Labor has accused the government of “cheating small businesses out of opportunity” after new research found they only get a 10 percent share of public sector contracts earmarked for them.
Despite ministers’ promises to support the small and medium-sized enterprise (SMEs) sector, an analysis by the Spend Network found that large companies still take the lion’s share – 90 per cent – of the £30bn worth of orders each year received, which are considered suitable for offers from smaller companies.
Speaking to Small Business Saturday, Labor Deputy Leader Angela Rayner said UK SMEs were being “choked out of tender processes”.
She pointed to figures showing that the government has repeatedly missed its target of benefiting SMEs from 33 percent of total procurement spending, with the figure reaching just 26.7 percent in 2019-2020 and 26.9 percent in 2020-21.
Earlier this year, the UK Chamber of Commerce found that SMEs now receive a relatively smaller amount of direct government procurement spending than they did five years ago in 2016.
And the Federation of Small Businesses found last year that only one in five SMBs had applied for a public sector contract in the previous three years.
Too often companies felt that it was either too difficult to bid for public sector bids or that public bodies had already selected their preferred bidders, the FSB report says.
“Even in sectors that are heavily dependent on SMEs, such as construction, a huge untapped pool of SMEs remains,” says the report.
“It is often too easy for government agencies to use large companies to act as aggregators when, with the right training and process, the department could bring SMEs directly into the supply chain and break down opportunities.”
Ms Rayner said: Conservatives talk about small business but consistently fail at it.
“Ministers have failed SMEs at every turn, cheating them of opportunities while handing out the brightest prospectuses or best connections to the usual giants.
“A Labor government will give small and medium-sized businesses a fair chance to get business. Where the Tories gave billions of pounds to their cronies with links to tax havens, Labor will ensure that local businesses are no longer queued behind big firms with more form-fillers than workers.
“Our sourcing policy will cut bureaucracy and streamline the bidding process, giving small businesses a real chance. Where the Tories had their VIP lane for their donors and cronies, Labor will champion the businesses and corporations that create prosperity for all and contribute to a fairer society.”
There was no immediate response to The Independent‘s request for comment from the Department of Economy, Energy and Industrial Strategy (Beis).