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Government ‘has lost momentum’ in efforts to spend more with SMEs, say MPs

The government has “lost momentum” in its efforts to spend more with small and medium-sized enterprises (SMEs), according to the Public Accounts Committee (PAC).

The committee said that while the government had reported progress against its target for SME spending from 2010 to 2015, it wasn’t clear that SMEs had been better able to compete with larger providers or whether they were actually getting any more government business than before.

For example, the government’s top five IT providers received over half of its total spending on contracted out IT.

The PAC said it was not persuaded that initiatives to remove barriers to SMEs have resulted in substantially greater competition for government business. And it called for the government to reinvigorate its efforts, as many of the initiatives began early in the previous parliament, and a number have come to an end, such as those focused on voluntary, community and social enterprise (VCSE) organisations.

It pointed to some success with the G-Cloud programme, whereby an estimated 51 per cent (or £510m) of government spending went directly to SMEs.

The PAC said that the government has yet to identify areas of spending where SMEs could bring the most benefit and it remained too difficult for SMEs to know what bidding opportunities were available. It called on the Cabinet Office and Crown Commercial Service (CCS) to help departments identify areas where SMEs can add best value “and how it will structure contracts and procurement to enable them to compete accordingly”.

In August 2015, the government increased the target for SME spending from 25 per cent to 33 per cent by 2020. But the committee said it wasn’t clear how the government decided on 33 per cent as a target or how achievable this target is. It urged the CCS to report back by March 2017 on what it has done to re-establish momentum towards hitting this target.

The PAC also criticised the way the government had changed its approach to measuring SME spending in four of the past five years – making it hard to know whether government spending with SMEs has truly increased. It recommended the adoption of a new and consistent approach to measuring year-on-year performance for SME spending.

The committee questioned whether “the voice of SMEs is being heard in government” and said it wasn’t convinced that increasing spending with SMEs is being given sufficient priority.

It called on the government to set out how it will it make it easier for SMEs to be aware of all contracting opportunities, subcontracting opportunities, awarded contracts and other opportunities in the pipeline.

Meg Hillier, chair of the PAC, said that the committee was “sceptical” about the progress the government had made, and emphasised that launching initiatives was not the same as delivering results.

She said that “without new and concerted action” there would be a risk that the government’s pledge to increase SME spending would not be honoured.

She added that small businesses were too often locked out by complex and lengthy procedures and called for an attitude change in Whitehall for SMEs to get the chance to contribute more.

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