5 December 2015

In the last financial year, UK small businesses benefited from £12.1 billion of government spending. In 2014 to 2015, 27.1 per cent of central government buying was with small businesses, either directly (10.9 per cent) or through the supply chain (16.2 per cent).

This exceeds the target set in the last Parliament of spending 25 per cent of the central government procurement budget with small businesses by 2015.

The government is also in a good position to reach its new target for a third of central government buying to be with small businesses by 2020. Achieving this target will mean an extra £3 billion per year (in 2013 to 2014 terms) going to small firms directly or through the supply chain.

Seventeen of the government’s 33 ‘strategic suppliers’ have now signed up to the Prompt Payment Code. By signing the Code, these major companies have promised to pay their suppliers promptly, including the small businesses in their supply chains. This makes working with these large suppliers much easier for thousands of small firms, because cash flow is critical to their businesses. See the list of suppliers here.

This is the latest of a series of government measures to make sure that small businesses, charities and voluntary organisations can compete for public sector contracts. Find out more here.

UK Minister for the Cabinet Office and Paymaster General Matt Hancock said:

“Small businesses are the lifeblood of the UK economy and on Small Business Saturday, I want to see as many of them as possible competing for and winning public sector contracts.

“I want to turbocharge our ambitions for small business and have £1 in every £3 of government spend going to small businesses by 2020. I look forward to seeing even more of our big suppliers sign up to the prompt payment code, and help the small businesses in their supply chain.”

John Manzoni, UK Chief Executive of the Civil Service, said:

“I’ve seen for myself how innovative small business can be and government should be benefiting from what they can offer. That’s why today of all days, it’s great to see that we’re making good on our promise to open up public sector procurement to businesses of all sizes, and by creating this more diverse marketplace, we’re helping to stimulate local economies and delivering greater innovation and value for money for the taxpayer.”