Emma Jones CBE calls on the next Prime Minister to spend more with small businesses to stimulate growth
Emma Jones CBE is the founder and chief executive of small business network and business support provider Enterprise Nation.
She says the next Prime Minister must rethink procurement which can be life-changing for small businesses.
Right now, the UK’s 5.5m-strong SME community is placing a forensic focus on the economic pledges offered by the candidates in the Tory leadership race.
Corporation Tax increases, Corporation Tax cuts, National Insurance rise reversal, a pause on VAT, regional business rate holidays and income tax reductions are all in the mix.
You’d have to be an economist with insomnia to be able to predict which of these totally opposing proposals are going to help grow our economy, in the context of today’s volatile global political system.
But one thing that the next incumbent could do to genuinely unlock economic growth is to dramatically increase spending with UK small businesses.
Procurement, or the Government’s budget for buying the services or products it needs from private sector businesses, accounts for a third of all government spending, and over a tenth of all spending in the economy.
It ranges from significant advisory support at the highest levels of seniority, buying in security services to stocking crisps in vending machines – and everything in between.
It also includes the services and products purchased at a local level by Councils and Combined Authorities, think school dinners, cleaning services and wheelie bins.
But it’s got a bit of an image problem. Procurement is not the sexy end of the economy. And it very understandably comes under a lot of scrutiny because it’s tax payers’ money.
But it also means the Government has more power comfortably within its own grasp to unlock economic growth and support the business community than many actually understand.
Rethinking the way it spends and makes those key decisions, is the focus of a new report my company Enterprise Nation has unveiled today. It demonstrates how transforming procurement could help to create a much more dynamic economy that benefits us all.
There are 5.5million SMEs in the UK employing 16million people.
The Government has done a great job of encouraging the growth of the UK’s start-up and small business ecosystem.
The next logical step is to play a role in their growth, by ensuring they are buying from them, either directly, via consortiums or through larger businesses that make a point of working in partnership with small firms.
The reality is that working with government can be a life-changing experience for smaller businesses. It can provide them with opportunities that can lead to sustainable and significant scale.
With a government contract in place, businesses can confidently employ more people, innovate and grow. It can lead to investment and productivity gains. These are words we’re very used to hearing echoing down the corridors of power.
So why isn’t this happening already?
Access all Areas: Government, found that despite policy ambition to increase spending with SMEs to 25 per cent, over the past five years the Government had managed to spend just 10 per cent of its total procurement budget directly with small businesses.
The report we commissioned from think tank The Entrepreneurs Network analysed fresh data from government tenders and data provider Tussell.
It found that the inability to dial up direct spend was partly down to the lack of information the Government holds about how the small business community operates – and how they can be helped.
As a consequence, the system requires a lot of unnecessary bureaucracy, which is vastly easier for larger firms to cope with.
Most SMEs do not have the slack to dedicate staff time and resources to searching for procurement opportunities or filling out arduously long tenders.
The report shows a significant reduction in bureaucracy could help to turn the dial on small business growth, something that is crucial to the long-term health of our economy.
If the next Prime Minister really wants to help small businesses, they should read our report and spend, spend, spend with SMEs.
