SME spend must double to reach government target

21 June 2011

21 June 2011 | Lindsay Clark

UK central government may have to double its spending with small and medium sized enterprises (SMEs) to reach its target of giving them 25 per cent of all opportunities.

Last year, the Cabinet Office said that a quarter of Whitehall deals should go to SMEs in order to boost the economy.

However, the government’s own adviser on the subject, Stephen Allott, crown commercial representative for SME’s at the Cabinet Office, said that it did not have a base figure for the SME spending target. Speaking to SM, he said: “We don’t know where central government is at the moment and don’t know how long it will take to reach the target.”

It could be the lifetime of the government before the 25 per cent figure was reached, he said. “That would probably double what we are now – we’re probably half that,” he said.

As reported by SM, Prime Minister David Cameron said in February that he wanted to boost the amount of government work awarded to small and medium-sized enterprises from around 5 per cent to 25 per cent. In order to do that, he said, it needed to overhaul the way it does business and would support central government purchasers who take a chance on smaller suppliers.

Allott quoted researchfrom the European Union that found that across the UK public sector as a whole, spending with SMEs was around 24 per cent, ranking it 24th of the 27 member states. It found France spent 44 per cent of its public procurement with SMEs, while in Germany the figure was 52 per cent.

He said that if the UK central government reached its 25 per cent target and other areas of the public sector also increased the proportion spent with SME suppliers “then we could be as good as France or Germany”.

In February, the Cabinet Office launched a programme to help SMEs gain access to government contracts. This includes a contract finder website, the launch of SME product surgeries and a strategy to eliminate Pre-Qualification Questionnaires for contracts of less than £100,000. 

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