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Government Contracts: SMEs

Volume 634: debated on Wednesday 10 January 2018

3. What steps the Government are taking to ensure that small and medium-sized enterprises can access opportunities to secure Government contracts. (903188)

Thank you, Mr Speaker, and hon. Members for that very warm welcome.

Small businesses are the backbone of our economy, and this Government are committed to supporting them in securing Government contracts. To that end, we have already streamlined our procurement processes to assist small businesses. Our small business panel is working to improve accessibility of Government contracts, and we continue to focus on breaking down the barriers that might deter SMEs.

I thank the Minister for that answer and welcome him to his position. He will know that many small businesses are put off trying to get contracts by the amount of information they need to supply and the bureaucracy they have to go through. What more can the Government do to reduce that bureaucracy and amount of information?

My hon. Friend raises a very important point. It really is vital that small businesses can access Government contracts as simply as possible, so to achieve this we have already taken action to ensure that bidding processes are simplified across the public sector, with complex pre-qualification questionnaires abolished for low-value contracts. We will continue to look at ways to reduce burdens for business, particularly small businesses.

Given what the Minister has said, what information does he have that there has actually been an increase in the number of small and medium-sized businesses accessing Government contracts?

I would point to three pieces of information: direct spend with SMEs is up 80% since the Conservatives came to power in the coalition in 2010; more small businesses than ever are bidding for Government business; and the Government now spend about £5.6 billion directly with SMEs.

As a fellow Hertfordshire MP, may I congratulate my hon. Friend on his well-deserved new role? Does he agree that it may be possible for prime contractors with Government contracts to do more to bring in small and medium-sized businesses, particularly in specialist areas, where Hertfordshire is of course so strong?

I thank my right hon. and learned Hertfordshire Friend for his welcome. He raises an important point. There are two aspects of this: there is the direct spend—as I have said, it is about £5.6 billion—but we also need to ensure that we get spend into contracts lower down, with people who have Government contracts then spending with small businesses, which is something we are committed to doing as a Government.

Too often, rather than outsourcing to SMEs, very large companies are employed. In this respect, despite being under investigation by the Financial Conduct Authority and reportedly having debts of £1.5 billion, the massive outsourcing company Carillion remains a major supplier in terms of Government procurement. If it were to collapse, it would risk massive damage to a range of public services. Do the Government have a contingency plan for such an eventuality, and what is the likely cost to the taxpayer?

As the hon. Gentleman would expect, we of course make contingency plans for all eventualities. If I could briefly update the House, Carillion, as Members will know, is a major supplier to the Government, with a number of long-term contracts. We are committed to maintaining a healthy supplier market and working closely with our key suppliers. I can tell the House that Carillion’s operational performance has continued to be positive. For example, it advanced its work on Crossrail over the Christmas period.

The truth is that the Minister has failed to answer the central question. The Government have been outsourcing public services to large outsourcing companies on an industrial scale. When these massive outsourcing companies fail, as too often they do, does the Minister really think it is fair that the costs stay with the taxpayer, while the profits are creamed off by the shareholders?

I do not think there is anything wrong with profit. Profit is a reward for investment made by businesses. Perhaps if the hon. Gentleman had listened to my answer, he would not have had to read a pre-scripted question. I gently suggest to him that this is something the Government take very seriously. We, for the first time, as a Government—this had not been done for 13 years previously—started measuring the number of small and medium-sized enterprises that have Government contracts. We set a target of 25% in the last Parliament, and we have delivered on that, so I think that is a record of success for this Government.