UK Government to Prioritise Procurement Deals with Domestic Startups

20.01.2025

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In a move set to reshape the UK’s public procurement landscape, Tech Minister Peter Kyle has confirmed that the government will significantly boost its engagement with homegrown start-ups. Unveiling a series of digital tools, including a new chatbot developed in collaboration with OpenAI, Kyle emphasised the government's commitment to fostering innovation and supporting local businesses.


This policy shift comes after sustained criticism from the UK tech community, which has long felt side-lined by the complex and opaque nature of government procurement processes. Many startups have voiced frustrations over being overlooked in favour of larger, established firms, particularly for high-value government contracts.


Kyle's announcement marks a clear pivot under the new Labour administration, which took office in July 2024, following months of deteriorating relations between the government and the tech sector. While Kyle refrained from offering concrete details on how these procurement changes will be implemented, he stressed that the government’s purchasing power would be harnessed to support British innovation.


“We are determined to ensure that the UK’s purchasing power benefits the next wave of homegrown innovation,” Kyle remarked during a press briefing, pointing to the government's desire to create a more equitable environment for startups to access public contracts.


This development is part of a wider series of initiatives by the government, which also recently unveiled an ambitious AI strategy. The £1.3bn funding overhaul and plans to increase the UK’s computing capabilities twentyfold by 2030 aim to establish the country as a global leader in AI.



What This Means for SMEs


  • Greater access to government and council contracts through simplified procurement processes.


  • Increased opportunities to compete with larger firms in the public sector.

  • Enhanced support for innovation and growth within the UK’s tech ecosystem.


  • A stronger investment landscape, with £80bn targeted for startups and infrastructure.


  • Potential for SMEs to play a pivotal role in shaping critical national projects in the developing technology sector