Government encouraged to spend more with SMEs | A blog by Business Butler

Government encouraged to spend more with SMEs

In a recent article, the business support platform Enterprise Nation called upon the Government to increase spending within UK small businesses to help unlock the economic growth and to try and create a more diverse and dynamic economy.

Access all Areas

The new report, Access all Areas: Government, found that even though policy ambition is to increase spending with SMEs to 25%, throughout the past 5 years, the Government had actually managed to spend only 10% of its overall procurement budget directly on small businesses.

Enterprise Nation’s report and The Entrepreneurs Network Think Tank have recently analysed new data from data provider and government tenders Tussell. They found that the inability to turn the dial up on direct spending was partly due to the lack of information the government holds concerning the 5.5m small business community, how they operate, and how in turn they can be helped.


A consequence of this is that their systems need a lot of unnecessary bureaucracy which tends to be a lot easier for larger firms to handle. Most SMEs do not have the resources and time to dedicate to searching for procurement opportunities, the report said. Procurement across UK accounts makes up a third of all government spending and also over a tenth of all of the spending in the economy. This means that the Government has more firepower than expected to support small businesses and start-up companies growth.

The founder and CBE of Enterprise Nation, Emma Jones, who was also a former SME Crown Representative was quoted saying: “The Government has done a great job of encouraging the growth of the UK’s start-up and small business ecosystem. The next logical step is to place a role in their growth, by ensuring they are buying from them, either directly, via consortiums or through larger businesses that make a point of working in partnership with small firms.” She also added: “Working with the Government can be life-changing for smaller businesses. It can provide them with opportunities and experiences and can lead to sustainable and significant scale.

“We’re not suggesting a ‘bonfire of the red tape’, but this report shows a significant reduction in bureaucracy could help to turn the dial on small business growth.”

Time-consuming process

Jarmila Yu, who is a strategic marketing consultant was invited last May to submit an application to provide marketing advice services to clients of the government supported Regional Growth Hub. However, the onboarding process was a long-drawn-out affair, which meant she couldn’t start work immediately. 

She was quoted saying: “It was quite a small contract, but meaningful, as it was a way to supplement my own work and crucially support more small and growing businesses needing help.

“But the procurement process was highly burdensome, considering that from initial conversation to first client engagement it took eight months. The formal onboarding process involved information submission via a procurement portal that was cumbersome and counter-intuitive and whilst I already had relevant professional documentation such as insurances and IT systems in place I used for my private sector clients, I had to conform with the government requirements which involved added expense”. She then added to finish: “Very soon I was in the rhythm of supporting clients. I had some very enjoyable interactions.”

Making it easier for small businesses

The report has helped highlight a selection of policies that could be utilised to help make it easier for smaller firms to adequately compete for Government contracts. Some of which include; improve pre-procurement consortium building, publish pipelines early, establish a pro-innovation culture, write bids in a certain way that can allow room for more innovative solutions, sticking with one method of SME spending, and decreasing the bureaucracy. If all of this materialises then it will be a big help for SMEs. Government spending definitely needs to be directed towards the UK’s small businesses and it’s refreshing to hear that it will be going forward!

What are your thoughts on this? Is the Government doing enough for SMEs and small businesses? 

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