Preferential Treatment for British-Based Companies in UK Gov Contracts

Economy
1

Prioritise British-based companies in public procurement, including software contracts, to bolster the UK economy, promote local innovation, and strengthen digital sovereignty, while navigating international trade obligations.

Policy Components:

  1. Domestic Preference Framework: Grant British-based companies a 10–15% price preference or priority in tenders, particularly for contracts below international thresholds (e.g., £139,688 for services).

  2. Software Procurement Focus: Mandate preference for UK-developed software in government IT contracts, with exemptions only when no domestic alternative exists.

  3. SME Support: Enhance measures to favour British SMEs in tech and software sectors.

  4. Social Value Weighting: Emphasise local economic impact in tender evaluations to indirectly benefit UK firms.

  5. Below-Threshold Flexibility: Reserve contracts below GPA/TCA thresholds for British companies.

Benefits:

• Boosts UK economy, particularly the tech sector (£85 billion in software exports, 2024).

• Enhances digital sovereignty by reducing reliance on foreign software.

• Supports British SMEs, aligning with the 33% SME procurement target.

Challenges:

• Risks breaching WTO GPA and UK-EU TCA, potentially triggering trade retaliation.

• May increase costs if domestic bids are less competitive (£557 billion public procurement spend, 2023).

• Requires careful legal drafting to avoid international disputes.

• Could face pushback from devolved administrations (Scotland, Wales, Northern Ireland).

Pushback from Devolved Administrations: Devolved administrations may resist due to their partial autonomy over procurement under devolution settlements (e.g., Scotland Act 1998, Government of Wales Act 2006). Scotland, Wales, and Northern Ireland have their own procurement policies (e.g., Scotland’s Procurement Reform Act 2014), which prioritise local economic benefits and SMEs within their regions. A UK-wide policy favouring British companies might:

• Undermine regional priorities, as devolved governments may prefer supporting businesses within their jurisdictions (e.g., Scottish firms over English ones).

• Be seen as centralising control, reducing devolved authority over procurement decisions.

• Create economic disparities if benefits skew towards England, where most UK tech firms are based (e.g., London’s tech hub vs. Scotland’s smaller IT sector).

• Face political opposition, particularly from nationalist parties (e.g., SNP in Scotland), who may view it as Westminster overreach.

Laws to Be Changed or Created

  1. Procurement Act 2023: Amend to permit preferential treatment for British companies by introducing a “national preference” clause.

  2. National Procurement Policy Statement: Revise to encourage prioritising British firms.

  3. New Secondary Legislation: Create regulations to implement preferences, such as price advantages or reserved contracts.

  4. Competition Act 1998: Amend to exempt the policy from anti-competitive challenges.

  5. International Trade Agreements: Renegotiate WTO GPA, UK-EU TCA, and other FTAs to allow limited domestic preferences.

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