£6bn of government business going to SMEs, says Cabinet

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THe amount of central government business going to small and medium-sized enterprises (SMEs) is on track to double to £6bn by the end of this financial year, according to the Cabinet Office.

Yesterday, the Minister for the Cabinet Office, Francis Maude, announced further measures to support SMEs to win Government business, a year after an initial raft of measures was announced.

In 2010, SMEs accounted for 50 per cent of turnover in the UK economy but were winning only around 6.5 per cent of the value of central government’s procurement spend. This is on track to double to 13.7 per cent by the end of the financial year, said the Cabinet Office. Government spend to SMEs was tracked at £3bn in 2010 and is on track to double to £6bn by the end of 2011/12, it said.

Mr Maude, said: “We said we wanted to improve things for smaller businesses and today we have shown that the measures we introduced a year ago are making a difference.”

He added: “We are determined to shake up public buying so radically that there is no turning back to old days of SMEs being shut out.”

However, in a recent interview with the Yorkshire Post, Paul Wright, managing director at PAWA Consulting in Shipley, and co-author of Excellence in Public Sector Procurement, was critical of the fact that the Government was measuring success in improving public sector procurement by setting targets according to the percentage of central government contracts by value being awarded to SMEs.

He said this does not include contracts from local government and other public bodies, which tend to be more suitable for SMEs.

Key measures announced yesterday included new commitments from large private sector players including Capita and Balfour Beatty, as well as the introduction of set breakpoints in IT contracts so there is less money locked into large lengthy contracts. The Government said it will look to “disaggregate future contracts and deliver flexible, cheaper solutions”. It also said new ways of paying SMEs are being explored to ensure SMEs within the supply chain receive payment at the same time as the prime suppliers.

The measures also promised greater transparency with departments being judged by smaller businesses and given a star rating to show how effective they are at working with smaller players.