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Ensure 33% of central government purchasing will come from SMEs

Central government must play a role in supporting SMEs: across all government departments, we will ensure that 33 per cent of central government purchasing will come from SMEs by the end of the parliament.

Our Verdict

Small and medium enterprises (SMEs) – or companies who employ up to 250 people – account for 99% of UK businesses. This is a pledge to support these enterprises by increasing central government purchasing from them to 33% of total government purchasing by the end of parliament.

In 2017, the government announced that the SME Advisory Panel, a group of 24 entrepreneurs and business figures formed in 2016, would work to bring public purchasing from SMEs to 33% by 2022. Areas of work include supply chain management, contracts, and providing better information to help SMEs respond to tender opportunities.

From April to June 2018, the government held a consultation on whether it would be appropriate to “exclude suppliers from major government procurements if they cannot demonstrate a fair, effective and responsible approach to payment in their supply chain management.”

The Prime Minister has also appointed one minister in every department as Small Business Champion. As a result, every government branch has a custom plan for increasing purchasing from SMEs. For instance:

In March 2019 the government published its first spending data, covering the fiscal year 2017/2018. Compared to 2016/2017 figures, purchasing from SMEs grew by about one per cent, from 22.5% to 23.7%. This comprises direct spending with SMEs and indirect spending (meaning via supply chains of bigger firms).

With government purchasing from SMEs increasing to 23.7%, and with ministerial Champions and the Advisory Panel working towards fulfilling this pledge, we consider this policy ‘in progress’. We’ll keep tracking the work of these public agencies and the purchasing figures. This will be ‘done’ once we have evidence that government purchasing from SMEs has risen to 33%. Follow this policy to stay up to date.

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