UK sets SME procurement targets
New British procurement rules give departments individual spending targets for SMEs worth more than £7.4bn a year, a change welcomed by the British Chambers of Commerce. The move aims to boost smaller suppliers’ access to government contracts and make public buying more competitive. (jhgreenwood.co.uk)
Whitehall departments now have their own small-business shopping lists: the Cabinet Office said on March 24 that each department must hit individual targets so more than £7.4 billion a year goes directly to small and medium-sized enterprises by 2028. (gov.uk) That is a change from one big government-wide ambition to named departmental targets with annual progress updates, which means the laggards will be visible instead of disappearing inside one national total. (gov.uk) The rule sits inside a wider rewrite of British public buying under the Procurement Act 2023, which is the law that reshaped how public contracts are advertised, awarded, and monitored across the United Kingdom. (legislation.gov.uk) The government’s procurement note says central departments, executive agencies, and non-departmental public bodies must set three-year targets for direct spending with small and medium-sized enterprises from April 1, 2025, and two-year targets for voluntary, community, and social enterprises from April 1, 2026. (gov.uk) “Direct spending” is the key phrase here, because it means money paid straight to a small supplier rather than money that reaches one through a giant prime contractor several layers down the chain. (gov.uk) The Cabinet Office says departments can also set indirect targets voluntarily, but only the direct targets are mandatory, which tells you ministers want a cleaner number that is harder to inflate. (gov.uk) Small firms have complained for years that government contracts look open on paper but are built for companies with dedicated bid teams, thick cash buffers, and the patience to survive long payment cycles. The British Chambers of Commerce said in August 2024 that government deals were still “out of reach for too many businesses.” (britishchambers.org.uk) The same business group welcomed the new targets on March 25, 2026, with policy head Jonny Haseldine calling departmental responsibility for £7.4 billion of small-business procurement a possible “breakthrough moment.” (britishchambers.org.uk) The government is also trying to remove some of the mechanics that shut smaller bidders out, including earlier visibility of upcoming contracts, a duty to consider barriers to small-business participation, and a ban on forcing a small firm to hold insurance before it has even won the contract. (gov.uk) Another change is cash flow: the procurement guidance says 30-day payment terms must run through the public-sector supply chain, which matters because a small engineering shop cannot bankroll a government project the way a multinational outsourcer can. (gov.uk) The test is not the March 2026 press release but the annual scorecards that come next, because a target only changes behavior if departments start splitting contracts, simplifying bids, and actually moving pounds from incumbents to smaller suppliers. (gov.uk)
