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Equipment and Support Contracts (SMEs)

Volume 548: debated on Monday 16 July 2012

6. What his most recent estimate is of the proportion of defence equipment and support contracts let to small and medium-sized enterprises. (116896)

9. What his most recent estimate is of the proportion of defence equipment and support contracts let to small and medium-sized enterprises. (116899)

During the financial year 2011-12, approximately 41% of new contracts were awarded to small and medium-sized enterprises. That represented approximately 13% of the value of all new contracts placed in the year. A significant proportion of our other business also reaches SMEs from the prime contractors through the supply chain.

I welcome the recent announcement that 41% of contracts were awarded to SMEs. They are vital not only to our security, but to the economy. What steps is my hon. Friend taking to fulfil their potential abroad as well as at home?

I am glad to say that I find that SMEs are often particularly energetic in pursuing overseas opportunities. Indeed, many British small defence contractors begin their commercial lives exporting, rather than selling to the domestic market, which is a great tribute to the enterprise they show. UKTI DSO takes enormous steps to help SMEs. It participates in many trade delegations with my hon. Friend the Member for Aldershot (Mr Howarth), the Minister with responsibility for international security strategy. I pay tribute to DSO and to SMEs, which make a great contribution to our economy and to defence.

There are 3,000 SMEs in the UK defence industry, and they are doing great things for our economy and vital work for our defence sector. What is the MOD doing to make Government business more accessible to these SMEs?

My hon. Friend might apply for an Adjournment debate on that topic, because it would test your patience, Mr Speaker, if I were to list all the things we are doing to help SMEs, which include producing simplified standard contracts, making SMEs aware of tendering opportunities, and ensuring they are paid quickly. However, I attach the greatest importance to the establishment of the suppliers’ forum for SMEs, which I chair, and which enables us to pursue in detail both the concerns of SMEs and the issues we have in dealing with them. That is a very fruitful discussion, which is leading to a radical simplification of the way in which we do business with SMEs, and in due course it will create many more opportunities for them.

I always have patience for orderly answers, but not for speeches masquerading as answers. I know the Minister will readily accept that point.

On defence contracts, will the MOD’s current plans inevitably result in more contracts for companies such as G4S?

That is not my responsibility. I was talking about defence equipment and support contracts, and as far as I am aware—I stand ready to be corrected—G4S has no role in such contracts.

Many SMEs in Northern Ireland are involved merely on the periphery of large MOD contracts. What steps are the Government taking to ensure that there is a fair distribution of defence contracts and fair business opportunities for SMEs in Northern Ireland?

It is one of the sadnesses of the structure of the UK defence industry that defence industries are relatively few and far between in Northern Ireland. Of course, Thales is the prime example of an excellent company doing first-rate work in Northern Ireland; I visited it earlier this year, seeing for myself just how good that company is, and it makes a huge contribution through the supply chain. The small and medium-sized businesses of Northern Ireland can also contribute to other contracts throughout the United Kingdom, and I am sure they are doing so in a realistic and strong way.