On Thursday as the House of Commons was closing down for their half term break there was a short question and response piece under the heading of Government Contracts: Small Businesses that was set out by four MPs including Caroline Ansell from Eastbourne. As it happens it was four Conservative MPs who had obviously come up with a shared question and they should be congratulated for doing so. However we actually need a wider range of MPs to work together on this theme and see if a more in-depth approach can be obtained from the Government, particularly as they have indicated that they are about to introduce a new approach on this theme. Clearly one of the issues that needs to be resolved is a genuine focus on small businesses and in addition on what is defined as micro businesses. The medium businesses, particularly at the bigger end of their sector operate in a very different way and the challenge of linking together the Micro, Small and Medium Businesses is sometimes not very helpful even though the SME reference is often easy for politicians to use as we can see below.
One of the benefits for an MP is that they get a chance to find out what is happening in their constituency in quite a bit of detail. However one of the challenges is that they don’t often get an opportunity to understand what is happening nearby unless they begin to work together in different ways with their neighbours and across the party structures. Anyway back to the question from three of the four MPs was “What steps the Government are taking to increase opportunities for small businesses to bid for Government contracts.” and this came from Caroline along with Miriam Cates from Penistone and Stocksbridge and Stephen Metcalfe from South Basildon and East Thurrock. The fourth MP was Danny Kruger from Devizes and his question was “What steps he is taking to reform Government procurement to boost (a) local growth and (b) the small and medium-sized enterprises sector.” Rather sadly he did not mention the Micro Enterprise sector which is needing a great deal of help too. The response to all of these questions came from Julia Lopez who is the Parliamentary Secretary for the Cabinet Office.
JL: The UK spends £290 billion on public procurement each year. Now that we have left the EU transition period, we aim to make it simpler, quicker and cheaper for small and medium-sized enterprises and social enterprises to bid for Government contracts, as set out in our ambitious procurement Green Paper. We have already introduced a policy that will allow below-threshold contracts to be reserved for smaller UK suppliers, and we hope our new approach to social value will secure wider public benefit by allowing us to contract with firms that deliver more apprenticeships, local growth opportunities and environmental benefits.
Clearly we need the focus to remain on social enterprises but we also need Julia and indeed her colleagues to focus on the small businesses and the micro businesses and not simply go to the medium sized businesses. That is partly because these MPs have called for small businesses to benefit and although they have not referred to the micro enterprises there are many that would also benefit and they would both enable local growth and environmental matters to benefit. Of course many of the small and micro enterprises are currently struggling to deal with apprenticeships as I wrote about a few days ago, however these are elements that the Government can make much easier.
So now onto the subsequent questions – the only items I have removed are the local calls by all of the MPs apart from Danny Kruger who understands why this is for each community, not just the four constituencies being represented in this debate.
SM: I know that my hon. Friend will agree that our small and medium-sized businesses are the bedrock of our economy. I am sure that she will also agree that giving them the opportunity to bid for Government contracts will give them a significant boost and help them recover from what has been a very tough year. Will she lay out exactly how the Government will be promoting this opportunity to SMEs, so that businesses can start to bid immediately?
Sadly Stephen has referred to SMEs which is a bad response.
JL: I agree with my hon. Friend that the opportunities in this space are huge, and we think that our reforms will play a huge role in our post-covid recovery. For too long, complex and opaque procurement rules have benefited bigger and less innovative firms. Our reforms will simplify the current framework of over 350 regulations into one uniform set of rules, and move from seven procurement procedures to three. Our free-to-use digital platform, Contracts Finder, should make it easier for businesses in his constituency to find relevant opportunities. We want to make supply registration far simpler, so that data has to be submitted only once to qualify for any public sector procurement.
The Contracts Finder page on the Government website is here and on the front page is claims that it covers contracts between £10,000 and £118,000 but in reality many within 50miles of our location were £0 value and one was £1,500,000,000 so there is a bit more work needed here. Anyway next came Miriam Cates who for most of her comments was clearly focused on the small size businesses even though she then dropped onto the SME reference.
MC: Small businesses in my constituency would like the opportunity to bid for more Government and council contracts, but the current procurement rules are too complex and inevitably favour big firms. Can my hon. Friend assure me that we will be using our new freedom from EU procurement rules to deliver more commercial opportunities to innovative, dynamic SMEs.
JL: Absolutely. I know that my hon. Friend, as someone who has run a business herself, understands the bureaucratic frustrations that too many of her constituency businesses come up against. We want public buyers to divide contracts into more accessible lots and allow them to reserve contracts under a certain threshold for small, innovative firms. We are also pushing ambitious targets on prompt payment, and we aim to simplify the bidding process so that it does not favour big firms, which inevitably have greater resources to devote to form-filling and box-ticking.
DK: I welcome the recent Green Paper setting out the freedoms that the UK now enjoys to create a new framework for public procurement, including a new exceptional power for public bodies to commission for wider public benefit. Does my hon. Friend agree that we need to go further and make this exception the norm, ensuring more joined-up services and better overall outcomes for the public? Otherwise, we will be getting only half the Brexit dividend that we could in the field of procurement, with freedoms but not the actual implementation.
JL: My hon. Friend is quite right. Our proposed procurement reforms will not in themselves deliver change unless commercial teams across the public sector actually understand how to deploy them to greatest effect. That is why we are introducing a programme of training for contracting authorities. On the matter of wider public benefit, I refer him to our social value model. We do not want to award only to those that make the cheapest bid; we also want to award to firms that offer value for money in a much broader sense, including to the community in which the service is being delivered. I know that is something he cares very passionately about, given his thoughtful review on a new social covenant.
CA: I so welcome all that my hon. Friend has said on this. I am mustard-keen to see Government contracts open up and work for businesses and charities. The latest feedback from one of my manufacturers, which has just ventured into this arena with a bid to the Ministry of Defence, highlights the absence of a published timeline on decision making for the contract, which the manufacturer says is essential information to allow it to plan for success, build capacity and ensure that it delivers for all its customers. Will she look at this situation, to ensure that the whole process is as transparent and as small business-friendly as possible?
JL: I thank my hon. Friend for highlighting this; she raises an important point. I am happy to look into the specifics of the case and take it up with officials, or she might want to look at the public procurement review service. All Departments, including the MOD, are actively supporting the SME agenda, and one of the ways we hope to encourage more bids from SMEs is by publishing contract pipelines well in advance, so that they have much more time to plan and resource bids, and shorten the time in which contracting bodies make decisions.
So rather sadly at the end of this piece Julia Lopez has referred back to the SME approach which is what is vital to be removed from the Government concept if we are going to see small businesses being supported along with micro businesses. However we clearly need to find a way to encourage all MPs who understand or are interested to help the small AND MICRO businesses to start to raise this in front of the Government.