Government Contracts (SMEs)

Lord Dodds of Duncairn Excerpts

Wednesday 28th January 2015 Westminster Hall

[Mr McKenzie]

I accept the hon. Gentleman’s point, but if procurement does one thing, it should be to get the most for what is spent. Monitoring whether we get jobs, especially apprenticeships, out of procurement would not be too difficult. The local council in my area has done that for many contracts. Those contracts have been gratefully received, and we have been really successful in keeping our youth unemployment down to a low level using those contracts.

[Mr Nigel Dodds (Belfast North) (DUP)]

Further to the point raised by my hon. Friend the Member for East Antrim (Sammy Wilson), there is a question of balance in those contracts. However, if contracts awarded by Belfast city council and others over the years have a clause about local employment, local people see that the council and other agencies are delivering something in their locality that is about not just a building or a project, but jobs. My hon. Friend is right to talk about balance, but it is important for local people to see a definite benefit from the public money being spent in their area.

[Mr McKenzie]

The right hon. Gentleman makes a good point: this is about local people seeing real value for money and getting opportunities.

Many small businesses do not bid, because they feel unable to compete with the larger suppliers and to offer lower costs. There is also the issue of understanding contracts and not making them too complex. We should go out to small businesses to help them understand contracts and what is being looked for in the terms and conditions. The issue may not be solely the cost; it may be things such as the quality of the product, the lead team or the hubbing aspects of getting the product to someone at specific times. This is not entirely about the cost factor, and a range of terms and conditions might put smaller businesses off attempting to compete with larger organisations.

I want to mention three areas where I have seen improvement in the procurement process. In 2010, the Cabinet Office set up the efficiency and reform group to make sure that Departments work together. That consortium approach to procurement is wholly sensible. It is hard to believe that each service would have been going out to procure the same commodities on differing contracts, but that could have been taking place. The Government also set a goal of ensuring that 25% of spend went to SMEs, either directly or through the supply chain, although that was downgraded to an aspiration.

Secondly, in 2011, the Government appointed a Crown representative for SMEs, with the intention of helping to redesign and improve public procurement policy and processes to bridge the gap between the Government and small suppliers. The main aims were to understand the concerns of SME suppliers, which is essential, and to open up the Government procurement process more to them. Another aim was to put together a list of tips for SMEs bidding for Government contracts, although I am never too sure that the word “tips” sits well with a procurement process.

Finally, in 2012, the Government ran a pilot of the Solutions Exchange—an online tool to enable a two-way conversation between Government and SMEs, in the hope of creating better dialogue between them.

The hon. Member for South Antrim touched on the directives coming from the EU. A set of new procurement directives, including reforms that should help SMEs, was agreed in Europe last year. There is now a need to transpose them into UK law.

Let me refer to what the FSB says about the problems facing SMEs on procurement. It says that there are four main difficulties. Access to finance—getting those loans—is still a problem. Another problem is tax simplification; tax can be difficult and confusing for SMEs. A further difficulty, which we have heard about many times, is fuel duty; the cost of fuel is crippling many small businesses. The final problem is late payments. If a payment is not made on time, that can end a small business, especially a micro-business. We have recently heard in the news about the horrendous time scales for meeting payment terms, and those are having a detrimental effect on small businesses up and down the country.

I have a couple of questions for the Minister. What is the Government’s position on the recent EU procurement directives? Will the terms and conditions in contracts be looked at with a view to including employment opportunities for young people—for example, by writing in apprenticeships? Will any person or business that has been engaged in blacklisting or in compiling blacklists of workers be excluded from bidding for Government contracts? Finally, when will the Government truly embrace e-procurement, get out there and assist SMEs as much as possible to understand and navigate the process?