Government spending with small businesses increases by 9%

Government spending with SMEs continues to rise as part of efforts to diversify spending, support small businesses and advance the levelling-up agenda.

The latest procurement figures for 2019/20 show that across government, £15.5bn was paid to small and medium sized businesses to help deliver vital public services. The figure is an increase of £1.3bn on the previous year.

Overall, spending with small and medium sized businesses represented 26.7 per cent of the £58bn spent by the government in 2019/20 – an increase of 1.1 per cent on the previous year.

For 2019/20, the total direct spend with SMEs was £6.6bn, compared to £6.4bn in 2018/19 - and the indirect spend was £9bn, compared to £7.8bn in 2018/19.

"We are determined to make sure the power of government spending supports this vital sector and helps bring forward the delivery of top class public services," said Cabinet Office Minister, Lord Agnew. "Figures for government spending with small businesses are measured both in terms of direct spending, where money goes directly from the government to small businesses, and indirect spending, which goes through the supply-chains of larger companies."

The boost in spending is a result of both a long-term government commitment to obtain value for money for taxpayers and support small businesses and start-ups through procurement. Small and medium-sized businesses employ almost 17 million people in the UK.

This support includes talking directly with SME organisations to better understand the challenges and barriers facing smaller firms when bidding for and contracting with government departments.

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