London SMEs ‘choked off’ from government contracts, says Labour
The government is “choking off” opportunities for London SMEs by missing targets in awarding government contracts, Labour deputy leader Angela Rayner has said.
Rayner today told City PM that the public procurement process was a “Tory racket”, with new figures showing just a quarter of London SMEs have been successful in their bid to win a government contract.
The figures, from the Federation of Small Businesses (FSB), also show the government has not met its target of awarding one-in-three public contracts to SMEs by 2022.
The FSB, a business advocacy group, warned small businesses were being “excluded” from government contracts due to red tape and “unnecessary contract terms”.
Labour outlined its National Procurement Plan in September, which aims to give more opportunities to small businesses by cutting red tape in the application process.
Rayner said: “The Tory procurement racket is choking the potential of London’s small businesses.
“Local employers are being shunted to the back of the queue behind giant corporations with more form fillers than workers.”
It comes after research by the British Chamber of Commerce found SMEs were now receiving a smaller relative amount of direct government procurement spending than they were five years ago.
FSB policy chair Tina McKenzie said the UK’s procurement process needed to be “more streamlined and transparent” to help smaller companies apply.
“The proportion of small businesses winning public sector contracts is way below the government’s one in three target, and more must be done so innovative and ambitious small firms are not excluded by unrealistic and unnecessary contract terms,” she said.
The government was hit by claims of cronyism during Covid-19, with contracts allegedly handed out to businesses that were linked to ministers.
This included a contract given to Alex Bourne, who used to run a pub near the home of then health secretary Matt Hancock, for “tens of millions of vials for NHS Covid-19 tests”.
Bourne was formerly a neighbour of Hancock and offered his services by texting the former health secretary.
A Cabinet Office spokesperson said: “Government procurement spending with small businesses hit a record of £19.3bn in the latest set of figures, for 2020-21 – an increase of £3.7bn on the previous year.
“New laws we are introducing will also simplify processes further, strengthening opportunities available for SMEs and making it easier for them to win government contracts.”