The stereotypical view of business is that they despise red tape, almost more than the Government which tends to dislike the red tape that others have imposed (either previous Governments or the EU), preferring their own much free-er restrictions and measures, because they after all are right and everyone else is wrong!. As I wrote in early November, this Governments commitment to improving the prospects for small – medium size enterprises, which is a good thing generally,  overlooks that the terminology reflects a broad range of companies.

“A year ago the Prime Minister and I launched a package of radical measures to increase opportunities for SME suppliers and to give us access to SMEs creativity and innovation. With the ultimate aspiration that we would deliver 25% of our central Government procurement spend through SMEs by the end of this Parliament.” Francis Maude speaking in March 2012

The Government uses definitions for business size that is agreed throughout the European Union. This provides three categories within the range of SME:

Micro entities – 10 employees or less

Small companies – 11-50 employees

Medium size enterprises – 51-250 employees

Clearly there is a significant difference between a company that employs 250 people and one that employs 2 or 3, yet the Government has delivered on its promise if 25% of their contracts and those for local government go to organisations with 250 employees. With this in mind, the Government asks the Councils to measure their procurement with this commitment in mind. In practice many local Councils are willing to focus their energy on much smaller, and in theory much more local businesses. However because there is no requirement to do so, and because price is often the overriding element of any contract, a larger company may be able to price the small and local business out of the market. One of the barriers to procure a greater proportion of business from micro entities, or even small companies at the expense of the medium sized enterprises, is that there are no ways of measuring the current arrangements, to find out what the current split is. In a risk averse context, such as local government the idea of measuring more than the Government demands, with the inevitable cost that would be associated with this, acts as a huge barrier. Yet if we could persuade all local Councils to analyse their procurement on these three criteria, rather than treating them as a group, we could at least argue for greater levels of business for small and micro companies.

As we approach the end of 2013 my plea to the Government is for them to ask local Councils to begin to measure the level of procurement with greater detail and granularity than they do at present. Please Mr Cameron and Mr Maude, ask all of our Councils to count the beans differently!