Recommendation 13

HM Government · verbatim extract Acknowledged

6.1. The Government agrees that public procurement is a powerful lever for driving economic growth in the UK. The Industrial Strategy set out how the Government will implement current reforms and also go further to ensure that public purchasing power is used strategically to support the Government’s priorities. Further detail on the Government’s approach to procurement will be set out following the consultation which was launched in June 2025, which proposed options to improve domestic competitiveness, strengthening the UK’s economic resilience and supporting British businesses. 6.2. The Council brings together experts and thought leaders from across business, academia and trade unions. Members have been appointed based on their expertise and wide-ranging experience. 6.3. The Council in its role will have oversight for robust and comprehensive monitoring and evaluation (M&E) of the Industrial Strategy. The Council will work closely with government departments and public bodies (such as regulators) that are responsible for developing the M&E programmes for individual Sector Plans and policies. 7.1. For SMEs, the Procurement Act (2023), which came into force in February 2025, and National Procurement Policy Statement include a suite of measures including requiring all central government departments and their arms length bodies to set 3-year targets for direct spend with SMEs from 1 April 2025 (with targets for voluntary, community, and social enterprises (VCSEs) to follow in 2026). 7.2. The Government is also currently consulting on options to go further to: require large contracting authorities with spend over £100m p.a. to publish their own 3-year target for direct spend with SMEs and VCSEs with annual reporting; require contracting authorities to exclude suppliers from bidding on major contracts if they cannot demonstrate prompt payment of invoices to their supply chains, and; clarifying in primary legislation where it may be appropriate to award contracts for certain services to vulnerable citizens without full competitive procedure. 7.3. The MOD has committed in the Industrial Strategy to increasing annual defence spending with SMEs by £2.5 billion by May 2028, which equates to a 50% increase in the value of work delivered by SMEs compared to FY 23 /24 and will take total MOD spending with SMEs to £7.5 billion covering both direct and indirect spend. 8.1. The Government also recognises that long-term signalling is critical, and the provision of clear, long-term signals to suppliers, for example by targeting at least 10% of the MOD’s equipment procurement budget for novel technologies will seek to accelerate innovation and create investment opportunities. The introduction of the Procurement Act (2023) seeks to create a simpler, more commercial and transparent regime that will reinforce commitment to long-term signalling. 8.2. The current consultation on options to go further to strategically support our Industrial Strategy priorities includes growing British industry, jobs and skills. The Government recognises that public procurement can help to improve domestic competitiveness, make the economy stronger and more resilient, and help provide a foundation of security for British businesses. The consultation proposes options on how we can open up contracts to more small businesses and ensure public bodies give more weight to firms that show they will boost British jobs.