Government "exceeds SME spending target" - Cabinet Office figures

Civil service chief executive John Manzoni says government "making good" on promise to open up public sector procurement to smaller firms

By Civil Service World

07 Dec 2015

More than a quarter of all government buying went through small and medium-sized businesses in the last financial year, ministers have announced, surpassing a target set in the last parliament.

SMEs are typically defined as companies with fewer than 250 staff. Under the coalition government, the Cabinet Office vowed to spend a quarter of the government's procurement budget through SMEs by 2015, either directly or in supply chains, in a bid to reduce central government's reliance on large suppliers.

New indicative figures from the Cabinet Office, based on a survey of the top 500 government suppliers, show that SMEs accounted for 27.1% of overall government procurement spend in 2014/15. That was up from 26.1% in 2013/14.

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Breaking down the figures, the government said 10.9% of overall spending was directly allocated to SMEs in the last financial year, while 16.2% of the total was accounted for by indirect spend through the supply chain. Overall, the government spent £12.1bn through SMEs in the last financial year.

More than 40% of Ministry of Justice procurement contracts by value went to SMEs, the figures show, while the Department for International Development – which allocated 38.8% of its contract spending to SMEs – and the Department for Culture, Media and Sport (37.5%) also ranked highly.

Welcoming the figures, civil service chief executive John Manzoni said: "I’ve seen for myself how innovative small business can be and government should be benefiting from what they can offer."

The civil service chief said government was now "making good on our promise to open up public sector procurement to businesses of all sizes" while "delivering greater innovation and value for money for the taxpayer".

The Conservative manifesto commits the new government to going further on SME spending, allocating 33% of government contracts by value to such firms by 2020.

The Cabinet Office also announced that seventeen of the government's larger "strategic" suppliers had now signed up to a prompt payment code, statutory guidance introduced in the last parliament to ensure public sector suppliers pay "undisputed, valid invoices" to firms in their supply chains within 30 days.

Sixteen of the government's strategic suppliers are still to sign up to the code as of December 2015, but the Cabinet Office said firms who have now done so include Capita, Serco, Sodexo and Capgemini.

Cabinet Office minister Matt Hancock said: "I look forward to seeing even more of our big suppliers sign up to the prompt payment code, and help the small businesses in their supply chain."

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