Autumn Budget 2025: what it means for public procurement

On November 26th 2025, the Chancellor of the Exchequer presented her Autumn Budget to Parliament.

Many of the Budget's announcements will impact public procurement - including increasing budgets for most Central Government Departments, a continued focus on public sector efficiency, and new funds set aside across transport, infrastructure, defence, energy, and health.

In this blog, we break down exactly how the 2025 Autumn Budget will impact public procurement, and what this all means for suppliers operating in the public sector marketplace.

Skip ahead to read about:

• What are the key takeaways from the 2025 Autumn Budget?
  • Efficiency
  • Innovation
• Which Central Government Departments' budgets are growing, and which are shrinking?
• Which Department's should suppliers target in 2026?
• What about local government?
• What are the key public investment areas outlined in the budget? 
  • Transport and Infrastructure
  • Defence
    
  • Energy and Net Zero
    
  • Health and NHS Transformation
• Summary and conclusion: the 2025 Autumn Budget

📈 What are the key procurement takeaways from the 2025 Autumn Budget?

Rachel Reeves’ much-anticipated 2025 Autumn Budget delivers a wide range of spending commitments and policy measures - many of which will directly shape public authorities’ procurement activity in the years ahead.

Although some departments will face tighter budgets, the Chancellor has also pledged major investment across transport, infrastructure, defence, energy, and NHS transformation, signalling clear demand for suppliers operating in (or supporting progress in) these sectors.

Beyond these headline allocations, two cross-cutting themes dominate the Budget’s approach to public spending: efficiency and innovation. Together, they set the tone for how government intends to deliver services, manage resources, and engage the market - and they will have significant implications for suppliers across the public sector.

Efficiency

Efficiency is a core pillar of the Budget, with the government pushing departments to deliver greater value for every pound spent.

The Budget commits to streamlined back-office functions, modernised systems, and reduced administrative overheads, supported by new cross-government savings targets. From NHS productivity reforms to a digital-first approach across the public sector, the focus is on delivering more with less -reshaping procurement towards solutions that cut costs, improve performance, and modernise service delivery.

Across every sector, suppliers that can clearly show how their solutions deliver measurable efficiency gains will be best positioned to win in 2026 and beyond.

Innovation

Innovation is positioned as a key driver of public service transformation, with the Budget linking technological progress directly to procurement reform.

The introduction of Procurement Innovation Champions is designed to accelerate the adoption of frontier tech across priority industries and shape how innovative suppliers enter the public sector. This is reinforced by the forthcoming Innovation Marketplace, intended to "remove internal barriers to innovative procurement".

Together, these measures signal that public authorities may increasingly prioritise novel, high-impact solutions. Yet the public sector has long been seen as cautious and slow to adopt new approaches - so whether these reforms will translate into a meaningful increase in the procurement of innovation remains an open question.

Hear what UKRI and IPEC have to say about the Procurement of Innovation

📈 Which Central Government Departments' budgets are growing, and which are shrinking?

Resource Departmental Expenditure Limits (RDEL) are set to change between FY25/26 and FY26/27. RDEL funds the day-to-day running of public services - including salaries for public sector workforces, procurement of medicines and consumables, cleaning and grounds maintenance, IT and digital services, and administrative operations.

Rising RDEL typically signals increased opportunities for suppliers in HR, IT, facilities management, professional services, and operational delivery.

Overall, total RDEL will rise from £517.9bn to £537.1bn, a 3.7% year-on-year increase. But this uplift is unevenly spread across government.

A number of departments face reductions - including the Single Intelligence Account (SIA), the Foreign, Commonwealth & Development Office (FCDO), MHCLG, DEFRA, and the Department for Business & Trade (DBT) - indicating tighter operational environments and potential pressure on programme delivery in those areas.

* MHCLG (formerly DLUHC) funding is split into two pots. 'MHCLG Local Government 'funding goes directly to local authorities, whereas 'MHCLG Housing, Communities and Local Government' funding goes to the Department itself.

** The SIA regulates the private security industry in the UK.

Capital Departmental Expenditure Limits (CDEL) are also set to shift significantly between FY25/26 and FY26/27. CDEL funds long-term investment - projects that build or improve enduring assets such as infrastructure, digital systems, major equipment, and construction. High CDEL typically signals opportunities for suppliers in construction, engineering, and digital transformation.

Overall, total CDEL will rise from £130.9bn to £139.1bn, a 6.3% increase year-on-year. But this uplift is not evenly distributed across government.

Several departments see substantial increases - notably the Department for Education, the Ministry of Justice, and the Department for Work and Pensions, signalling expanded capital programmes in schools, courts, prisons, and estates modernisation.

In contrast, other departments are set to face reductions. FCDO, DCMS, and DESNZ all see their capital budgets fall, indicating a tightening of investment activity in international development, culture and media, and certain energy programmes.

📈 Which Departments should suppliers target in 2026?

DEL growth is a useful indicator for spotting high-level spending trends - but it should never be the only metric used when building a target account list.

For example, despite only modest DEL growth year-on-year, the Department of Health & Social Care (DHSC) will still command a combined DEL of £225 billion in FY26/27. That’s around one-third of all Central Government spending, making it a major buyer regardless of its annual percentage change.

To build a meaningful pipeline, suppliers need to look far beyond DEL movements and track the buying signals that genuinely shape upcoming opportunities. The Autumn Budget is a valuable directional document, but it is far too high-level to stand alone as a main prospecting tool.

This is where Tussell’s market intelligence gives you an edge. Our platform helps you build a real pipeline by:

• tracking upcoming contract expiries,

• identifying the right frameworks for your product or service,

• receiving live tenders and pre-tender notices, straight to your inbox.

Tussell customers also now benefit from our new AI-powered future demand engine, which mines thousands of Central Gov't, Local Gov't and NHS documents - including the Autumn Budget - to surface early signals of buying intent. This allows you to engage with public sector decision-makers before the procurement process even begins, shaping demand and influencing outcomes long before competitors are aware that an opportunity exists.

Book a chat with the Tussell team to see how you can move from anecdotal account planning to a data-driven growth strategy for 2026.

📈 What about Local Government?

English devolution is one of the government's landmark policies, with this Budget handing Local Government significantly greater control over investment, creating new opportunities for suppliers.

Mayoral areas are set to gain access to major new funding streams - including the £902m Local Growth Fund, and the £500m Mayoral Revolving Growth Fund - alongside a doubling of local roads maintenance funding.

While financial pressures remain, procurement decisions will increasingly be shaped locally, favouring suppliers who understand regional priorities and engage early with devolved authorities.

Download Tussell's 2025 English Devolution Public Procurement Report

📈 What are the key public investment areas outlined in the budget?

This section covers four key strands of investment covered in the Autumn budget. To discover early buying signals across all industries and public sector verticals, book a chat with our team to learn how Tussell's AI-powered Early Opportunities Finder could help you.

Transport and Infrastructure

The Budget places infrastructure investment at the centre of the government’s growth agenda, creating a broad and sustained pipeline of opportunities for suppliers.

Alongside a doubling of local roads maintenance funding and continued work on major schemes like the Lower Thames Crossing, the government is also investing heavily in wider social and economic infrastructure. This includes the ongoing School Rebuilding Programme, delivering upgrades or rebuilds for 500 schools; the construction of 250 new Neighbourhood Health Centres; and fresh capital for energy efficiency and Warm Homes measures. 

Targeted regeneration projects - such as developments in Peterborough, Darlington and Inverclyde - further expand the pipeline, while digital modernisation programmes across the NHS and HMRC signal long-term demand for major IT, estates and systems upgrades. Book a chat with the Tussell team to start finding opportunities in your public sector market.

Defence

Defence emerges as one of the strongest investment areas in the Budget, with a clear focus on boosting the UK’s industrial capacity and strengthening national security.

The government has committed £1.5bn to expand domestic munitions and energetics manufacturing, alongside continued investment to take defence spending to 2.6% of GDP by 2027.

The Budget highlights the need to modernise defence estates and accelerate procurement to support rapid replenishment and resilience. For suppliers, this signals a sustained period of demand - particularly for advanced manufacturing, digital capabilities, secure systems, construction, FM, and specialist consultancy.

Unpack the public sector's changing relationship with the 39 Strategic Suppliers

Energy and Net Zero

The Budget renews momentum behind energy security and decarbonisation, opening clear opportunities for public sector suppliers.

The Warm Homes Plan injects new capital into insulation, retrofit and low-carbon heating, while nuclear’s inclusion in the UK Green Financing Framework signals long-term investment in clean power infrastructure. Additional commitments to EV charging, grid readiness and green industrial capacity will further drive demand across Local and Central Government.

For suppliers, this means growing opportunities in retrofit delivery, sustainable construction, heat decarbonisation and clean energy infrastructure - particularly as Mayoral and local authorities gain greater control over place-based Net Zero programmes.

Health & NHS Transformation

The Budget puts NHS modernisation at the core of its public service reform agenda, creating significant opportunities for suppliers.

Alongside commitments to 250 new Neighbourhood Health Centres, the government is investing in digital infrastructure, diagnostics capacity and estate upgrades to support its NHS productivity drive.

The Budget also sets expectations for reduced agency spend, streamlined operations and technology-enabled pathways, signalling strong demand for solutions that enhance efficiency and clinical throughput.

For suppliers, this translates into growing opportunities across digital health, estates and construction, diagnostics technology, workforce optimisation and operational improvement - as the NHS shifts towards more integrated, community-based and digitally enabled models of care.

📈 Summary & Conclusion: the 2025 Autumn Budget

The 2025 Autumn Budget sets a clear direction for public procurement in the year ahead: tighter operational budgets in some areas, but major new investment across transport, infrastructure, defence, energy, and health.

Combined with the government’s twin priorities of efficiency and innovation, the procurement landscape in 2026 will demand more from suppliers than ever before - sharper value propositions, clearer impact, and earlier engagement in the buying cycle.

But identifying real opportunities requires more than Budget headlines. Suppliers need real visibility of expiring contracts, frameworks, and early market signals - long before tenders are published.

This is where Tussell provides a crucial advantage. Our market intelligence platform and AI-powered Early Opportunities Finder are already helping top firms in your sector do more business with government and the NHS.

If you want to turn the Autumn Budget into a winning growth strategy for 2026, book a chat with the Tussell team today.