Big opportunities for small firms: government set to spend £1 in every £3 with small businesses

Matt Hancock, the Minister for the Cabinet Office has announced an ambitious new target to get more small businesses working on central government contracts.

In 2013 to 2014, central government spent an unprecedented £11.4 billion with small and medium-sized businesses – those employing 250 employees or less. This is equivalent to 26% of central government spend.

By 2020, the government wants to increase this to a third. This would mean an extra £3 billion per year (in 2013 to 2014 terms) going to small and medium-sized firms directly or through the supply chain.

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Earlier this year, the government improved the way it buys goods and services to help more small businesses bid for public sector contracts, by:

  • requiring the entire public sector supply chain to be paid within 30 days
  • abolishing pre-qualification questionnaires for low value public sector contracts, making it simpler and quicker to buy
  • requiring the public sector to publish its contracts in one place on Contracts Finder

Each government department and the Crown Commercial Service will now make sure that it meets this target by setting out individual plans and targets for spending with small and medium-sized businesses over the next 5 years.

Minister for the Cabinet Office Matt Hancock said:

This is such an amazing opportunity for the country’s diverse and innovative small businesses, and today I urge them to get stuck in. From computers to uniforms – there are so many opportunities for small businesses to work with us, and I want to see more of them providing value for money for the taxpayer and benefiting from our spending.

John Allan, National Chairman for the Federation of Small Businesses (FSB), said:

The government has much to gain from opening up public procurement to smaller businesses and we welcome the government’s commitment to achieve this ambitious target. To meet it, the government will need to focus on robust monitoring and challenge of poor practices wherever they are found. The FSB will play its part, and will work with ministers on this important goal.

John Manzoni, Chief Executive of the Civil Service said:

Further opening up our marketplace to small businesses is good economic sense all round – making it easier for them to access and win government business opportunities, whilst encouraging increased competition and market innovation to deliver best value for the taxpayer.


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