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The government has issued new guidelines that instruct buyers in the public sector to make it easier for small companies to win a larger part of the £ 400 billion that is spent annually on goods and services.
The National Purchasing Policy, which will come into effect on 24 February, encourages 20,000 public authorities to simplify the tenders for small and medium-sized companies (SMEs), as well as voluntary, community and social companies. The move is designed to reduce bureaucracy, to stimulate social change and to help small businesses compete for government contracts.
The government’s office has told buyers to “maximize purchasing expenses” with SMEs without jeopardizing the value of money or quality, as part of broader efforts to stimulate economic growth.
Because SMEs already receive approximately 20 percent of public purchasing expenditure, the reforms can unlock billions of pounds in contracts for smaller companies. According to the National Audit Office, the purchasing law of 2023, which comes into effect at the end of the month, will introduce greater transparency, which may save more than £ 4 billion a year.
“Companies tell me that the current system is not working. It is slow, complicated and too often means that small companies in this country are excluded from contracts in the public sector. These measures will change that. “
The new rules also require that government services perform spot controls to ensure that large suppliers pay subcontractors within 30 days.
A “public interest” test is also introduced, whereby it is determined whether public services and local authorities should outsource contracts or provide services in -house to improve efficiency and where for your money.
The government’s office is also investigating ways to enable local councils to prioritize SMEs in their communities over national suppliers, even when larger companies offer lower prices.
Emma Jones, Chief Executive of Enterprise Nation, welcomed the changes and said: “By setting new standards in creating social value and strengthening 30-day payment conditions, this new approach could see many more opportunities open to the Small business community of the UK to grow. ”
Increasing SME contracts to 40% by 2030
A Goldman SACHS report this week encouraged that the government increases the share of purchasing contracts that were granted to SMEs to 40 percent by 2030. The Institute for the Government has estimated that the expenditure for the public sector of the SMEs between 2018 and 2023 remained by around 20 percent, which considerably emphasizes, which considerably emphasizes the room for improvement.
Jones believes that reservations for small companies will offer an important incentive to the local economies, which supports the expenditure for the public sector innovation, sustainability and creating jobs in communities in the United Kingdom.
Because the government wants to stimulate growth and support smaller companies, companies will keep a close eye on to see if these reforms translate into real opportunities.