- Small businesses across the country are set to benefit from
over £7.4 billion of Government money a year by 2028
- Departments have, for the first time, set individual targets
for the amount they will spend with SMEs - boosting economic
growth and delivering on the Plan for Small Business.
- New requirement to publish yearly progress updates to ensure
departments stay on track.
Small businesses across the country are set to receive over £7.4
billion a year from Government spending by 2028, boosting local
communities and creating jobs.
New targets published today will see Government departments
delivering on a key commitment in the Plan for Small Business by
spending more money with small and medium sized businesses, so
they can grow themselves and grow the economy.
Departments have for the first time, individually set direct SME
spending targets and will publish yearly progress updates
ensuring they are held to account, those who fall behind will
need to set out robust actions on how they will improve.
This is in addition to small business spending from the Ministry
of Defence which will increase by a further £2.5 billion, to £7.5
billion by May 2028.
While the targets are for direct spending, billions more also
goes through supply chains, meaning the overall amount for small
businesses is likely to be even higher.
This government is empowering business to drive growth and wealth
across Britain because a thriving private sector creates
opportunities for people to get good jobs across the country.
This is why we will be more proactive than our predecessors in
backing British businesses small and large to build and scale
up.
Last year, the Government launched its flagship Small Business
Plan, which included the most significant legislation to tackle
the scourge of late payments in over 25 years and a massive £4
billion finance boost to break down barriers to accessing
funding.
Cabinet Office Minister, said:
This Government is backing SMEs and British businesses.
These ambitious spending targets will help ensure more Government
contracts go to SMEs - keeping more money, jobs and opportunities
in local communities. This will make a real difference - and is a
statement of intent that this Government will pull every lever to
support SMEs and drive growth.
The money will go to businesses across the country, including key
sectors cyber, manufacturing, finance and science.
Previous Small Medium Enterprises (SMEs) to win government
contracts include UMi, based in Durham which was chosen to
spearhead the Business Support Service, and Logan Construction
based in the South East which has won a number of government
construction contracts.
The targets will help to rebalance government spending from big
international companies and put it into the pockets of
hardworking communities in the UK, boosting local growth and
creating new jobs.
Small Business Minister, said:
These new targets will ensure thousands of smaller businesses
have greater opportunity to win lucrative government contracts
and grow their businesses.
As outlined in our Plan for Small Business, increasing
procurement spend with SMEs is a national priority to drive
growth across the UK, and through today's changes we are
delivering on that.
Policy Chair at the Federation of Small Businesses (FSB),
Tina McKenzie said:
Understanding exactly how much central government spends directly
with small businesses is essential for holding departments to
account.
The decline in direct SME spend since 2022 shows exactly why
these targets matter - as well as the scale of the task ahead.
It's important that this announcement is a starting point for
more ambitious future spending commitments for 2028 and beyond,
particularly as overall spend among the biggest government
departments like health, defence and education, is set to rise.
Chief Executive of UMi, Nicki Clark said:
The advantages of enabling SMEs to access publicly procured
opportunities is well understood, so the momentum and practical
change that is being created in achieving that through the new
procurement act is really encouraging to see.
Chair of Constellia, Rob Levene said:
Today's announcement marks a pivotal moment for small businesses
across the UK who have felt locked out of public contracts due to
cost or complexity.
More collaboration with SMEs will ensure better value, less waste
and meaningful returns for communities, ensuring Government
Departments reap the multitude of benefits offered by agile and
innovative SMEs.
Targets set across government include 40% from DSIT, 33% from
DCMS and 30% from Cabinet Office, with nearly half of departments
setting a target of above 20%. Meaning that for every five pounds
spent at least one is going directly to a small business for half
of government.
Full details of the
Departmental Small Business Procurement Targets are on GOV.UK.
