UK central government fails to increase spending with SMEs

The Cabinet Office has published figures for how much the UK’s central government departments spent on products and services from small and medium enterprises during the year 2011/2012. The low key announcement slipped under the radar for many people, possibly because the figures indicate that the government is very unlikely to hit its target of spending a quarter of its total expenditure with SMEs in the course of this parliament. While it’s inevitable that large areas of government spending are unsuitable for supply from smaller businesses, the Cabinet Office will be concerned that the current total of 10 per cent is way short of its expectations.

The details are also concerning, particularly the fact that 97 per cent of the £1.24 billion increase in SME spending over the previous year was accounted for by changes in the definitions of law firms providing legal aid to the Ministry of Justice and the bizarre classification of PFI providers as SMEs. In essence, there has been no increase in spending with small businesses across large parts of central government.