Government plans to increase spending with SMEs

Spending with SMEs to be increased to a third by 2020.

Ambitious new targets have been announced by the Cabinet Office that will see more and more small businesses working on central government contracts.

Announced by the Minister for the Cabinet Office, Matt Hancock, the new plans outline the government’s ambition to spend more money on small businesses by 2020.

The level is already one that will impress small to medium enterprises (SMEs) and give them encouragement that the government will support smaller enterprises financially to ensure that they benefit from various noteworthy projects.

In the period of 2013 to 2014, SMEs saw £11.4Bn spent with them, which is equivalent to 26% of the central government spend.

Not content with this, the government wants to extend this to a third, which will add a further £3Bn each year that would be going to SMEs either directly or through the supply chain.

As a result of this commitment, those companies employing a maximum of 250 people will see the benefits of a third of government spending.

It comes after improvements were made in the way goods and services are bought by the government – seen as a way of helping SMEs bid for public sector contracts.

Under the improvements, the public sector supply chain can expect to be paid within 30 days, pre-qualification questionnaires on smaller contracts have been abolished, and the public sector now has to publish its contracts in one place.

Individual plans are being set out so that targets are met to give SMEs the planned investment by 2020.

Matt Hancock said: “This is such an amazing opportunity for the country’s diverse and innovative small businesses, and today I urge them to get stuck in.

“From computers to uniforms, there are so many opportunities for small businesses to work with us, and I want to see more of them providing value for money for the taxpayer and benefiting from our spending.”

John Allan is the National Chairman for the Federation of Small Businesses (FSB), and he believes there are many advantages for the government by supporting SMEs.

“The government has much to gain from opening up public procurement to smaller businesses and we welcome the government’s commitment to achieve this ambitious target,” he said.

“To meet it, the government will need to focus on robust monitoring and challenge of poor practices wherever they are found. The FSB will play its part, and will work with ministers on this important goal.”

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