UK Government making slow progress on commitment to spend more with SMEs

DollsThere is no doubt the UK Cabinet Office has been responsible for some commendable improvements in the Government’s approach to property and procurement. Yet, like most government departments it is also prone to fudging or spinning the outcomes of projects that don’t quite cover the department and its initiatives in glory. One of the sure signs of this is that the head of the department, Francis Maude, is busy doing other things on the day mixed reports and bad news come out. And sure enough, a new report from the Cabinet Office which shows that Central Government is already way off course in its aim to spend 25 percent of its budget with SMEs by 2015, has been released quietly, in August and fronted by a junior minister.

Indeed the report is presented by Chloe Smith, the go-to human shield for senior Cabinet Ministers and best known for her evisceration by Jeremy Paxman following last year’s fuel duty omnishambles. Sadists can witness a clip here.

The report tries to be upbeat and some of the headline figures are superficially encouraging but as the Spend Matters website points out, the government  is being selective in its use of comparative data. So while between  2009/10 and 2012/13 there is a growth in proportion of spend with SMEs from 6.5 percent to 10.5 percent, over the past twelve month it has only risen from 10.1 percent in 2011/12 to 10.5 percent.

This rate of change leaves the Whitehall target of 25 percent by 2015 look extremely unlikely even if there has been progress with the development of processes needed to encourage SMEs to chase public sector work and a greater willingness within certain departments to spend more with small businesses.

The lengthy report also highlights the structural issues that make certain sectors more likely to win the SME pound, especially smaller IT suppliers and digital agencies who are heavily featured in the report, while departments like the MOD are inherently unable to spend large parts of their budget with small businesses.

Even within sectors there are complexities. For example Computer Weekly magazine reports that  less than 1 percent of IT spending on the flagship Universal Credit programme has gone to SMEs. It claims that ‘two-and-a-half years on, the latest SME initiative is being stalled by civil servants falling back on the supposedly safe option of the “oligopoly” of big systems integrators’.

Recent announcements from the Government have highlighted the difficulties involved in setting universal targets across departments and when certain market sectors consist solely or primarily of smaller businesses.  So the creation of the new Crown Commercial Service, which bears more than a passing resemblance to other attempts at centralising procurement, the cost and complexity that still deters firms from bidding on certain jobs, and the CBI’s evidently sceptical approach to a survey into the experience firms have of working with the public sector all paint an uncertain picture.

There’s clearly progress but it remains slow and it seems very unlikely on the basis of this latest Cabinet Office Report that a quarter of Whitehall spending will be finding its way to the UK’s SMEs within the next two years. It’s probably most telling that this 25 percent figure is presented as an aspiration rather than a target.