The government has overhauled public sector procurement guidance to urge councils, government departments, the NHS and non-departmental bodies to prioritise local charities when commissioning.

The guidance, which comes into effect on 24 February, tells public sector commissioners to “maximise procurement spend with small and medium-size enterprises (SMEs) and voluntary community and social enterprises (VCSEs)”.

It says the move “should drive economic growth and strengthen supply chains by giving SMEs and VCSEs a fair chance at public contracts, creating high quality jobs and championing innovation”.

“Small businesses and social enterprises are more likely to generate diverse and thriving local economies, creating jobs and economic growth,” adds the guidance.

“Increasing procurement spend with these suppliers is a national priority to drive economic growth.

“This government wants to maximise every opportunity for these suppliers by opening up competition in public contracts and removing the barriers to participation they face.”

The previous National Procurement Policy Statement under the last Conservative government did not ask commissioners to prioritise local small businesses and charities in procurement decisions.

Local community organisations network Locality has welcomed the change in focus to promote the commissioning of local organisations including charities.

“This is a positive step,” said Tony Armstrong, chief executive of Locality, which has been running a ‘Keep It Local’ campaign to ensure services are provided by local charities, enterprises and community businesses “that know local people best”.

“For too long, we’ve seen communities shut out of services because they can’t compete for big outsourcing contracts,” he said.

“This just leads to poor quality services, and it damages our economy because precious public sector investment leaks out of our communities.

“This new approach needs to turn the tide. Local community organisations can deliver better services for local people and keep the income and opportunities flowing round their neighbourhoods. This is a first step towards that, and we look forward to working with the government to unlock the power of communities across the country”.

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