SMEs (Public Sector Procurement)

Huw Irranca-Davies Excerpts

Tuesday 11th June 2013 Westminster Hall

[Mr Philip Hollobone (in the Chair)]

In one moment I shall call the first speaker in the debate. I can confidently predict that after Mr Irranca-Davies has made his opening speech, I will not be setting a time limit. The next speakers will be Andrew Bingham and Iain McKenzie, and we will then see who else turns up. I shall, however, call the Front-Bench spokespeople at no later than 3.30 pm, and perhaps sooner.

[Huw Irranca-Davies (Ogmore) (Lab)]

I admire your confidence, Mr Hollobone; I have been known to wax eloquent for days, but on this occasion I will be happy to allow others to contribute as well.

This is a welcome opportunity to debate an important subject. There is cross-party interest in ensuring that procurement works far better for small and medium-sized enterprises than it has done in the past. The Government here are doing work on that, and I will refer to some of the innovative and pioneering work of the Welsh Government. I also want to deal with some of the myths about why we cannot do more—not least, those about the European Union.

I know that props are not allowed in this or any other parliamentary Chamber, but I have in front of me an exposé from Farmers Weekly, which ran a good campaign called “Get Better, Get British”. We know that over many years, if not decades, British farmers have been asked, often quite rightly, to invest heavily in the highest standards of animal welfare, environmental measures and so on, but doing that brings costs. In the UK, we now have British buying standards, and the question is this: how do we translate those standards in food produce into being represented by SMEs that can supply to local government, the NHS, the Ministry of Defence and others? That does not seem to be happening.

If I may, I will briefly plug the Farmers Weekly “Get Better, Get British” campaign, which identified that one in 10 NHS hospital trusts sources 50% or less of its food from Britain. The campaign also points out that the cost of feeding a patient varies between £14.40 and £2.11 per day across trusts. Most people would think, “We can see how you could use good ingredients and get good nutritional standards by spending £14.40, sourcing, where the standards are appropriate, locally and regionally from British farmers.”

However, hospital spending on food goes down to as low as £2.11 per day. Most people would struggle to explain not simply the divergence in the figures but how the nutrient value can be achieved with that little money, and how there can be procurement for SMEs within the locality and the region. The NHS trusts at the lower end of the spend range would be performing a magic trick if they were pulling that off.

In addition, according to the campaign, 93% of NHS trusts do not carry out any traceability checks on their food. We know that, despite what I said earlier about British standards within food—the British buying standards and so on, of which the Government are a keen proponent—the standards do not apply to hospitals and NHS trusts. Hospital food does not have to meet British farm-assured standards, for example, that are signalled by the Red Tractor logo that everyone knows and in which many trust. That is a practical illustration of the job of work that has to be done. I am focusing on food in this debate, but we could go right across the spectrum—many producer organisations are SMEs. SMEs are where the bulk of our employment, innovation and entrepreneurship is, and they need a fair opportunity to get into procurement.

Often, the argument has been that we cannot specify British products—or products from Cornwall, Devon, Wales or wherever—because we have to play by the EU and World Trade Organisation rules, but a lot of Welsh Government work over a number of years has shown clearly that that argument is unjustified.

Excellent work is being done by not only the Welsh Government but leading-edge people in Bangor university. Dermot Cahill leads on a procurement project at Bangor, which considers the legality of the issues and the technical implementation of more innovative approaches. He will point clearly to the fact that EU law is far more flexible than it is often given credit for. Something like 80% of procurement contracts fall outside EU legislation anyway, as far as their size and shape is concerned, so the excuse that we are bound by EU regulations when tendering contracts does not seem to apply to eight out of 10 of those contracts.

The Public Services (Social Value) Act 2012 is often held up as a reason why we have difficulty in applying local and regional procurement, particularly with SMEs, but although neither the Act nor EU law is pertinent here—perhaps the Minister can confirm that—the latter is often directly blamed.

The McClelland review in Wales produced a groundbreaking report. It found, on the basis of the best available legal advice and technical interpretations, that there was no evidence that EU law obligations were inhibiting procurement reform. We must remember, of course, that EU law itself promotes transparency, and that is something that is lacking at the moment. I do not say that to criticise the Government but to highlight the point that we have come to: despite everything I have just said, all of which is legally grounded within the McClelland report and the work of legal experts in academia in Wales and elsewhere, the UK is the highest user, at 55%, of the restricted procedure.

We know from experience that many other EU countries use an open procedure, which makes procurement opportunities far more visible to SMEs and allows them much more participation within tendering competitions and bids.

[Mr Iain McKenzie (Inverclyde) (Lab)]

Does my hon. Friend feel, as I do, that the McClelland report, which has also been used in Scotland, shone a light on procurement practices that were very much set in the past and brought procurement up to date sooner rather than later?

[Huw Irranca-Davies]

I agree with my hon. Friend. We seem to have a legacy of mythology about why we cannot do things with procurement for SMEs, and those myths are used as the excuse not to do anything.

We first need to shatter some of the myths, and then say to those who work in procurement departments, “There is no excuse. We will encourage, support, offer guidance and put in place, when necessary, light-touch regulatory approaches, but you need to get on and design procurement contracts in a way that will encourage the highest level of competition—not simply between four or five big companies—and put the information out there that there is a competition going on.”

Far too often, procurement contracts are simply not well publicised and promoted, so it is no surprise that local food producers, haulage companies, building contractors and so on have no idea that procurement is going on. How will they get the business if there is no proper promotion?

My hon. Friend the Member for Inverclyde (Mr McKenzie) is absolutely right. Through the McClelland report and its application in different devolved jurisdictions, we are seeing a different way forward. First, we need absolutely to shatter the mythology, and then to say, “Let’s all work together to devise a way in which we can open the market up”. By so doing, we are not creating unfair competition; we are increasing competition. We are not levelling the field to promote just local farmers or food producers; we are saying, “You should be aware of the tendering processes coming up in your local school, the fire service and so on, and we will design the contracts in a way that allows you to go for them, just as anyone else can.” We first need to open the door, to allow them to do just that.

I do not claim to be an expert in the field, but strong consensus is now building in the devolved Administrations and elsewhere about the way forward. Some of that relates to inadequate feedback, or its complete absence, from public procurers to those who want to bid. SMEs might bid for something and not be successful, and that is the end of it—they are not told where they have gone wrong, what their weaknesses are and how they might improve.

It is no surprise, given the cost and resource intensity of putting some bids together, that many SMEs say, “Well, that was a waste of our time. We don’t know where we went wrong. We aren’t going to do that again.” Big corporations, whether in the food sector or elsewhere, have units and departments specifically to do procurement and they can take off the shelf the computer model of their recent bids and put in a lot of effort. An SME might be a local haulage company with 20 people working for it, of which one, in addition to their other jobs, is told, “Have a try for this one. We’ve finally heard about a contract coming up, so have a go for it.” However, they hear nothing back, so they receive no guidance. That is simply wrong.

Many tender documents for procurement are inadequate: some are too large or too extensive, to the point that it is no wonder that SMEs do not apply—they identify that the profit margin could be the same as the cost of devising the bid. Why would they bother to go for it?

The issue is often to do with the fact that some of the bonds or liabilities required are absolutely beyond the reach of SMEs. It is fair enough if there is a reason for having large financial guarantees, but some contracts are relatively small and the procurement could easily be intelligently devised so that hurdles—liabilities and bonds—were far lower. That would encourage more SMEs to apply. It is not rocket science, but it does require procurement officers and departments at all levels—central Government, local government and all agencies—to have the necessary will and capabilities, which I shall touch on in a moment.

Inappropriate use of frameworks can amount to market exclusion. Frameworks—long-enduring ones with four-year-long contract applications, for instance—are sometimes there for a good purpose, but once they are won the process is over. Long frameworks are normally linked to large, onerous contract documents of immense detail and complexity, and they are sometimes not the right way forward, particularly if we want to encourage more SMEs to take part in the bidding process.

There is a flip side: the more we go for frameworks, the more we are likely to minimise the number of those wanting to tender and possibly to encourage cartel operation. If there are only four, five or six large players in any particular sector that can bid through a framework document over several years, with all the complexity involved, that is likely to lead to their taking the opportunity for cartel behaviour. I have to stress that I will not, under parliamentary privilege, lay any direct accusations before the House. [Interruption.] Not today.

How do we get through some of these things? I will use the example of the Welsh Government. There are good local examples of local authorities, such as Camden and others, doing really innovative work on procurement by applying ideas about increasing transparency and extending the offer to more SMEs, but the example of the Welsh Government is instructive and, as a Welsh MP, I know it well. I am not saying that the Minister must do what the Welsh Government say and follow their example—although sometimes that is not a bad thing—but simply that they are carving out a method that is in its early days, but is legally and technically sound and already seems to be having significant effects in opening the market to SMEs in procurement at all levels in Wales.

In the Welsh Government’s policy statement on procurement in December, based on the McClelland review, they set out the principles against which the Welsh public sector—including the NHS, education, fire and rescue, local authorities and any bodies sponsored by the Welsh Government—should carry out procurement. It was made in recognition of the fact that the value of Welsh public sector procurement is approximately £4.3 billion a year, which is almost a third of the overall Welsh public sector budget. We can see what an impact it would have locally and regionally if we could encourage SMEs to take part, with a multiplier effect not only through the supply chain, but in the wider communities where the money goes.

Jane Hutt, the Minister responsible, said in the policy statement:

“We must use innovative, evidence based, approaches to procurement to support the design and delivery of efficient and effective public services”—

yes, let us make them efficient and effective, with value for money, and so on—

“and to optimise the added value that is delivered to the economy and communities of Wales.”

Why have we argued that we cannot say those things about procurement, when the Welsh Minister, with the support of the Counsel General for Wales in the Welsh Government, can make such a statement? That statement can be followed through in procurement practices at all levels, and we need not hide from it. We must be open, transparent and competitive with anybody who wants to bid in such processes, but we can gear our policies towards supporting our own communities.

On added value, the Minister said that the Welsh Government

“will utilise public procurement creatively as a strategic tool to deliver economic benefit to the people and communities of Wales through employment, training and supply-chain opportunities.”

That will be part and parcel of the procurement approach and design. As Jane Hutt said, it supports other strategies, such as tackling poverty in communities and economic regeneration.

On the back of the exhaustive work done by the Welsh Government, the statement makes it clear that not only are the approaches legally sound, but they are tried and tested, and proven to work. In the December policy statement, Jane Hutt said:

“There are no reasons or excuses why all organisations cannot fully adopt them and there must be no delay in so doing.”

Let me explain the principles of the Welsh public procurement policy that she is asking organisations to adopt. The first principle is strategic:

“Procurement should be recognised and managed as a strategic corporate function that organises and understands expenditure; influencing early planning and service design and involved in decision making to support delivery of overarching objectives.”

That will be set out as the strategy.

The next is professionally resourced procurement, which is that

“procurement expenditure should be subject to an appropriate level of professional involvement and influence”.

That relates to one of the big criticisms of procurement, which is absolutely true. Accountancy and many other disciplines are careers that people aim to go into and design themselves for: they want to do the levels of continuing professional development and to pick up chartered institute qualifications. There are good procurement officers, but all too often people fall into procurement inadvertently and get minimal resources to do it.

The issue of minimal resources is fascinating because, as the Minister will know, good analysis has been done of procurement departments by looking at the correlation between the number of people dedicated to procurement in a local authority, fire services and so on and the number of SMEs that are successful in bidding. There is a direct correlation between the number of people—not only the number, but their expertise—working on procurement in a local authority, a fire service or the NHS and the degree of success in getting bids to SMEs. Why? Because those people take more time and more care for detail intelligently to design procurement contracts so that they are suitable for SMEs to bid for, so that they are not onerous and do not include huge barriers of complexity, finance and bureaucracy, and so that the pre-qualifying operation does not look like a tender bid.

On professionally resourced procurement, the policy statement continues that it should adopt

“the initial benchmark of a minimum of one procurement professional per £10m of expenditure.”

The Welsh Government have actually set it down and said that because there is a direct correlation, they demand of all their organisations that they move towards adequate resourcing, because they know that it benefits SMEs.

On the economic, social and environmental impact, the Welsh Government will use sustainable risk assessment and take account of the long-term impact on the combination of benefits of sustainability and community. If I turn to community benefits, they specifically say that

“delivery of added value through Community Benefits policy must be an integral consideration in procurement.”

On open accessible competition, the Welsh Government say:

“Public bodies should adopt risk based proportionate approaches to procurement”.

That is the thrust of what I am saying today. We have got into a dilemma with large, off the shelf risk averse procurement contracts: either very few people are doing them or people are specifically rewarded for driving down costs on what they were awarded last year, instead of being rewarded for the wider social and community benefits that also flow from procurement bids. We are allowed to reward on that basis, so why are we not doing it more? We need open accessible competition and

“risk-based proportionate approaches to procurement to ensure that contract opportunities are open to all and smaller local suppliers.”

On a simplified standard process, the Welsh Government say:

“Procurement processes should be open and transparent and based on standard approaches and use of common systems that appropriately minimise complexity, costs, timescales and requirements for suppliers.”

One thing that is specifically pushed is e-procurement. Rather than submitting 20 versions of highly complex, onerous, expensive documentation that has to go to different people for consideration, it is a lot easier for SMEs to do it in a simplified way, by e-procurement. The Welsh Government are pushing hard on that and will expect their agencies, providers and local authorities to move towards it at a rate of knots.

The Welsh Government talk about collaboration among SMEs, so that SMEs can come together locally and bid, and advise them how to do it. There are so many ways in which we can take these things forward, including the supplier qualification information database—SQuID—innovation. I will not go on and on.

The essence of my argument is that we can no longer hide behind the idea that because of EU rules or World Trade Organisation rules, we should not be devising intelligently appropriate procurement bid documentation that works for SMEs. I say that unashamedly because I am all in favour of open and transparent competition for anybody who wants to bid into the system, but the way we have traditionally done it has favoured very few small players. There is a real issue of investment, both financially and in guidance on the expertise of procurement departments. We should force the pace of change with local authorities, the NHS, fire services and Government agencies to go down that line to ensure that we deliver the maximum benefit for our local and regional SMEs.

What we are trying to do is level the playing field. It frustrates me, because I am tired of employers coming to me and saying, “Why is it that I always end up just picking up the crumbs from larger contracts? Even though I am a pretty reasonably sized medium-sized firm, I have not got the expertise or the time to bid for some of these massive contracts. The only ones bidding are the likes of Laing O’Rourke and Carillion. Why do I have to be a subcontractor for them?” Things are starting to change in Wales, and it is happening on a good sound legal basis. I am interested to hear what the UK Government are doing and what they are learning from Scotland and Wales and from places such as Camden local authority in London so that they can do more and do it more quickly. There is a way forward. Let us stop making excuses and drive ahead for the social, economic and community benefits of our own areas and of UK plc.

--- Later in debate ---

[Huw Irranca-Davies]

My hon. Friend makes a valid point about the strategic importance to SMEs of procurement. Does he agree that there are practical things we can work through? Will he pay tribute to Bangor university, which is working with SMEs and the Welsh Government to, for example, reduce 50-page contract tendering documents to as few as 10 pages? We can see that those things can be done, and will create jobs through SMEs.

[Chris Evans]

I agree, and there was a discussion about that this morning in another place.

From my constituency experience of micro-businesses, such as painters and decorators, they make their money from painting council houses, school buildings and hospitals; but they must jump through rings of fire to get through the procurement process. I pay tribute to the work that Bangor university and the Welsh Government are doing to reduce the paperwork that SMEs must go through. That paperwork turns them away from a vital source of income, because of the complexity of the system.

I was interested when my hon. Friend the Member for Ogmore mentioned procurement examples in the food sector, and I want to touch on another example of best practice, which I am pleased to say comes from my constituency. It concerns the defence and security industry, which is a massive industry for us. We are lucky in Islwyn that we have General Dynamics UK, which moved there specifically because of a Ministry of Defence contract. It has access to markets and cutting-edge technology that can be used by small businesses. I am delighted that the EDGE UK facility is in Oakdale at the moment. It does an incredible amount of work with SMEs, helping them to get access to defence and security markets nationally and internationally. Not only that, but its modus operandi protects the intellectual property of the SME and ensures buy-in from all sides, offering clear benefits to both parties. If the Minister wants to see an example of innovation in the procurement process, she has an open invitation to come to Islwyn and to Oakdale. I shall be happy to show her round; I think she will find it is a beautiful constituency.

Anyone who has dealt with SMEs will say how important it is for them to work with larger companies, retain their intellectual property and win new business in the market. EDGE UK is appreciated by the customers of General Dynamics UK, including the Ministry of Defence, as it helps those with a niche capability from SMEs who usually cannot get access to the customer. Through EDGE UK General Dynamics works with an average of 50 SMEs a year, constantly seeking out and reviewing innovative developments. I know from speaking with people from General Dynamics that it is always keen to attend business events, to expand awareness of EDGE UK through the SME community, and to invite new SMEs to talk about ways they can engage with a company through EDGE UK. I remind all those with small businesses, if any of them are watching the debate—hopefully on television on a Sunday morning—that they have an open invitation to get involved with EDGE UK, and to get access to its innovation and capability. It is fantastic.

Not every SME can work with General Dynamics, of course. Products may need maturing. EDGE UK provides support to such SMEs, to help them identify avenues for funding that will help them develop their technologies. Those include, for example, the Centre for Defence Enterprise, the Technology Strategy Board, and the various business funding streams available from the Welsh Government. We cannot talk about SMEs and procurement in the public sector without looking at examples such as EDGE UK and seeing what we can learn and apply. For every General Dynamics success story and every EDGE UK there is someone in Wales, or somewhere in Britain—perhaps a micro-business employing five people, such as a painter and decorator—who is desperate to get hold of a contract: to paint a council house or school building. That is because those are what I like to term Bank of England contracts—they will not fall apart under someone’s feet, and they will not walk away: the business owner knows they will get the money at the end of the day. When there are businesses that pay their bills late, access to contracts of that kind is vital.

I find it frustrating that, as my hon. Friend the Member for Ogmore mentioned in an intervention, people have to wade through 50 pages of tendering documents. The time and money that goes into public contracts makes it harder and harder for small and micro-businesses to tender for them. The process costs money that is precious to them, and they become caught in a vicious cycle. They have no money for the tender, but they need to tender to make money. The fact that the Government are willing to promote the tendering process, but allow companies to get stuck in a system where they cannot get hold of contracts, is a bit of a hare-brained scheme. On a recent visit to Axiom Manufacturing Services, a successful manufacturer in my constituency, the frustration of the situation was pointed out to me. First, no help is provided with filling in the contracts: the business does not know what is being looked for in the tender. Secondly, feedback is rarely given to those who are unsuccessful, so it is not possible to move on and improve processes the next time.

To return to the 25% aspiration, let me say that now is the time for a coherent Government plan. Since I entered the House I have often heard the accusation that all the Opposition do is oppose everything, but I want to set out concrete plans, and I hope the Minister will listen to five points. First, there should be agreement by Government that procurement will be used as an engine of economic growth. I do not mean central Government but all levels of government, including councils and the NHS. Secondly, a border line should be established and we need to set a target in stone. If 25% is too high, and is just an aspiration, we need to bring the target down; but we need to begin achieving targets, and they need to be measurable.

Thirdly—and I must return to the example of General Dynamics UK and EDGE UK for this—every company with more than a certain number of employees, in receipt of a Government contract, needs to produce a training plan and an apprenticeship scheme, to enable young people to get on the ladder, so that skills and training will improve. That cannot be put in place at zero cost.

Fourthly, we should take a leaf from the book of General Dynamics UK and use procurement to encourage innovation, allowing bidders to come up with new, fresh ideas. That should be in the tendering process. My fifth point relates to what I said before about Axiom. There is a need for help from public bodies, for contracts to be designed in a way that allows SMEs to compete. We need standard contracts across the board. We also need a helpline or someone in Government, in the Department for Business, Innovation and Skills; at Axiom I discussed bringing troubleshooters in. There is a need for a crack team that can be called free and told, “I need help to fill this contract in.” The Government could send it on.

Those would be innovative processes. However, we must remember that, without Government will, a limited number of suppliers will still reinforce their market share, stifle competition and keep prices high. Government will and action are needed, and I hope that we see that today.

[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate my hon. Friend the Member for Ogmore (Huw Irranca-Davies) on securing this debate on an important issue that does not attract the attention it deserves. As my hon. Friend the Member for Islwyn (Chris Evans) said, hon. Members from all parties are aware of the importance of this issue and it would have been fitting if more had attended this debate. However, important points have been made by hon. Members from both sides of the House. My hon. Friend the Member for Islwyn said that there was a Celtic emphasis to the contributions. This is a cross-party, national issue.

Contributions, particularly from my hon. Friends the Members for Islwyn and for Inverclyde (Mr McKenzie), and the passionate opening remarks made by my hon. Friend the Member for Ogmore, emphasised the importance of procurement for small and medium-sized enterprises and their importance to our economy.

This has been a remarkably non-partisan debate and I hope that that will not change too much as I make some remarks on behalf of the official Opposition. If there is one thing that all hon. Members agree on, it is that small and medium-sized enterprises are the lifeblood of our economy and should be supported. They account for 99.9% of all private sector businesses in the UK, 59.1% of private sector employment and almost half of private sector turnover.

As has been said, given the economic challenges that we face, encouraging small and medium-sized enterprises must be a focal point for Government policy as we seek to find growth again. In short, they are critical to our economic recovery. Yet still the proportion of public spend on dynamic small and medium-sized enterprises is far too low. As the UK’s biggest single consumer, government must do more to support SMEs across the country.

In February 2011, the Prime Minister and the Minister for the Cabinet Office and Paymaster General, the right hon. Member for Horsham (Mr Maude), outlined Government procurement reforms at a conference for SME suppliers, where the famous pledge was made that

“25% of all government contracts”

should be

“awarded to small and medium-sized enterprises”.

Regrettably, that 25% target did not last long. It has been downgraded, rather like our credit rating, and is now merely an aspiration. Last month, the Prime Minister’s enterprise adviser, Lord Young, said that he was

“not convinced that the value of SMEs is being fully exploited across the whole public sector.”

I think that we can all agree with him.

I am sure that the Minister will tell us that procurement figures for SMEs are up. The Government do not have a particularly good record on statistics, but it is still depressing to hear the Minister for the Cabinet Office say that most Departments do not know their spend on SMEs and that therefore people “cannot trust the numbers”.

Mark Taylor, the former co-chair of a panel set up to advise the Minister for the Cabinet Office on SME procurement, has accused the Government of “recounting” their procurement SME figures. He said that Government contracts to SMEs were “drying up”, that things were “going backwards” and that SMEs were

“finding it more difficult to do business with Government.”

[Huw Irranca-Davies]

Perhaps a way forward is to replicate the Welsh Government’s approach. They are now asking all their local authorities, the NHS and any procurers to carry out regular procurement fitness checks, including monitoring how many contracts are going out to SMEs.

[Chi Onwurah]

My hon. Friend raises an excellent point that I hoped to make later. It is useful to see concrete examples of where that is being done successfully, but the measurement and understanding of procurement practices and, most importantly, what the outcomes are, particularly for SMEs, is a key way of improving the situation.

What is being done to measure SME procurement in Government? What is the Minister doing, specifically, to stop things going backwards? Will she confirm that only two Departments have increased SME procurement spend to any significant degree and that one of those—the Ministry of Justice—only achieved that by including providers of legal aid?

Will the Minister say what concrete action has been taken to increase the proportion of spending with SMEs? Fine words are all very well, but we want to know what is actually being done to address this issue, which everyone agrees is critical. Speeches and leaning on Departments can only go so far. We have all read reports of bloody battles going on between Departments and the Treasury over spending envelopes in the next Budget. There is a huge pressure on Departments to use their buying power to cut costs and, unfortunately, that tends to be through ever-larger contracts.

The Government have spoken many fine words of encouragement to social enterprises, without delivering. Most social enterprises are SMEs. The message that I get from social enterprises—I recently held workshops in Newcastle and London—is that often, how Government contracts are bundled makes it impossible for them to bid. That is, as we have heard, a general concern among SMEs. Will the Minister explain what specific actions have been taken, and what actions are planned, to unbundle as many contracts as possible, to level the playing field for smaller enterprises?

Support through direct procurement is not the only way to support SMEs. The previous Labour Government introduced the innovative small business research initiative programme to drive innovation through procurement. The SBRI allows small businesses to bid for contracts to provide innovative solutions to procurement problems, supporting innovation and small businesses at the same time.

We in the official Opposition had been calling for some time for the programme to be expanded, so we were glad when the expansion was agreed to by the Treasury. This is good news for innovative SMEs. However, a recent survey by the Federation of Small Businesses found that nearly 40% of small firms felt that they were being “sidelined” by the Government because of their persistent belief that bigger firms are better. What are the Government doing to address that?

I turn briefly to the Government’s Contracts Finder, which I am sure the Minister will address. The value of contracts published on the website each month is still very small compared with the £15 billion total value of Government procurement contracts that are outsourced each month. Does the Minister agree that more needs to be done to ensure that contracts are put on the Contracts Finder system? What is happening on that?

What are Ministers doing to ensure that local authorities are properly engaged with Contracts Finder? What work are they doing with councils to improve their procurement from SMEs? We have heard of a number of examples from local authorities across England and Wales that are being very innovative in that respect, and I would like the Minister to say whether she is studying what is happening in our local authorities.

There are a number of rivalries between cities in the north-east, particularly between Newcastle and Sunderland, but as we subsume them within a combined local authority, I am pleased to say that I can hold up Sunderland city council as an example of innovative and successful work in procurement.

Indeed, only last night, at the Federation of Small Businesses reception, Sunderland city council was praised for its intensive engagement with the FSB and local suppliers before implementing the Buy Sunderland First system for quotations below the tender threshold and the North East Procurement Organisation portal for all opportunities above the threshold. Consequently, spend with north-east businesses now accounts for more than 68% of all third-party spend by Sunderland city council. What other examples would the Minister like to hold up for us of ways in which local authorities are successfully engaging with small businesses?

I have asked a number of questions of the Minister. My hon. Friend the Member for Ogmore has raised a number of important points, and my hon. Friends the Members for Islwyn and for Inverclyde have made a number of suggestions. I draw my remarks to a close by saying to the Minister that, although we have seen some small steps forward, the Government’s approach lacks the required urgency. Whether on procurement or bank lending, Ministers across Government are failing SMEs.

Responding to a recent National Audit Office report on improving Government procurement, the head of the CBI said:

“Two and a half years after the Government committed to centralising public procurement, individual departments are still too often doing their own thing. We need to see strong leadership from the Cabinet Office to drive a culture shift across…Whitehall”.

Such complacency is all too common among Ministers. The CBI survey report recently stated:

“Across the board the rate of reform requires more urgency. The lack of progress on turning sound policy into actual change is not only damaging to government and costly to the taxpayer, but it also stunts growth.”

Will the Minister now take action to ensure that permanent secretaries prioritise and buy into that? Will they visibly start to split major contracts into smaller chunks? Will they take steps to record the success or failure of those policies?

Successfully changing the mindset on procurement so that we use and support our SMEs more effectively is an issue that unites the whole House, so will we see decisive Government action so that our ambitions can be realised?

--- Later in debate ---

[Miss Smith]

I suspect that I do not have time to do that topic justice and that you would not wish me to go there, Mr Hollobone. However, if the hon. Gentleman thinks that it is bad practice, he or anybody else ought to enter it into the mystery shopper and see what comes out the other end. We regularly publish the outcomes of mystery shopper investigations on the gov.uk website, and I am sure that the hon. Gentleman will find it easy to use.

By 31 May this year, we had received 425 mystery shopper cases. Of those that we have closed, a great majority have had a positive outcome. Once again, I encourage all Members to ensure that their constituents are aware of it.

[Huw Irranca-Davies]

Briefly, and in case the Minister does not touch on these two issues, what are the UK Government doing in terms of the threshold for advertising on the web? The Welsh Government have moved to advertising any contract of more than £25,000 on the web. Also, what are the UK Government doing to reduce the insurance and turnover thresholds to break down more barriers for SMEs?

[Miss Smith]

On the first question, all central Government contracts of more than £10,000 must be advertised on Contracts Finder; I am sure that those who have their smartphones out will find it a helpful source of information. The second question brings me to a point that I shall make later. We need to leave some areas of professional competence for the contractors themselves. It may be under the headings that the hon. Gentleman mentioned. There are instances in which a particular contractor will need to find particular characteristics that suit their procurement.

I turn to a couple of other points that have been made. Hon. Members have asked for there to be ways of giving feedback to unsuccessful bidders. We have used the mystery shopper to provide that in some cases; I am interested in how we can encourage it as a far wider practice. I will also give an example of the move away from frameworks, another point made earlier. In some cases, it can be an instance of poor procurement practice when frameworks are used inappropriately. They can certainly be a blunt instrument. I point hon. Members to the example of the G-Cloud, a way that we are procuring for IT across Government that has done away with frameworks entirely. There are many more such examples.

PQQs, or pre-qualification questionnaires, are undoubtedly a burden to small and medium-sized businesses. To address that, we have eliminated their use in 15 of 17 Departments for all central Government procurements under the EU threshold of £100,000. The two Departments still using PQQs are doing so only for security reasons.