Skip to main content

SMEs (Government Procurement)

Volume 585: debated on Wednesday 10 September 2014

7. What recent steps he has taken to remove barriers to small and medium-sized enterprises participating in government procurement. (905302)

In response to the hon. Member for Huddersfield (Mr Sheerman), I think that my tie is at least as pink as yours, Mr Speaker.

The direct spend of central Government with SMEs increased from £3 billion in 2009-10 to £4.5 billion in 2012-13. SMEs benefited from a further £4 billion in indirect spend though the supply chain. We are therefore well on track to deliver our ambition that 25% of Government spend through the supply chain should be with SMEs. However, we are still not satisfied, so we are taking forward a number of the recommendations of Lord Young of Graffham on creating an SME-friendly single market in, among other things, the Small Business, Enterprise and Employment Bill.

I thank the Minister for his reply. However, with £36 billion owed to small businesses in late payments, will he ensure that the Small Business, Enterprise and Employment Bill requires companies to demonstrate that they will pay all their suppliers promptly in order to be on the Government’s approved supplier list?

The hon. Lady is a doughty campaigner on this front and I commend her for it. The policy of central Government is to pay undisputed invoices within five days and to pass 30-day payment terms down the supply chain as a condition of contract. The situation is therefore improving. We encourage our prime contractors to pay more quickly than the 30-day commitment on a voluntary basis. We have tasked Departments with managing their contracts in a way that ensures that that happens. We also encourage SMEs that are not being paid by the prime contractor sufficiently quickly to let us know so that we can investigate.