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Government Contracts

Volume 519: debated on Wednesday 24 November 2010

5. What plans he has to encourage opportunities for small and medium-sized enterprises to apply for Government contracts. (25853)

14. What plans he has to encourage opportunities for small and medium-sized enterprises to apply for Government contracts. (25862)

15. What plans he has to encourage opportunities for small and medium-sized enterprises to apply for Government contracts. (25863)

On 1 November, my right hon. Friend the Minister for the Cabinet Office announced a package of measures to help small and medium-sized enterprises to obtain public sector contracts. They include halving the length and breadth of the pre-qualification process for small firms, and creating a single website called Contracts Finder, where small businesses can locate all the contracts that are available from Government.

Given that 95% of people in my constituency are employed by small and medium-sized enterprises and that some companies would relish the opportunity of a fair playing field in bidding for Government contracts, will my right hon. Friend make suitable changes to the bureaucratic burden that they currently bear, thanks to the previous Government, as soon as possible?

The short answer is yes—and abundantly so. The measures I just described are intended to do that. In addition, we are looking at the causes of delay in the procurement process because, as was mentioned earlier, that is often part of the problem. We are also requiring suppliers to pay their subcontractors within 30 days, and encouraging them to pass those payments right down the line to the smallest businesses.

These are great measures for small business, but may I impress upon the ministerial team the need to move forward with them now, because British small business is desperate for access to these contracts? So—please, please, please—get on with it now.

I am happy to be able to tell my hon. Friend that that is precisely what we are doing. That is why we are publishing every contract for tender of over £10,000 on a website, enabling people to see the opportunities. It is also why we have put in every Department’s business plan the requirement to report on the percentage by value of contracts they have let to small and medium-sized enterprises. We shall measure the extent to which Departments fulfil that requirement. [Interruption.]

Order. For a start, there is too much noise in the Chamber. Secondly, the Minister is, no doubt because of his natural courtesy, looking back at the person by whom he has been questioned, but he must address the Chamber so we can all hear him.

Will the Minister consider organising an event or exhibition at which small businesses could show what they can offer to Government procurement? Perhaps we could have a street fair in Downing street, and invite people out of their offices to come and see for themselves?

I cannot offer my hon. Friend a street fair in Downing street, but I can certainly promise that we will take up his suggestion of looking into ways of enabling small businesses to bring home to those responsible for procurement just what a valuable contribution they make.

Perhaps we could have a street fair in Colne Valley. SMEs in my constituency will certainly welcome the measures, which will make it easier for them to do business with the Government, but can the Minister assure them that the process will be more accountable and transparent?

Yes, indeed, I can; in fact everything I have been describing tends to that end. We are going to make sure SMEs know what contracts are available; we are going to make sure they get a proper account of what is awarded; and we are going to make sure that Departments are held to account in awarding to SMEs. We want transparency all the way through the process because that is what will drive Government to let contracts to SMEs.

Now that Lord Young has gone, does the Minister agree that SMEs have never had it so good in respect of their share of Government procurements given the scale of cuts announced in the spending review?

Lord Young has resigned. My personal view is that the longest and deepest recession since the war, and the vast fiscal deficits that the Labour party bequeathed to us, have left not only SMEs but the entire country, and, of course, the Government, with an enormous challenge that we are now trying to meet.

Some of the enterprises of relevance in this context are third sector or voluntary sector organisations, for which the operation of the compact is important. How will the Minister respond to the concerns expressed by a number of those organisations that the compact is not working and that the new compact’s accountability mechanisms are not robust enough? The reality is that voluntary sector organisations are first in line for cuts, and this Government are doing nothing to address that.

Let us be clear: the compact is not about the level of expenditure but about the extent to which, in each contract, the Government play fair by those with whom they are contracting. We absolutely accept that the operation of the compact under the previous Government was not adequate. We are introducing new measures to make it more transparent, and the entire structures of our payment by results contracts will be totally transparent and in line with the spirit, as well as the letter, of the compact.

Of course. If the Scottish Government take the correct measures, it will apply in Scotland; and in the UK as a whole, and in England in particular, we will make sure there is transparency and that the compact is totally observed regardless of where the contractors come from.

The cuts in public expenditure will put enormous pressure on construction industry firms, and the smaller and medium-sized firms will be particularly badly hit. What are the Government going to do to protect those companies so that when the economy improves they will still be there to do the construction that is needed?

The greatest protection for small and medium-sized enterprises in the construction sector and elsewhere is, of course, a macro-economic framework that enables them to survive the recession, prosper and grow. That is why my right hon. Friend the Chancellor has taken the steps that have led the world in providing a solid macro-economic framework and low interest rates that enable—