Only a fifth (20%) of procurement spend from the wider public sector, including central government, went to SMEs in 2024. That’s 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
