The UK Procurement Bill will “accelerate spending with small businesses” amid criticism the government is failing to meeting its SME spend target.
Jeremy Quin, paymaster general and minister for the Cabinet Office, told the House of Commons on Monday (9 January) public sector buyers would have to “look at how they can remove bureaucratic barriers and level the playing field for smaller businesses”.
“New duties will require contracting authorities to have regard to SME participation,” he said.
Angela Rayner, deputy Labour leader, said she welcomed steps in the bill to support SMEs and “reform is urgently needed”.
“The British Chamber of Commerce found that SMEs are now receiving a smaller relative amount of direct government procurement spending than they were five years ago,” she said.
“Small businesses across the country are being choked out of the bidding processes, which are complicated and time-consuming. SMEs are competing for contracts against big corporations that have more form-fillers than the SMEs have workers.”
The comments came after the Federation of Small Businesses (FSB) claimed the government had missed a target to spend one pound in three with SMEs by 2022.
Tina McKenzie, policy and advocacy chair at the FSB, told the Financial Times that “when it comes to meeting its own signature procurement target, the government has time and again proved itself worse at delivery than Royal Mail on a strike day”.
“Placing one third of public procurement contracts with SMEs was a pledge first made in 2015, originally meant to be achieved within five years, and no prime minister or chancellor since then made progress by giving this target the priority it deserves.”
In October 2022 research by data provider Tussell and the British Chambers of Commerce showed only one pound in five (21%) of procurement spend was going to SMEs.
Quin said under the bill the public sector would be contractually obliged to pay prime contractors within 30 days and “we expect that 30-day payment to trickle all the way down the supply chain”. “It really will be for primes to be held to account,” he said.
Rayner said: “There is not enough in this legislation dealing with late payments for SMEs – a practice that, in the current economic crisis, is killing off too many small enterprises in this country. The minister talks about the trickle-down effect of 30 days, but I do not believe that will work in this instance.”
Labour has also criticised the bill as a “charter for cronies” because it does not outlaw the use of VIP lanes, used during the pandemic to purchase PPE.
Alicia Kearns (Con) raised concerns hostile foreign powers were accessing UK data through products bought by the public sector.
“Equipment used by our police forces, hospitals, [government] departments and local councils are providing hostile states with a back door into our security and forcing dependency on these malign actors and the states who produce them,” she said.
She cited the examples of Huawei in 5G networks and the risk of Hytera police body cameras sending images to China.
“The flaws in our procurement system severely undermine not only our security at home, but our ability to stand up for human rights around the globe,” she said.
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