Exclusive! 25% of spend to SMEs “not an individual target” for Government Departments: but it is value based

We sent an FOI request in to Treasury a while ago because there seemed to be some confusion around the Government's target for SME (small and medium enterprise) share of public procurement expenditure. Was it 25% of spend by value or by number of contracts? For instance, both options were actually mentioned in different sections of the same Treasury document!  In our opinion, the former - value of spend - is more meaningful but probably harder to achieve.

We had our response yesterday, and indeed that's what it is.

"The 25% applies to the value of business with SMEs, and not volume".

But the next sentence was more interesting.  (Note the Treasury's own highlighting).

"It is not an individual target for departments; it is an aspiration for the totality of Central Government procurement spend across the whole Spending Review period".

We haven't seen that made clear anywhere before; I had assumed that the target would apply to each organisation (but maybe that was just me being naive).  So both the measure being made over 5 years, and the 'averaging' process gives government a bit more flexibility to hit what will be a tough target.

But the averaging across departments may not help that much - as we showed here, it is the larger spending Departments, like MOD and the Highways Agency, who have the smallest % of SME spend. So actually, this may be a high risk strategy. Rather than being in a position where most departments could probably hit the target, and a few fail, the objective as a whole might now be missed.

And I guess some SMEs may feel cheated that their particular  target department is not bound directly by the 25% target; what do you think?

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Voices (4)

  1. Final Furlong:

    Well done Peter, but sadly we’ve been well and truly mugged by ‘civil servant speak’.

    Not a ‘target’ but an ‘aspiration’. (Translation: “Ideally, we’d like to climb the seven tallest mountains in the world, but we’re going to be pragmatic and start with Ben Nevis, probably sometime next year.”) In fact, they haven’t mentioned ‘targets’ anywhere – unless they’ve mentioned them elsewhere in their response to you.

    ‘Over the CSR period’. Translation: “they’ll all eventually forget about it and, anyway, something far important will come along during that period which will overtake this rather annoying initiative. Can’t they see that we’re still very busy embarrassing our top suppliers into giving us retrospective discounts?”

    The shock of receiving their reponse must have been catastrophic on the old brain box – the CSR period is only 4 years (to 2014/15) not 5, so this 25% fluffy aspirational initiative has a tighter timeframe in which to deliver its outcomes. However, before one gets terribly excited over the progress made in the last year, the current CSR period only started last month…

    1. Peter Smith:

      I know – I too was thinking ‘the civil servants have done a good job on this one’.
      “Well, Minister, if we average it across Departments then of course no-one is really to blame. Spreading it over 4 years (thanks for the correction!) means everyone will be into election fever in 2014/15 and no-one will check on this. And – just to finish it off nicely – let’s call it an aspiration, not a target or (God forbid) a ‘committment’ “.
      I was going to write that, then I thought it might sound just a little cynical….
      Interesting to see if the Federation for Small Business pick up on this, but given that they do have in general reasonably strong Conservative sympathies (!), I don’t expect too much pushback from them. I remeber what a hard time they used to give the last Government; for some reason they’re much quieter now….

  2. Neil Hind:

    Similar targets have been encouraged within the local governement sector by central government. I think it came somewhat as a suprise to them to find out some council already have as much as 60% of spend (as % of total spend value) with SMEs.

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