Only a fifth (20%) of procurement spend from the wider public sector, including central government, went to SMEs in 2024, according to the latest report by the British Chambers of Commerce and data provider Tussell, in partnership with technology firm AutogenAI.
The BCC’s SME Procurement Tracker powered by Tussell – now in its third year – is the market’s benchmark source for reporting on how well the Government is supporting small businesses by doing business with them.
The report reveals that absolute public spending directly with SMEs continues to grow, £45.4b in 2024, compared with £42.4b in 2023. However, the proportion of spending is in a rut, sitting at 20%.
It was a similar picture in 2023 (19%) and back in 2019 (20%).
The 2024 data shows the state of play just before the Procurement Act came into force in February this year.
PPN 001, accompanying the Bill, explicitly sets out the requirement for all central government departments, their executive agencies and non-departmental public bodies to set targets for direct spend with SMEs and to publish results annually.
The report offers a timely analysis of how things stand at the end of 2024, and where work still needs to be done to make it easier for small businesses to access public sector supply chains.
Based on open procurement expenditure data published by public bodies for transparency purposes and then analysed by Tussell, the value of total reported public sector spend on third party procurement 2024, was £227.7b.
Local government had the highest procurement spend directly with SMEs last year, both as a share of total procurement spend (35%) and in absolute terms (£28.1b). The figure for the NHS was 19% of total spend and £7.9b in absolute terms, while for central government the figures was 11% (£6.9b).
Public sector spend with SMEs varies across different sectors. SMEs in the Health and Social Care sector earned £14.0b in direct public sector revenue in 2024.
This accounts for 33% of total public spend in the sector, up from 28% in 2019. £5.0b was spent on public sector spending with SMEs in the education, training and recruitment sector.
Within central government, the Department for Culture, Media and Sport spent the highest proportion of its procurement spend directly with SMEs in 2024.
DCMS spent 28% of its procurement total (equivalent to £240m). The Department for Education spent the highest absolute amount directly with SMEs, amounting to £2.4b in 2024, or 26% of its total procurement spend.
Head of business support at Cumbria Chamber of Commerce, Lesley Robinson said: “This BCC report highlights that too many SMEs remain locked out of public sector supply chains, securing just 20% of procurement spend.
“While the value of contracts with SMEs is rising, the procurement system remains complex and often inaccessible to many.
“The introduction of the much-anticipated Procurement Act will hopefully deliver a more streamlined and transparent process that levels the playing field for SMEs.
“Accessing practical support services is essential for SMEs looking to navigate the Government’s procurement system and prepare for the upcoming changes. That’s why we offer a Supply Chain Programme through Cumbria Business Growth Hub, the chamber’s business support arm.
“The programme delivers tailored one-to-one support for local businesses over a three-month period and is led by Martyn Staveley of 3 Peaks Consulting.
“Businesses taking part receive practical guidance on navigating public procurement, identifying tender opportunities, creating action plans, and preparing to pitch effectively to prospective buyers.
“Initiatives like this help businesses build the confidence, capability, and connections they need to successfully access supply chains and seize growth opportunities.”
More information on the programme can be found on its website at https://cumbriagrowthhub.co.uk/grow-your-business/supply-chain-pilot-programme
