Setting out an updated policy, Hancock said procurement boycotts were inappropriate outside formal legal sanctions and embargoes put in place by the government as they undermined good community relations and fuelled anti-Semitism.
Locally imposed boycotts can also hinder Britain’s export trade and harm international relations, he said.
Details of the penalties that will be faced by authorities if they do not comply with the procurement policy note are not confirmed, but Hancock said any body found to be in breach would be subject to severe penalties.
Among local authorities, Leicester City Council introduced a boycott of Israeli products linked to settlements on Palestinian territory in 2014, while Swansea City Council has introduced and then ended a boycott. The Scottish Government published a procurement notice to Scottish councils that “strongly discourages trade and investment from illegal settlements”.
But following the change, all contracting authorities will have to comply with the guidance including central government, executive agencies, non-departmental public bodies, local authorities and NHS bodies.
Any discrimination against Israeli suppliers involving procurements would be in breach of the agreement, Hancock confirmed.
“We need to challenge and prevent these divisive town hall boycotts,” he added.
“The new guidance on procurement combined with changes we are making to how pension pots can be invested will help prevent damaging and counter-productive local foreign policies undermining our national security.
“We support UK local authorities, businesses and individual consumers alike in making informed choices about how they procure services and products from overseas.”
