Government promises more work to SMEs and prompter payment

Oliver Dowden: tough new measures to help specialist sub-contractors win more government contracts and get paid more promptly.

You might feel you have heard it before, but following the collapse of its pet construction contractor, Carillion, the government says it wants fairer payment terms for sub-contractors and it wants more of them to be involved in its projects.

If you want to check out the contracts available (£10,000 and upwards), go to the Contracts Finder website here.

In 2015/16 (the latest year for which figures are available) the government spent £5.6billion directly with small businesses and £12.2billion when money channeled through larger contractors is included.

The promise of fairer payment terms today (10 April) comes from the Cabinet Office Minister for Implementation, Oliver Dowden. He describes the proposals as a package of tough new measures to level the playing field for smaller businesses bidding to win government contracts.

The proposals are supposed to exclude main contractors from major government procurements if they cannot demonstrate fair and effective payment practices for their sub-contractors.

The aim is to give sub-contractors greater access to buying authorities to report poor payment performance by main and management contractors.

The Prime Minister, Theresa May, has asked members of her Cabinet to nominate a Small Business Champion Minister in each department to ensure that small and medium-sized enterprises (SMEs) are given a fair opportunity.

This is supposed to ensure more SMEs will be able to supply goods and services to the public sector. The government believes this will somehow make public procurement more transparent.

The government says it wants 33% of its £200billion-a-year procurement spend with private companies to be with SMEs by 2022. Why? Because it believes SMEs are the pillar of the UK economy and play a crucial role at all levels in the construction industry.

More SMEs being treated more equitably might also go some way to minimising the creation of too many corporate bureaucracies, such as Carillion, that tend to accompany privatisation and outsourcing.