Angela Rayner accuses government of ‘cheating’ small businesses out of opportunity

Exclusive: Survey finds 90 per cent of contracts suitable for SMEs go to larger companies

SMEs are ‘choked out of bidding processes’, says Labour’s deputy leader (AP)

Labour has accused the government of “cheating small businesses out of opportunities” after new research revealed that they win only a 10 per cent share of the public sector contracts earmarked for them.

Despite ministers’ promises to support the small and medium-sized enterprise (SME) sector, analysis by the Spend Network found that big corporations still win the lion’s share – 90 per cent – of contracts worth £30bn a year which are deemed to be suitable for bids from smaller businesses.

Speaking ahead of Small Business Saturday, Labour’s deputy leader Angela Rayner said that Britain’s SMEs were being “choked out of bidding processes”.

She pointed to figures showing that the government has repeatedly missed its target for SMEs to benefit from 33 per cent of total procurement spend, with the figure reaching just 26.7 per ent in 2019-20 and 26.9 per cent in 2020-21.

Earlier this year, the British Chamber of Commerce found that SMEs are now receiving a relatively smaller amount of direct government procurement spending than they were five years ago in 2016.

And the Federation of Small Businesses last year found that only one in five SMEs had bid for a public sector contract in the previous three years.

Too often, businesses felt that public sector opportunities were either too difficult to apply for or that public bodies had already chosen their preferred bidders, said the FSB report.

“Even in sectors which have a heavy SME reliance, such as construction, there remains a vast untapped pool of SMEs,” said the report.

“It is often too easy for government departments to use large businesses that act as aggregators, when the department could, with the right training and process, attract SMEs into the supply chain directly and disaggregate opportunities.“

Ms Rayner said: The Conservatives talk the talk on small businesses but consistently fail to deliver.

“Ministers have let SMEs down at every turn, cheating them out of opportunities as they dish out to the usual giant corporations with the glossiest leaflets or best connections.

“A Labour government will give small and medium-sized enterprises a fair chance to win contracts. Where the Tories handed billions of pounds to their cronies with links to tax havens, Labour will ensure local businesses are no longer shunted to the back of the queue behind big corporates with more form fillers than workers.

“Our procurement policy will cut red tape and streamline the bidding process, giving small businesses a genuine shot. Where the Tories had their VIP lane for their donors and cronies, Labour will champion the businesses and enterprises that create wealth for all and contribute to a fairer society.”

There was no immediate response to The Independent’s request for comment from the Department for Business, Energy and Industrial Strategy (Beis).