Who said what to whom?
Chuka Umunna, Shadow Business Secretary, told the Federation of Small Businesses in a speech last week that a Labour Government will create a Small Business Administration modelled on the US. In an accompanying policy paper, Lord Adonis said that among its tasks this body would make sure that 25 per cent of government contracts by value go to small businesses.
What does it mean The Coalition Government already has a commitment to drive up the amount of government buying that is done from small businesses to 25 per cent. But it includes the value provided by small businesses when they are in the supply chain of a bigger business. This means that even when Government is buying defence equipment from a major contractor, if they in turn buy some widgets from a small business, that counts in the procurement target. By contrast Labour is saying that government should buy 25 per cent of its stuff directly from small businesses as well as requiring its larger suppliers to do the same.
What could go wrong? It’s more a question of what needs to go right. The problem small businesses face in bidding for government contracts is that the procurement processes are long and costly. The Cabinet Office has already made significant improvements including reducing the average length of a procurement to around 100 days. But that’s still a long time. Rather than waiting three months, a small business might prefer to compete for business elsewhere or to be a supplier to a bigger business with more capacity and deeper pockets.
The other challenge is that government will have to break work down into smaller bits to make it accessible to small businesses. This is difficult when it’s buying aircraft carriers but it’s certainly possible elsewhere. Such dismemberment of contracts can have positive side effects too. For example, big IT has a bad track record, whereas smaller IT projects are more likely to be delivered on time and on budget. They’re also more likely to use the latest innovations. The Coalition has made progress on changing the nature of IT procurement via the new Government Digital Service, but Labour would need to redouble those efforts.
When will we know? The targets in Lord Adonis’s paper are pretty unambiguous. A Labour Government would presumably publish them, an action plan for reaching them and then report on progress against them. This could be the return of high New Labour target-setting which has some problems but, when used properly, at least provides clarity on what’s working and what isn’t.
Commitment rating: 2 I don’t doubt the commitment but the reform needed to the government’s procurement process in order to deliver it is massive. Creating a brand new Small Business Administration will itself eat up some time. Once it’s up and running it will have to work extremely hard to get anywhere near the twin 25 per cent targets.
What does it mean The Coalition Government already has a commitment to drive up the amount of government buying that is done from small businesses to 25 per cent. But it includes the value provided by small businesses when they are in the supply chain of a bigger business. This means that even when Government is buying defence equipment from a major contractor, if they in turn buy some widgets from a small business, that counts in the procurement target. By contrast Labour is saying that government should buy 25 per cent of its stuff directly from small businesses as well as requiring its larger suppliers to do the same.
What could go wrong? It’s more a question of what needs to go right. The problem small businesses face in bidding for government contracts is that the procurement processes are long and costly. The Cabinet Office has already made significant improvements including reducing the average length of a procurement to around 100 days. But that’s still a long time. Rather than waiting three months, a small business might prefer to compete for business elsewhere or to be a supplier to a bigger business with more capacity and deeper pockets.
The other challenge is that government will have to break work down into smaller bits to make it accessible to small businesses. This is difficult when it’s buying aircraft carriers but it’s certainly possible elsewhere. Such dismemberment of contracts can have positive side effects too. For example, big IT has a bad track record, whereas smaller IT projects are more likely to be delivered on time and on budget. They’re also more likely to use the latest innovations. The Coalition has made progress on changing the nature of IT procurement via the new Government Digital Service, but Labour would need to redouble those efforts.
When will we know? The targets in Lord Adonis’s paper are pretty unambiguous. A Labour Government would presumably publish them, an action plan for reaching them and then report on progress against them. This could be the return of high New Labour target-setting which has some problems but, when used properly, at least provides clarity on what’s working and what isn’t.
Commitment rating: 2 I don’t doubt the commitment but the reform needed to the government’s procurement process in order to deliver it is massive. Creating a brand new Small Business Administration will itself eat up some time. Once it’s up and running it will have to work extremely hard to get anywhere near the twin 25 per cent targets.
