Government procurement to prioritise national security

• New procurement guidance will protect national security and enhance supply chain resilience across critical sectors
• Government separately confirms £5 billion in contracts awarded to British firms since March, accelerating delivery of the modern Industrial Strategy in priority sectors, and supporting growth in key industries
• Communities across the country to benefit from Farnborough to Huddersfield, and Edinburgh to Solihull

Every year the government spends around £400 billion on public procurement, and for far too long this spending has been focused too narrowly on short-term requirements and upfront costs.

This has left the UK exposed to global shocks, with recent events showing the fragility of global supply chains. This new guidance draws a line under that approach and works to protect the UK’s national security and build resilience in critical sectors.

Through the new guidance, the Chancellor, alongside the Chief Secretary to the Prime Minister, highlight the power of public spending to safeguarding sovereign capability, supporting businesses, jobs, and skills across the UK, with real money going straight to communities from Farnborough to Huddersfield, and Edinburgh to Solihull.

The Chancellor will also today confirm that British founded-firms have already seen a £5 billion surge in new government contracts since March, targeting high-growth sectors central to the Industrial Strategy.

Chancellor of the Exchequer Rachel Reeves said

We have the right economic plan – using the power of public procurement to protect our national security and strengthen the UK’s economic resilience.

British companies are delivering the innovation and resilience we need in a more uncertain world. This government will continue to back British businesses as we strengthen our national security and economic resilience.

Chief Secretary to the Prime Minister Darren Jones said

From the closure of the Strait of Hormuz to Russia’s invasion of Ukraine driving up energy bills, recent events show why we need to protect our national security, and invest in home-grown British expertise and industry to secure our sovereign capability.

For too long, governments have prioritised short-term buying decisions that leave us vulnerable to the actions of others. This guidance will change that. From shipbuilding in Barrow to steel in Scunthorpe, we will make national security a priority and back British businesses and jobs.

Technology Secretary Liz Kendall said

Every child deserves access to world class support with their schoolwork, regardless of where they’re from or what their parents can afford. Today we are making that a reality.

These six British companies are developing world-leading AI that genuinely works in the classroom – safe, effective, and built around the needs of both pupils and teachers.

Up to 450,000 disadvantaged children will benefit from this ambitious investment. This government is breaking down barriers to opportunity and giving every young person the best start in life.

Cabinet Office Minister Chris Ward said

This government is determined to make every penny of our procurement budget work for British businesses and national security. This is another big step toward that, and to boosting growth and resilience across the country”.

Since March, the government has awarded a number of new deals to British firms including

• A new digital platform to support RAF pilots in flight
• AI fraud detection tools to help HMRC identify tax errors faster
• Essential road and vehicle recovery services on the strategic road network.

Up to 450,000 disadvantaged pupils are set to benefit from future-generation technology in AI tutoring from 2027. Six British organisations are among those selected and will receive £1.8 million to help build the next generation of safe and effective AI tutoring tools that will set the global standard for effective AI models.

Mayoral Strategic Authorities are also playing a crucial role in the new push, such as with West Yorkshire Combined Authority and Greater Manchester Combined Authority procuring new local electric buses and steel from UK businesses.

New guidance on national security and resilience

The new guidance sets out the process for departments to use the national security exemption within the Procurement Act 2023 in key sectors to support the country’s national security and economic resilience. To support this new approach, the government has appointed dedicated Sector Leads in key departments across Whitehall. 

These Leads will support Ministers and oversee upcoming procurements, so they can appropriately apply the national security exemption for contracts – supporting national security and stronger supply chains, while helping ensure the UK is better prepared in an increasingly uncertain world.

Alongside this, the Treasury will be writing to accounting officers across government on the importance of protecting national security through future spending decisions. This will provide guidance on the use of the exemption to deliver value for money.

Both new pieces of guidance are consistent with our international trade agreements and complement the government’s work with international partners to improve the security and resilience of key sectors, ensuring that we can collectively respond to global challenges.

This includes recognising that our global trading partners and close allies will often have suppliers well-placed to help us meet our security needs. Our approach is built on collaboration; trusted international partners and global suppliers are at the heart of our procurement strategy, bringing the innovation and resilience we need to stay secure.

The government also announced the publication of the Supply Chain Centre’s mission statement and action plan this week, setting out a new cross-government approach to securing the inputs the UK economy relies on and boosting supply chain resilience.

Kate Shoesmith, Director of Policy and Insights, British Chambers of Commerce

 “The world order has shifted dramatically in the last five years and a stronger government focus on economic security and supply chain resilience is one we support.

Our Chambers are involved in infrastructure projects across the UK and know how investment in British firms can be transformative for local economies and communities.

One third of all the money that government spends is on procurement so its potential to shift the dial is huge.

Opening the system up to more SMEs is also one of the best and quickest ways to increase the impact this spending has. Chambers will be keen to get involved in the supply chains for these projects to maximise that effect.