My Lords, it may aid the House if I set out the government amendments in this group. I thank my noble friend Lady McIntosh of Pickering, and will respond to her when I have heard other contributions. I share her tribute to Lord Plumb, whom I dealt with in all the stages of my career—at Defra, in Europe and in this House—and I am only sorry that government business prevented me from celebrating with others his wonderful life and success today.
There are a number of amendments in my name relating to SMEs. They are important government amendments to help SMEs to win a bigger share of the £300 billion procurement pie. I know that this issue is close to the hearts of noble Lords from across the House. Throughout Committee, noble Lords questioned whether the Bill had gone far enough in removing barriers to SMEs accessing public procurement. It has certainly been a top priority for me since I was lucky enough to become a Cabinet Office Minister. It is right that we support this vital sector of our economy. At the start of 2022, there were 5.5 million small businesses, accounting for 99% of all businesses in the UK, with over 16 million employees and a turnover of over £2 trillion. We must do more to champion these entrepreneurs.
The new measures that I am announcing today complement the existing provisions in the Bill, which make it easier for businesses to enter public sector supply chains and benefit SMEs. They include greater visibility of upcoming public sector opportunities and preliminary market engagement; developing a supplier registration system, meaning that suppliers need to submit their credentials only once; improvements to commercial tools, such as the introduction of dynamic markets and open frameworks; and, crucially, requiring that 30-day payment terms will apply throughout the public sector supply chain.
I am glad to be moving amendments in three areas to add to this momentum. First, we have introduced a new duty for contracting authorities to have regard to the participation of SMEs. It sends a very clear signal that the Government are open for business to this sector. For the first time, SMEs will be on the face of the Bill, which means that authorities have a responsibility to consider them and the barriers they face. To put this in practical terms, contracting authorities will, for example, need to specifically consider through an SME lens whether the requirements they are asking for are proportionate to the contract. Are the bidding times realistic when some businesses do not have a dedicated
bidding team? Have they provided clear pipelines of opportunity? Is there a diverse representation of businesses in pre-market engagement?
Secondly, we have further stripped out unnecessary barriers which SMEs face. I thank my noble friend Lady Noakes and the noble Lord, Lord Scriven, for highlighting ideas in Committee. I particularly appreciated the point that he raised, that we need to
“release some of the normal procedures and bureaucracy”.—[Official Report, 11/7/22; col. GC 385.]
As a result, we have banned authorities requiring the provision of audited accounts to test the financial standing of bidders to bid in procurements, to compete for contracts under frameworks and to join dynamic markets, except in so far as that is required under the Companies Act. This ensures that start-ups and SMEs which are not legally required to file audited accounts due to their size or age will not be shut out of procurements, provided that they can demonstrate their financial capacity by another reliable means.
Thirdly, we are going further to reduce unnecessary costs on businesses by preventing contracting authorities from requiring insurance relating to the performance of the contract, to be in place prior to the award. We know from feedback that this acts as an obstacle to participation.
Following Committee, I have reflected on the points raised by noble Lords during the debates and would like to thank many of them for follow-up discussions on this topic. I have also met trade associations such as the Federation of Small Businesses and the Business Services Association at a recent round table. We hope that the amendments will give SMEs a better chance of winning public sector contracts and allow the public sector wider access to the first-class skills, innovation and ideas that many agile, creative smaller firms offer. In turn, this will allow us to improve and enable the transformation of procurement services. These are all captured in Amendments 40, 122, 57, 70 and 74. Amendments 75, 76, 134, 140, 179, 183, 186, 188, 192 and 203 are consequential amendments, including splitting Clause 43 into two to avoid it becoming unwieldy.
I have also tabled Amendment 55, which requires a contracting authority to provide sufficient information in the tender notice or associated documents to enable suppliers to prepare tenders. It facilitates a clear trigger for the start of the tendering period identified in Clause 51. As the time available for bid preparation is so important, we consider that small suppliers will welcome this practical clarification. Amendments 40 and 122 in my name create new obligations on contracting authorities to consider the removal or reduction of barriers in procurement to small and medium-sized enterprises. We need to make sure that small and medium-sized companies do better in the procurement world.