An increase in the amount of money the government spends with small businesses has been welcomed by politicians and business leaders.

  • Government spent £14.2 billion with small and medium size businesses in 2018/19
  • Figure is nearly £2 billion more than previous year.
  • Direct Spend with SME is now £6,410m a year, a rise of 16.75%
  • Indirect Spend with SME is now £7,784m a year, a rise of 12.8%.
  • Overall spend has increased by 6%
  • Latest data also shows Cabinet Office pays 99% of its bills within 30 days

An increase in the amount of money the government spends with small businesses has been welcomed by politicians and business leaders. However, a significant proportion of the spend is related to Indirect spend – spend that is cascaded down from the main suppliers to smaller organisations. This is generally an estimate only and can vary widely.

Figures released today by the Cabinet Office show that for the year 2018/19, government spending with small and medium size firms rose to £14.2bn – an increase of £1.8bn on the previous year.

Cabinet Office Minister, Oliver Dowden, said:

We’re committed to using the power of government spending to support small businesses across the country and this is something I’ve championed in my time as a Minister – so it’s great to see these figures heading in the right direction.

As we leave the EU we can create more opportunities for small businesses to win government business – boosting growth, employment and innovation.

The amount of money the government spent with small businesses in 2018/19 was highest since government records began in 2013.

The investment has seen money pumped into small businesses providing services as varied as training courses for apprentices to the development of specialist software.

Mike Cherry, the National Chairman of the Federation of Small Businesses, said:

Making better use of small businesses in government procurement is good for public services, good for the economy and good for taxpayers. The Cabinet Office is showing real leadership to drive further progress on this issue and it is good to see this progress begin to be reflected in today’s figures.

Letting a greater proportion of public sector contracts to small businesses will increase competition, value for money and innovation, not to mention boost jobs across the UK. We will continue to work with government as it seeks to reach its welcome commitment for one third of public procurement to be with SMEs by 2022.

The government’s manifesto also committed to making sure that businesses are paid on time.

And latest data from the Cabinet Office shows that the department pays 99 per cent of its undisputed invoices within 30 days and 91 per cent within five days.

The government’s commitment to prompt payment also covers the private sector, where tough measures are in place to make sure that suppliers are paid in good time.

The detailed spend by department directly and indirectly with Central Government Departments

Post expires at 11:39pm on Thursday July 30th, 2020

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