national security and the vital role of resilient domestic supply chains. 

With the launch of the National Infrastructure Strategy and Strategic Defence Review, the next decade presents a generational opportunity for our steel industry. This revised guidance and proposals in the consultation will help government departments unlock the full capacity and capability of our members, supporting jobs and driving investment across the country.

Tina McKenzie, Policy Chair of the Federation of Small Businesses, said:

We welcome clear signs that prompt payment is being made a central plank of procurement policy.

Too many small firms are left chasing invoices for weeks or months, often at serious cost to their survival and growth, so excluding more bad payers from public contracts and building further on existing rules is a step in the right direction. This builds on FSB’s successful push to stop late payers winning major public contracts, with the payment threshold that must be enforced by all central government departments, and overseen by Cabinet Office, due to drop from an average of 55 to 45 days in October.

SME spending targets are vital, but the challenge is making sure that each department or public body has a target that is ambitious, monitored regularly and actually helps small firms to access public sector supply chains. We look forward to each Department’s new direct spend target for SMEs being published soon.

Going forward, we will be engaging with the consultation and its proposals in the coming weeks, and ensuring it delivers for small businesses who need meaningful change to access procurement opportunities.