Small businesses benefitting more than ever from government business, new figures reveal

Small businesses won a record-breaking amount of government work, new figures released by the Cabinet Office reveal today (Tuesday 15 August). 

The new figures, which underline the government’s commitment to helping SMEs benefit from government contracts show that UK small businesses received £21 billion worth of work in 2021/22. This equates to around £3.8k per British small business. 

Government work won by small businesses range across all sectors, including public infrastructure - supporting building schools and hospitals, defence - developing high end technology to keep the country safe and healthcare - helping keep the country healthy through clinical, medical and digital health services, as well as many more.

The figure is an increase of £1.7bn on the previous year, and the highest since records began, representing the fifth consecutive year that government work won by small businesses has increased.

Minister for the Cabinet Office Jeremy Quin said: 

“Today’s record-breaking figures demonstrate our commitment to ensure more small businesses benefit from public sector spending, by reducing barriers to entry and encouraging a more diverse market.

“One in three pounds of public money is spent on public procurement, which is why through the Procurement Bill we are improving the way it is regulated to save the taxpayer money and drive benefits across every region of the country.” 

The news comes as the Minister of the Cabinet Office meets with SME supplier Wagtail in Flintshire, Wales later today. The company provides detection dogs and related services for government departments and agencies including the UK Border Force, HM Revenue & Customs, Police, Trading Standards and Armed Forces. 

As well as seeing the benefits of innovative procurement practices in action, the Minister will see how the Procurement Bill will make it easier for small businesses, such as Wagtail, to win government contracts. 

Under new rules all departments and public bodies will be required to consider SMEs when designing their procurements, meaning that more SMEs will get to compete for and win government contracts through simpler and more flexible regulations.

The new rules also include:

·  Greater visibility of upcoming work, giving SMEs more time to gear up for bidding

·  A new central platform showing future work in each area. This means for example a new SME tech firm in Lancashire will be able to search for tech opportunities upcoming in their region

·  Creating one single website to register on, rather than the multiple and time consuming systems SMEs currently have to register on before bidding for work

·  Reducing unnecessary insurance costs before a supplier has even bid for a contract

·  A new Competitive Flexible procedure, which will allow contracting authorities to design more innovation into the process. 

·  Strengthening prompt payment, so that businesses throughout the public sector supply chain receive payment within 30 days

At the visit, the Minister will meet with Adam Vizard from Wagtail’s senior leadership team to learn about the business and its experience tendering for public contracts. He will also meet with the company’s professional dog trainers and operational handlers, observing demonstrations with a fully trained detection dog. 

Notes to Editors

• Figures for government spending with small businesses are measured both in terms of direct spending, where money goes directly from the government to small businesses, and indirect spending, which goes through the supply-chains of larger companies.

• The Procurement Bill is progressing through Parliament, with its final stages expected after the summer recess.

• Data on SME spending can be found here [LINK]. An SME is generally defined as an organisation with fewer than 250 (FTE) employees and a set limit for annual turnover or balance sheet totals on their company accounts.

• 13 departments - (BEIS, CO, DCMS, DEFRA, DFT, DIT, DLUHC, DWP, HMT, HO, MOD, MOJ and NDA) increased their total SME spend in real terms (£s spend with SMEs) in 2021/22 with 12 of these (BEIS, CO, DCMS, DEFRA, DFT, DIT, DLUHC, HMT, HO, MOD, MOJ, NDA) attaining a record spend value.

• The Small Business Team in the Cabinet Office works with departments to ensure that government is obtaining value for money and supporting small businesses and start-ups through procurement. 

• This includes:

• • Holding departments to account on actions to increase SME and start-up spend through tackling obstacles faced when bidding for work or contracting with government departments and agencies. 

  • Working with Industry, Trade Bodies and the Cabinet Office SME Advisory Panel (made up of 25 SME owners and entrepreneurs from a range of sectors) to better understand challenges and barriers facing smaller firms.

  • Excluding poor payers from the procurement process if they cannot demonstrate prompt payment to their supply chain.