Government Procurement: Small Businesses

Chancellor of the Duchy of Lancaster and Minister for the Cabinet Office – in the House of Commons at 12:00 am on 27th June 2018.

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Photo of Chris Davies Chris Davies Conservative, Brecon and Radnorshire

What steps his Department is taking to encourage the use of small businesses in Government procurement.

Photo of Bim Afolami Bim Afolami Conservative, Hitchin and Harpenden

What steps his Department is taking to encourage the use of small businesses in Government procurement.

Photo of Oliver Dowden Oliver Dowden The Parliamentary Secretary, Cabinet Office

Small businesses are the backbone of our economy, and we are determined to continue to level the playing field so that they can compete for Government contracts. That is why in April I announced a number of measures to help achieve that and have recently met the Government’s strategic suppliers and Ministers in several Departments to ensure that those measures are delivered.

Photo of James Duddridge James Duddridge Chair, High Speed Rail (West Midlands - Crewe) Bill Select Committee (Commons)

I thank the Minister for that reply. Specifically, how will coastal towns such as Southend-on-Sea benefit from the changes in this procurement procedure?

Photo of Oliver Dowden Oliver Dowden The Parliamentary Secretary, Cabinet Office

As my hon. Friend will know, small businesses generate more than 16 million jobs and we are determined to level the playing field so that those in coastal towns such as Southend get their fair share of prosperity and win Government contracts. I encourage businesses in Southend to look on Contracts Finder, on which more than 17,000 small businesses are already registered, for procurement opportunities.

Photo of Chris Davies Chris Davies Conservative, Brecon and Radnorshire

Does my hon. Friend agree that it is vital that we have a vibrant and mixed group of suppliers and small businesses from all corners of the UK, including Wales, Scotland and Northern Ireland, and that they should all be considered equally in the procurement process?

Photo of Oliver Dowden Oliver Dowden The Parliamentary Secretary, Cabinet Office

My hon. Friend is absolutely correct. It is crucial to ensure that we have a diverse supplier base. We have made a number of changes to the Government procurement processes to assist small businesses, including requiring prime contractors to advertise subcontracting opportunities on the Government Contracts Finder. We also divide contracts into separate lots, including by region, when that makes commercial sense.

Photo of Bim Afolami Bim Afolami Conservative, Hitchin and Harpenden

I thank the Minister for his responses. As seen from my recent work on the Public Accounts Committee, there sometimes appears to be a conflict between large strategic suppliers who see themselves as aggregators of several procurement contracts for small business and other instances in which small businesses would like to get certain contracts directly from Government. Will he explain the Government’s thinking on how to balance those two approaches?

Photo of Oliver Dowden Oliver Dowden The Parliamentary Secretary, Cabinet Office

We already require buying authorities to disaggregate contracts so that small and medium-sized enterprises can compete. However, there will, of course, be contracts in which disaggregation would affect value for money. That is why we recently announced that when large contractors are successful, they will be required to advertise those subcontracting opportunities on Contracts Finder, so that small businesses can bid.

Photo of Julie Cooper Julie Cooper Shadow Minister (Health and Social Care) (Community Health)

What assessment has the Minister made of the cost implications where outsourced contracts have been overturned by the High Court because of incompetent procurement processes? I refer specifically to the expensive mess created by Conservative-controlled Lancashire County Council in connection with a Virgin contract for children’s services.

Photo of Oliver Dowden Oliver Dowden The Parliamentary Secretary, Cabinet Office

As the hon. Lady will know, the Cabinet Office has extensive processes to ensure successful procuring. If she is questioning the overall purpose of procuring, I refer her to the comments made earlier by my right hon. Friend the Minister for the Cabinet Office. In addition, research shows that public authorities save at least 11% by contracting out services. That means more money for health and education.

Photo of Gregory Campbell Gregory Campbell Shadow DUP Spokesperson (International Development), Shadow DUP Spokesperson (Cabinet Office)

The Minister referred to small businesses as the backbone of our economy. What plans does he have over this Parliament to strengthen that backbone and increase targets in terms of accessibility of procurement for small businesses?

Photo of Oliver Dowden Oliver Dowden The Parliamentary Secretary, Cabinet Office

The hon. Gentleman raises an important point. In the previous Parliament, we set and met a target of 25% of all Government procurement going to small businesses. We set a challenging target in this Parliament of a third of all procurement going to small businesses. I am taking a number of steps to help us to try to achieve that.

Photo of Bill Esterson Bill Esterson Shadow Minister (Business, Energy and Industrial Strategy), Shadow Minister (International Trade)

Thirty thousand Carillion suppliers are owed £2 billion in unpaid invoices. When will Ministers enforce the prompt payment rules for Government contracts and stand up for small businesses, or is the reality that under this Prime Minister the Conservatives really are the anti-business party?

Photo of Oliver Dowden Oliver Dowden The Parliamentary Secretary, Cabinet Office

We are absolutely committed to prompt payment. That is why the Government pay over 96% of their suppliers within 30 days. In respect of application to contracting, I have just announced a consultation to ensure we can exclude contractors if they fail to pay small businesses on time.