Small Firms Still The Under‑dog in Public Procurement
Only 20 % of the public sector’s buying power went to SMEs in 2024 – a figure that’s stuck in the same spot for the last five years.
Where the Numbers Stand
- British Chambers of Commerce (BCC) & Tussell’s SME Procurement Tracker – now in its third year – is the go‑to source for judging how well the government is working with the little guys.
- Total public sector spend on third‑party procurement hit £227.7 billion in 2024.
- LM & NHS spend the most with SMEs: £28.1 billion (35 %) and £7.9 billion (19 %) respectively.
- Central government is the laggard, pulling in only £6.9 billion (11 %) from small businesses.
Sector‑by‑Sector Breakdown
- Health & Social Care – £14.0 billion in direct purchases from SMEs, 33 % of the sector’s total spend (up from 28 % in 2019).
- Education & Training – £5.0 billion from SMEs.
- Within central government:
- Department for Culture, Media & Sport (DCMS) spent 28 % (≈£240 m) on SMEs.
- Department for Education led the pack in absolute terms with £2.4 billion (26 % of its procurement).
Why the Numbers Aren’t Moving Fast
Jonny Haseldine (BCC) says:
“Public procurement for SMEs is still stuck in a rut. Despite growing contract value, the slice in the pie remains at 20 %. For most small firms, government deals feel like the glass tower out of reach. The upcoming Procurement Act must cut through the red tape and give SMEs a fair chance.”
Gus Tugendhat (Tussell) adds:
“We’re at a pivotal point – by May 2025, central departments are supposed to set targets for SME spend. But the reality in 2024 is that SMEs still snag just one in every five pounds. NHS and central bodies are flatlining, while local councils show the bright side: steady gains when ambition meets action.”
Sean Williams (AutogenAI) sums it up:
“Taxpayers win when services are bought through fair competition, but the process is a maze for tiny firms. AI can help them pitch their value. Yet technology alone isn’t enough; we need simpler rules to level the playing field and deliver better outcomes for everyone.”
Bottom Line
Procurement deals with SMEs are growing in value but not in share. The new Procurement Act offers a chance to break the cycle – the real test will be whether authorities will use the fresh flexibility to actually pull the numbers the way they’re supposed to climb.
