SMEs will get £1 of every £3 the government spends

This may be a positive year for small and medium-sized businesses (SMEs), with some good news finally flowing in after the European Regional Development Fund open its doors to small local firms earlier this month.

Cabinet Office minister Matt Hancock announced today new “ambitious targets” to get more small businesses working on central government contracts and becoming suppliers to government, by upping investment in SMEs.

In 2013-14, Whitehall spent £11.4bn with SMEs, equating to 26% of central government spend. Hancock wants to increase this to a third of spend, meaning an extra £3bn per year (in 2013-14 terms) going to SMEs directly or through the supply chain.

All departments and the Crown Commercial Service will ensure they meet this target by setting out individual plans and manageable target chunks for SME spending during this Parliament.

Hancock said the “amazing opportunity” would encourage more SMEs to work with the government, from “computers to uniforms”, while providing value for money for the taxpayer – the usual.

John Alan, national chairman for the Federation of Small Businesses, noted that the government has “much to gain” by extending public procurement to SMEs, making sure it focuses on robust monitoring and challenges poor practices wherever they are found.

Meanwhile, open data experts Spend Network, funded by Nesta, found in a recent analysis that less than 3% of government procurement spend goes to small start-up companies.

It looked at three years’ worth of procurement transactions amounting to £68bn, finding that just £1.6bn of that was directed at smaller start-ups.

Despite circumstances not historically looking up for SMEs, the government must have now realised that upping investment and opening up marketplace contracts under a capitalist structure must make “good economic sense” as it will help increase competition and market innovation.

To find government contracts that could suit your business, visit the government’s contract finder.


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