Procurement's red tape is strangling SMEs

Last month saw more allegations that another high street retailer had abused small suppliers.

Unfortunately stories like this are increasingly becoming the norm. Week after week, our members tell us the supply chain is fit to burst with hurdles and roadblocks that discriminate against small firms.

Lengthy tender documentation, stringent insurance requirements and obtuse framework agreements: cumulatively, the excessive red tape put in place by big business’ procurement departments threatens to strangle the ambitions of UK’s SMEs.

All the while, payment terms are being extended, leaving small business owners with no room to manoeuvre.

Increasingly small businesses are being used as a line of credit for larger organisations and propping up the finances of big businesses.

The levels of public outrage that have followed these revelations of malpractice reveal the UK is facing a crisis of trust in big business.

A recent Forum of Private Business-commissioned ComRes poll, showed that three quarters (72 per cent) of British adults think the next government should make it a priority to promote ethical practices among big businesses.

A similar proportion of the public also believes that the majority of big businesses have no concern for the UK’s small business owners.

The survey also showed the British public has identified the ethical deficit at the heart of British business and is calling for action ahead of the General Election. This is why the Forum of Private Business is putting business ethics at the forefront of the political agenda.

We are calling on big British business to commit to our Business Ethics Pledge to protect and promote small businesses. The pledge will seek to bind big business to promote responsible business in the UK, treat suppliers fairly, build long term relationships with local enterprises, and partner with SMEs to create jobs and boost local economies.

We believe the focus on reforming business ethics must begin in the supply chain. To this end, Tesco’s recent Supplier Network initiative, which seeks to remedy the historic issues that SMEs have faced when engaging with Britain’s biggest supermarket, recognises big business must do more to win the trust of suppliers and consumers.

We want to see British big business embrace a spirit of transparency and collaboration across the board, with the next government putting in place measures to put small business interests at the top of the agenda.

Failure to do so, we believe, risks breaking the backbone of Britain’s supply chain – small business owners.

Phil Orford is chief executive at the Forum of Private Business

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