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New payment practice plans to help SMEs apply for government contracts

Monday 16th April, 2018

The government has launched a package of tough new measures designed to level the playing field for smaller businesses bidding to win government contracts.

The new measures include plans to exclude suppliers from major government procurements if they cannot demonstrate fair and effective payment practices with their subcontractors.

Other plans include allowing subcontractors to have greater access to buying authorities to report poor payment performance, signalling the government’s commitment to improving payment practice in the UK.

The Prime Minister has also written to members of her Cabinet to nominate a Small Business Champion minister in each department to ensure that SMEs are given a fair opportunity.

Oliver Dowden, Minister for Implementation, said, “We have set a challenging aspiration that 33% of procurement spend should be with small businesses by 2022 - and are doing more than ever to break down barriers for smaller firms.

“Small businesses are the backbone of the UK economy, and play a key role in helping us to build a strong, viable private sector that delivers value for taxpayers and jobs for millions all over the UK.”

Federation of Small Businesses National Chairman, Mike Cherry, said, "It is right then that the government announces, as part of a new package to boost SME procurement, that it will clamp down on poor payment practice throughout public procurement supply chains. Companies who pay late should not be rewarded with public sector contracts. We need a robust public procurement process that holds larger companies to account for their payment practices."