SMEs need state to push for sustainable pricing

The government rolled out its plans to kick-start the recovery via the UK's engineroom of SMEs this week.

Sadly, the promise to make it easier for SMEs to access finance through initiatives like the much-maligned Enterprise Finance Guarantee and the creation of a new £1.5bn Business Growth Fund and the like was rather tainted by the predicted impact on SMEs of the new pension rules.

However, access to affordable finance is still most businesses’ overriding concern – so in theory the good outweighs the bad in these separate announcements. Equally, improving SMEs access to public sector spending can only be good news.

But hang on. It’s a bit odd that the government should state that 25% of all public sector procurement should be directed at SMEs; the official line seems to be that an SME is a company that employs less than 250 staff – so by that criteria I should imaging that at least a quarter of public sector work is already handled by SMEs anyway.

Equally, when the Prime Minister unveiled the SME support package he said that SMEs employ 60% of the UK workforce and are responsible for 49% of GDP; so surely the target for SMEs share of the (admittedly dwindling) public sector money jar should be nearer 50%, to better reflect ‘real-world’ business.

Besides, if the contracts are simply awarded on lowest price, then what’s the point anyway? I appreciate that company A will always be able to do job X cheaper than company B, but company B can produce job Y more economically, etc, which is fine. But when you throw company C and its deathwish-cheap quotes into the frame, then it all starts to go horribly wrong.

Surely the best form of public sector SME support the government could offer would be to create a procurement structure that puts sustainable pricing at its core.

But it would be churlish to criticise this attempt to improve the world of the SMEs.

Besides, when you look at the list of 180 individuals, companies and trade bodies that submitted information to the government’s green paper on ‘Financing a Private Sector Recovery’, it’s apparent that the print industry is conspicuous by its absence. So we’re hardly in a position to complain.