UK.gov's promise to pour cash into SMEs was just hot air Every government has always claimed to be the friend of SMEs – and with 5.2 million of them in the UK it makes an easy vote winner. But promising to do more business with smaller providers and handing over cold, hard cash are two very different things. Earlier this month the National Audit Office reported that what little …
It's a pretty nice drop, though.
Yes, it's only 1/16th of the budget. Yes, more should probably be done. But this is yet another case where statistics are used to fudge reality.
One billion of anything is quite a number. One billion of government funds spent on "local" companies is not a bad result. It will take some time to change mentalities, meaning that the old fogies and their buddy group need to retire to make place for the young fogies with their buddy group, then we'll be able to measure results.
Of course, by then, requirements will have changed and everyone will be clamoring about how the government is wasting money on small suppliers when economies of scale can be had with larger ones.
And the wheel turns.
The ONLY reason, and I mean the ONLY reason why the Govt is interested in SMEs is they think they can get more for less. And that's true as most SMEs are interested in solutions over profits.
The Govt wants more SMEs. The purchasers don't. They want to use big companies (easier, less risk) and pay a good price (looks better on the CV). They will have moved on so any flak will not be theirs.
I've worked on some of the biggest PFIs going and believe me, the buyer (the MOD) was happy that it was mega-bucks as it made them all excited and gooey. It was nothing to add another 100million on to the cost for a little extra.
> CCS' remit specifically states it will "work closely with the wider public sector to ensure that the benefits of aggregation and centralisation are shared across the public sector to maximise savings for the taxpayer."
Except that in many cases it simply doesn't. Several suppliers have quietly restructured so that whilst on paper they're making the mandated 3% markup, it's actually significantly higher, by way of pushing the sale via a number of subsidiaries with their own markups. (The 3% is on the final step) and in some cases the figures being charged are HIGHER than non-civil service clients pay.
It's just the same kind of scam as tax avoidance - perfectly legal but still highly unethical.
I run an SME that has provided IT services to government for the last 30 years. Last year as part of its move to encourage SMEs to participate in government contracts we were deliberately frozen out of the process. Government made it clear that they expect us to slash our day rates and to subcontract through much larger organisations who will charge government 3x our normal day rate for the same work. So we lose, government loses, and a small handful of fat-cat consultancies get to hoover up the available cash.
This is a continuation of the harassment that SMEs in the IT sector have experienced over the last decade with the threat of IR35 over our heads, government departments demanding that we indemnify them against employer's NI claims and most recently government departments handing over details of all our consultants to HMRC with an implication that they don't pay the full whack of NI/income tax that they should. Which is not true but it puts a small business under strain having to regularly justify the pay of staff and directors because, in the opinion of government, small businesses only exist to rip-off HMG.
The cynical side of me says watch the appointments to the boards of said fat-cat consultancies over the next couple of years.
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