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24 July 2018

Small firms being locked out of public sector contracts, say cross-party MPs

Responding to the publication of the Public Accounts Committee report on strategic suppliers, FSB National Chairman Mike Cherry, said: “Today’s report reinforces the view that the public procurement process is broken, heavily favouring big firms that waste taxpayers' money.

“It doesn’t make good reading following last week’s drop in central government small business spend and points to the need for immediate action to make the system fairer, simpler and more transparent.

“The committee recognises that a ‘Merry-Go-round’ culture has developed where public contracts are being awarded to a small number of large companies. By doing so, Government is handing over huge market power to these firms and effectively closing the market for small businesses.

“Taking back this market power and opening up the public service market benefits everyone from both large and small businesses, Government and taxpayers as it promotes innovation, creates jobs and provides better value for money.

“The report rightly states that there are no excuses for small suppliers not being paid on time. Unfortunately poor payment practice is an all too familiar problem for many small businesses. This is not an issue reserved for the private sector."

The latest FSB stats show that a quarter of businesses who are in supply chains for public infrastructure projects experience late payment more than half the time.

Mike Cherry continued: “More must be done by Government to get its own house in order including barring strategic suppliers, paid on the Government dime, from bidding and winning public sector contracts until they improve their payment practices.

“Government has committed to increasing SME spend and has announced measures to improve treatment of SMEs in supply chains. Now is the time for action, however, with small businesses needing to see real movement to widen the pool of Government suppliers and a crackdown on poor supply chain behaviour.”