Thursday, 28 July 2011

Government support for SMEs

The latest Business Link Newsletter has come round, outlining what the government is doing to support SMEs - in particular in winning business from the government. The news is mixed, and as always with governments of all persuasions contains a mixture of real initiatives, hope, aspiration, spin and the rehashing of existing initiatives as something new.

Large businesses are encouraged to pay smes quickly. This is laudable, but without any real government push behind it is essentially just a wishful idea. Anecdotal evidence is that larger companies are pushing out their payment terms, essentially banking with their sme suppliers, confident that their suppliers are desperate for business. SMEs generally would be happy if their large clients paid on time. Quicker payments would be a real bonus. Quicker than 30 days is probably unrealistic. 30 days exactly would probably be fine for all.

The pressure on major contractors to government to make quicker payments down the supply chain is welcome, but needs some real teeth. When suppliers are dropped for failing to pay sub-contractors they will take real notice. Until then they will pay lipservice until they feel it is safe not to do so. Publishing the data on a website is also to be supported as a general principle, though I am not sure what will be achieved. The public are not interested, and the SMEs already know, and I am not sure that shame will be sufficient. In fact you could argue that the shareholders will be pleased to know that contractors are pushing out payment terms, and therefore increasing their returns.

14 departments have eliminated the PQQ process for low value tenders. This is valuable for SMEs, though as I have argued long and weary a similar benefit could be achieved by all departments using the standard OGC PQQ template for all tenders. Then SMEs would only have to fill it in once. It could even be stored on government servers - as was tried in the One Form initiative in St. Helens. Back in February Robert Peston of the BBC pointed out that eliminating the PQQ process was not a sure fire way to get more competition - see here.

Contracts Finder continues to limp along, and is not really finding traction. The private sector alternative services seem to be able to provide a more extensive service, and so are (if not thriving at least) continuing. The number of contracts published seems low compared to the long standing equivalents in Scotland and Wales. Scotland are trumpeting the fact that their service is now publishing more opportunities below the OJEU threshold than above - which is of real relevance to SMES. It seems like there are lessons to be learned from the existing services.

Contracts Finder has lead to 600 contracts being let to SMEs since February - about 150 per month. Hopefully this will accelerate. The value is over £80m, which means the average contract was for £133 000, or about the OJEU limit. This is fine for some SMEs, but is very large for the smaller SMEs and micro businesses. Real success would be to get that down to, say, £50 000. Then opportunities would be be accessible by even the smallest businesses.

The 9 winners of the government's Innovation Launch Pad Product Surgery competition, out of 350 SMES were able to pitch their ideas to government. Laudable in itself, but why a competition over 3 months to pitch these ideas? Why not a series of Meet the Buyer events which would have allowed all 350 to pitch? The winners look like interesting businesses, of real benefit to the country. However many of them are existing suppliers to the government, and were pitching products that they already sell to the government. Hardly the sort of innovation that we need in these times - they should be being promoted by standard practices. One winner (Learning Pool) has saved the government £30m over the past two years - why do they have to pitch again? Why are they not being rolled out as best practice? More information here. A good idea, but again more needs to be done.

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