The government is trying to woo SMEs..

Will it work?

Amid all the heat and light of the changes this government is implementing, one has received surprisingly little mainstream coverage. And that is the big pitch it is making to small and medium-sized enterprises (SMEs) as part of efforts to woo them into bidding for government work.

When it came to power, this government announced an aspiration for 25 per cent of central government procurement spending to go to SMEs. Indeed, this goal was even set in stone in the Coalition Programme for Government, which is peppered with references to start-ups and small firms.

The government claims that funnelling more of its money to SMEs will provide it with access to the latest innovation, stimulate growth and jobs, and perhaps most importantly, reduce the amount spent on public sector contracts.

Aside from the stated reasons, there are other sound motives for championing SMEs in a recession, suggests market-watcher Stephen Roberts of Kable. "The SMEs which politicians dream of as replacements for giant global IT firms are British as well as innovative. Procurement is restricted by European legislation, but championing SMEs is the acceptable face of protectionism."

And, true to its word, the government –in particular the Cabinet Office- has been beavering away at the policy ever since.

It has pushed the adoption of "lean" procurement practices across Whitehall, set up a "Mystery Shopper" scheme where businesses can raise concerns if they notice unfair practices in public procurements and launched "Contracts Finder", a website which lists past, current and future contract opportunities in the public sector.

Indeed, it even recruited someone whose sole job is to focus on championing SMEs in government- with the rather grand title of "Crown Representative for Small and Medium Enterprises".

But how successful has it been?

Figures released last week show that the central government departments spent a total of 20 per cent of their budgets with SMEs last year.

However, of that 20 per cent, only just over half (10.5 per cent) went to SMEs directly. The remainder- 9.4 per cent - filtered down to them indirectly (via larger companies subcontracting some of their work to smaller companies).

And the indirect figures do come with a health warning- they are estimated numbers taken from quarterly supplier surveys, and only started being collected in the last couple of years- so we have virtually nothing to benchmark them against.

So looking at just direct spending with SMEs, this increased from 6.5 per cent in 2009/10 to 10.5 per cent in 2012/13. By that measure, Whitehall has increased its direct spending with SMEs by a respectable 4 per cent, with 0.5 per cent of that increase being achieved last year.

So if you do choose to include indirect spending, the government spent 20 per cent with SMEs last year and it sounds like it is indeed, as it claims, "on track" to hit its 25 per cent target by 2015. If you don’t, it has rather further to go.

And it is not an easy task. Departmental resistance is strong, warns Roberts. "The Civil Service is risk-averse, and SMEs carry risks that larger suppliers do not. The collapse of IT services firm 2e2 this year left a number of public sector clients in difficulties. Pragmatic concerns like this can trump political pressures."

However, there is no denying the level of aspiration, and it seems the government is stepping up efforts to advance the SME cause, for example by appointing lead ministers and senior civil servants to drive the agenda forward across the 17 government departments.

And nowhere has the push to buy from SMEs been more pronounced than in the area of technology where a new aspiration is for 50 per cent of spending on new government IT to go to SMEs.

The government has admitted that it doesn’t actually know how much of its IT budget goes to SMEs at the moment, but considering a report in 2011 found that 80 per cent of central government IT work was undertaken by 18 suppliers- all large multinational firms- it’s safe to say the 50 per cent goal is highly ambitious.

Those working on achieving this transformation are keenly eyeing up a tranche of the biggest IT contracts due to expire in the next two years, viewing this as an opportunity to break them up into smaller, more SME-friendly contracts, a process known as "disaggregating".

In addition, the government is keen to push a programme called G-Cloud, which promotes public sector adoption of cloud computing, as a vital route for smaller companies trying to get into bidding for government work.

At the heart of G-Cloud, which was launched in 2011, is the "CloudStore", an online catalogue (think of it as Amazon for government contracts) containing details of each of the suppliers on the framework, and their services. The list is updated at least twice a year with the aim of making sure the content is kept fresh and accommodate the rapidly-changing pace of technology.

The programme has seen its sales gradually tick upwards, from £4m in December 2012 to £11m in March 2013, £18m in April, £25m in June and £31m in July.

And it can boast some pretty impressive statistics, with SMEs winning 56 per cent of total sales by value, and over 60 per cent of contract wins.

With less than two years to go until the next election, many in government are aware that time is running out for them to cement SMEs into the government procurement mix.

The bottom line is that there can only be one winner. If SMEs are to gain more business, the government’s traditional suppliers will have to cede some of their Whitehall territory.

Indeed, some SMEs are rubbing their hands in glee at the prospect of long-term, inaccessible government contracts running out over the next few years. Already the Cabinet Office, led by Minister Francis Maude, has weighed in with rhetoric saying contracts will not be renewed.

The government is preparing to go to battle on SMEs behalf- whether they will win remains to be seen.

The government is wooing SMEs. Photograph: Getty Images

Charlotte Jee is a Reporter at Government Computing

 

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Banishing safe seats, and other proposals to bridge the democratic divide

How to improve key areas of democracy.

Labour’s election train is finally pulling into the station, with its new leader announced in just over a fortnight. However, a summer absorbed in the party’s internal democracy has obscured a deeper truth confronting the country: the general election confirmed that unequal political participation rates in the UK – by age, class, ethnicity and region– have become increasingly hardwired into how our democracy operates.

IPPR’s new report underscores the scale of the democratic divide.  For example, less than half of 18-24 year olds voted, compared to nearly four-fifths of the over-65s, while three-quarters of "AB" individuals cast a ballot, against just over half of "DE" registered voters. Critically, this marks a sharp rise in turnout inequality over time. In 1987, for example, turnout rates by class were almost identical but have steadily diverged since.

Similarly, age-based differences have got significantly worse over time. In 1964 turnout for 18-24 year olds was 76.4 per cent, almost matching the 76.7 per cent turnout rate of those aged 65 or over. By 2005 only 38.2 per cent of 18-24 year olds voted against 74.3 per cent of 65+ year olds, with only a very slight improvement this year.

Underlying growing disparities of electoral voice are striking divergences in perceptions of the fairness and effectiveness of our democracy. For example, IPPR/YouGov polling suggests a striking 63 per cent of "DE" individuals think that our democratic system serves their interests badly, while "AB" voters are evenly split.

Given these signs of democratic distress, there remains a strong case for establishing a wide-ranging constitutional convention to reset how our democracy operates. Yet Westminster shows no appetite for such constitutional reformation, and there would only be so much a civil society-led convention could achieve in terms of practical change.

In our report we therefore propose a series of achievable reforms that could update the civic, institutional and technological architecture of our democracy in the here and now, with the explicit goal of ensuring that all voices are better heard in the political process.

On electoral reform, while we reiterate our support for proportional representation for national elections, we know this simply isn’t going to happen this Parliament. We had a referendum on change in 2011 and it was heavily lost. The energies of electoral reformers should therefore focus on extending PR in local government, where it is more obviously in the self-interest of the major parties, as a means of extending their geographical reach.

In addition, the reduction in the number of MPs provides an opportunity to chip away at the number of safe seats. More than half of seats are "safe", a number that has grown over time, even allowing for the electoral earthquake in Scotland. Safe seats typically have lower levels of participation, lower turnout rates, and less electorally powerful voters. While safe seats will always be with us in a first-past-the-post system, too many can be damaging to democracy.

Given this, we have recommended that the various Boundary Commissions of the UK be given a new duty to consider the electoral competitiveness of seats – ie. to tilt against the creation of safe seats – when boundaries are redrawn. The priority would be to meet their current duties of ensuring the geographic coherence of a seat and roughly equal electorates.

However, where these duties can be met we suggest that the Commissions should consider revising boundaries to reduce the number of safe seats, as a step to increasing participation and the voting power of the average elector. Of course, this will clearly not "abolish" all safe seats – nor should it  but it could help re-empower millions of voters currently with little meaningful say over the outcome of elections and force political parties to up their game in safe seats.

At the same time, the transition to the individual electoral registration process risks excluding millions from the franchise, people who are disproportionately younger, poorer or from an ethnic minority. For example, there are clear inequalities by age and ethnicity in terms of who is registered to vote: in the 2010 general election, for which figures are most accurate, 90 per cent of people aged 55-64 were registered, compared to 55 per cent of those aged 18-24, while nearly 20 per cent of BME individuals were not registered to vote, compared to only 7 per cent of the "white British" population.

There are simple steps the government could take to ensure all who are eligible are able to vote: extending the registration deadline to December 2016, and making support available to local authorities to assist registration efforts, weighted towards authorities with higher levels of under-registration, could help reduce inequalities.  In the longer term, electoral registration officers should be given new duties, and the Electoral Commission more powers, to drive up registration rates, with a particular focus on presently under-registered demographics. 

Finally, we recommend introducing a Democracy Commission. At present, the Electoral Commission effectively regulates elections and party funding. Democracy, however, is far richer and broader than electoral processes. It is about formal representation, but also about participation and deliberation, in what Marc Stears has called "everyday democracy".

A statutorily independent Democracy Commission could give institutional ballast to the latter and help reinvigorate democratic life by providing research, resources and capacity-building to facilitate local, civil society-led initiatives that aim to increase broad-based levels of powerful democratic participation or deliberation in collective decision-making processes.

For example, a Democracy Commission could work with the GLA to introduce participatory budgeting in London, assist the Greater Manchester Combined Authority in instituting a public deliberative body with real teeth over how to integrate health and social care in the area, help the Scottish government conduct citizens’ juries on the future constitutional shape of the country, or support civil-society experiments to bring people closer to collective political decision-making processes in their locality.

We are living in a paradoxical political era, where growing political inequality is accompanied by ongoing social and technological change that has the capacity to collapse unnecessary political and economic hierarchies and build a more inclusive, participatory and responsive democracy. However, there is no guarantee that the age of the network will necessarily lead to democratic revival. The institutions and technologies of our political system, products of the 19th century, are struggling in the fluidity and fracture of the 21st century, inhibiting democratic renewal.

With our economy post-industrial, our ways of communicating increasingly digital and more networked, our identities and relationships ever more variegated and complex, it is therefore critical public policy seeks to update the democratic infrastructure of the UK, and, in so doing, help reverse entrenched political inequality.

Such an agenda is vital. If we simply accept the current institutional arrangements of our political system as the limits of our ambition, we must also content ourselves to live in a divided – and therefore inherently partial – democracy. Yet our democracy is not immutable but malleable, and capable of being reformed for the better; reform today can make democratic life more equal. After all, the story of British democracy’s evolution is one of yesterday’s impossible becoming today’s ordinary.

Mathew Lawrence is a research fellow at IPPR and the co-author of "The Democracy Commission: Reforming democracy to combat political inequality". He tweets at @dantonshead.