SME spending drops

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Public Sector Spending with SME's drops

In 2013 Francis Maude told the public sector that they should be awarding 25% of their external spend to SME’s. Since at that time, the public sector was already awarding 26.7% of their expenditure to SME’s, it wasn’t exactly a stretch target.

More recently, the “SME target” has been increased to 33%, by 2020. This will indeed provide a little “stretch” because in the calendar years 2016 the public sector spend with SME’s was running at 24% - a reduction since 2013.

In fairness to the public sector, these numbers under-state the full picture because they exclude business awarded to SME’s via prime contractors. Our analysis is based on the payments made to prime contractors; sadly the transparency data does not include the tier of invoices that sit in the hidden supply chain.

The most interesting part of our analysis however, shows that in the period 2013 to 2016, the payments made to public sector suppliers increased from 30.8% to 37.1%. These are services that the public sector buys in from another part of the public sector. So it includes things like the payments that NHS Trusts make to the NHS Litigation Authority, and payments that CCGs make to NHS Acute Trusts. It’s an insight into the incredibly complex public sector market, in which public sector providers trade with each-other alongside private sector suppliers.

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