World News Today: Cameron opens contracts to SMEs

David Cameron said the measures would reduce the deficit by tackling waste

David Cameron has announced a series of measures to help small and medium-sized firms compete for billions of pounds worth of central government contracts.

He said the aim was to give businesses greater access to the bidding process by eliminating "excessive bureaucracy and petty regulation".

Firms should no longer have to input their information each time they apply for a new contract, for example.

The CBI, however, said the government could have gone much further.

"This is a welcome package of measures," said Susan Anderson, the business body's director for public services, "but it could be much more radical by opening up all government contracts and public services to a range of innovative and expert providers."

Analysis

This week's long-awaited deal with banks, Project Merlin had specific lending committments for SMEs. The sector was also at the heart of Wednesday's Trade White Paper. Now it is in the spotlight again as the government opens up procurement.

The focus is deliberate - the small business sector is where the government hopes to see growth. What's more, despite accounting for 50% of the turnover of the UK business economy, SMEs only win 5-10% of the billions of pounds of public sector work.

The plans could certainly give fledgeling firms a leg up. David Cameron mentioned the case of Autonomy, the British technology firm. He said its founder Mike Lynch said that the reason it is a massive global success story is because one maverick government contracts manager defied the rules and gave him a tender.

But will the measures really deliver for taxpayers? And given the government doesn't know how much work is currently done by SMEs, quanitfying how well it is all going won't be easy.

The measures also include a new Contracts Finder website, which will feature all public sector contracts worth more than £10,000, to try to give business an an easier way to locate them.

Pre-qualification questions for central government contracts under £100,000 will also be elimated, the Cabinet Office said.

Launching the initiative, the Minister for the Cabinet Office Francis Maude, said they would end the "procurement oligopoly" where small businesses were effectively shut out from the bidding process for Westminster contracts by red tape and over regulation.

It is hoped the measures will also help charities and voluntary organisations bid for work.

David Cameron told representatives from small and medium sized firms that the measures should also help the UK economy.

"We need to make the system more open, competitive and transparent. It's important for getting to grips with our deficit," the prime minister said.

The TUC, however, sounded a note of caution on this point: "Simply offering public sector services to any private sector firm willing to provide them at the lowest cost will open up the NHS and other valued public services to cowboy operators, and mean lower wages and worse conditions for thousands of low paid workers."

The Scottish government, launched it's Public Contracts Scotland procurement website two years ago.

It said that it had been a success and revealed that it had so far registered 50,000 members.

"It is enabling the delivery of improved public services at a reduced cost, and having a direct positive impact on the Scottish economy," said Finance Secretary John Swinney.

"It has introduced a level of transparency and functionality that is unparalleled across Europe."

'Long overdue'

The UK government's new approach received a positive response from bodies representing smaller businesses.

"If our businesses are to generate the jobs and growth necessary to sustain a recovery, then it is only right the government should be looking to award contracts to smaller firms," said Dr Adam Marshall, director of policy at the British Chambers of Commerce.

The Institue of Directors said the changes were "long overdue", but questioned whether the culture in Whitehall would change sufficiently.

"It remains to be seen whether today's changes will benefit small businesses or whether risk-averse bureaucrats will soldier on with safe choices of big brands," said the IOD's Alexander Ehmann.

The Federation of Small Businesses recently called on the Ministry of Defence to overhaul how it manages its procurement process after releasing a report which suggested small businesses were at a "significant disadvantage" when bidding for defence contracts.

It said that 90% of defence exports are won by the 20 largest UK companies.

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