Budget boost for SMEs is welcome - but ...

In the budget speech today, the Chancellor Alistair Darling said:

“Building on the recommendations of the Glover review, I will increase by 15 per cent the proportion of central government contracts that go to SMEs.

“This could mean new business worth an extra £3bn from central government alone and up to £15bn across the wider public sector.”

Martin Rice, CEO of IT company Erudine and co-founder of the UK Innovation Initiative, welcomes Darling’s statement that more Government contracts will go to SMEs, but he says it won’t necessarily help small innovative companies in winning bids.

Martin Rice said:

“Clearly it is a positive step to increase the amount of Governmentbusiness going to SMEs, but this target will not address the fact thatin reality few small businesses can afford the huge cost of engagingwith the vast machinery of Government procurement.

“Where wemost need innovation, for example in Government IT projects, the supplychain is managed by prime contractors and at present SMEs are held backand squeezed by larger companies in the chain.

“This means the value of innovative ideas and entrepreneurial SMEs isoften crushed, with the smallest companies bearing the brunt of pressureto deliver reduced costs.

“This new target will do nothing tobring innovation into Government from the SME community or improvesupply chain professionalism. Unless major obstacles are removed, itwould appear talk of embracing innovation is simply pre-electionrhetoric.”


It’s also unclear, to me at least, how Darling will award more contracts to companies of aspecific size – by ruling out major bidders?

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