With permission, Mr Speaker, I will answer questions 4, 7, 11, 12, 13, 17 and 20 together—while the rest of the ministerial team go and have a cup of tea.
The wide-ranging interest in this topic shows just how much the £400 billion spent on procurement in the public sector matters for growth and for communities across the UK. I was recently in Grimsby, where small businesses are delivering local growth, innovating and providing more than half of local employment. MPs know that SMEs are vital for providing local employment in their communities. Under the previous Government, however, we became overly reliant on large consultants and a small number of big companies. We have too often ended up locked into expensive, poor performing contracts, with companies able to drive up prices in closed markets. That has to change. The new national procurement policy statement asks the public sector to maximise procurement spend with small and medium-sized enterprises, and the Government are leading the way by setting ambitious public targets for Departments on spending on SMEs.
I am glad that I am at the front of this particular queue, Mr Speaker.
Right across the country we have amazing, cutting-edge businesses, such as Great Wave AI, a start-up in my constituency that is already helping the Government to take advantage of AI. It wants to grow faster and do more work with Government Departments. What work is the Minister doing to ensure that small British start-ups can play their part in the AI revolution in government, not just mega companies such as Meta, Microsoft and Google?
We have been absolutely clear that there are huge opportunities for AI to support the public sector to better personalise services and save money, but we have to keep up with the speed of innovation in how we buy. I have heard from SMEs specialising in AI and digital transformation that the way we are doing procurement is too slow and too inflexible to keep up with that pace. That is why I am working with the Minister for AI and Digital Government, my hon. Friend the Member for Enfield North (Feryal Clark), to set up a new digital commercial centre for excellence to make sure that that changes, and that we have the best innovation from my hon. Friend’s constituency and across the country in Government.
Last year, Luton airport invested £110 million in local businesses. It knows the value of businesses, particularly small and medium-sized enterprises, in places like Luton. Every weekend, I do a small business Saturday shout-out. What can we do to ensure that small businesses in Luton get a fair crack of the whip when it comes to public sector procurement?
It is brilliant to hear about my hon. Friend’s leadership in supporting small businesses and the work they are doing in her constituency. We are absolutely determined that SMEs should have that fair crack. The new national procurement policy statement asks us to maximise spend with small businesses. It also sets stretching and transparent targets for each Department, which will be brought to the House. We will be held to account for delivering on them.
The targets in the national procurement policy statement for Government Departments to buy from British SMEs are to be strongly welcomed. The benefit will be long term, with broad and essential sources of investment, and we will improve our economy’s domestic resilience. Bus manufacturing is an area that needs domestic resilience, with over 100 jobs recently lost in the Falkirk area because the previous Government failed to support British buses. At the bus expert panel next week, does the Minister expect a general increase in domestic procurement following the updated national procurement policy statement?
As soon as I saw my hon. Friend’s name on the Order Paper, I knew that he would mention buses, because he has never missed an opportunity to raise this critical issue with me. The Government are absolutely committed to supporting the UK’s domestic bus manufacturing industry and ensuring that the procurement system recognises the high standards and quality of UK manufacturers. The new national procurement policy statement aligns with our industrial strategy and pushes us to maximise spend with SMEs. As a result, contracting authorities across the country must now consider how their procurement strategies can support the industrial strategy, including the bus manufacturing strategy.
Recent figures show that hundreds of small businesses have been opening up across Ipswich, and I am proud that we are now ranked in the top 10 of areas in the country where the number of SMEs is growing. However, I am ambitious for my town and want to go further. What steps are the Government taking to ensure that, as part of our skills agenda, young people in towns such as Ipswich have the chance to find skilled, long-term, well-paid employment with SMEs, and, in doing so, boost public procurement and our local economy?
There is so much young talent in Ipswich and in communities across the country, but too many young people are struggling to get on to the employment ladder, and we know the scarring impact that that can have on their lives. We need to ensure that the £400 billion spent on public procurement means something in communities such as Ipswich. We are streamlining how we measure social and economic value so that there is a very clear ask that is linked to our missions, including the opportunity mission, to deliver jobs and skills to young people out of work. We are asking those who win Government contracts to advertise in local jobcentres so that people in Ipswich and communities across the UK can benefit from Government contracts.
In January it was reported that nearly 7,000 construction firms were on the brink of insolvency—that is on top of the 4,000 that folded last year. A major cause of this is payment delays by large contractors. Given that project bank accounts, which protect against payment delays, are used by only some Departments, will the Minister act where the previous Government failed to do so and introduce these accounts across all Departments?
I really welcome this question. It is so important to small businesses that they are paid on time—I have heard time and again that late payments threaten their very existence. The construction playbook states that project bank accounts
“should be used unless there are compelling reasons not to.”
We are determined to crack down on late payments. We have announced regular spot checks on prompt payments throughout our supply chains, and in the Budget the Chancellor said that the Government will be required to exclude suppliers from bidding for major contracts if they cannot demonstrate that they pay within an average of 45 days. I welcome my hon. Friend’s work on this matter, and I very much enjoyed meeting her to discuss it. I know that she has built a wide coalition, and I hope we can continue to work together on these important issues.
Pathways Care Farm is an amazing charity in Lowestoft that supports people with disabilities, those with mental health issues and ex-offenders to get back on their feet by working with animals and growing food. The charity has excellent outcomes, particularly with helping people to get work-ready and improve their health, but it finds it hard to access opportunities for public contracts, such as social prescribing, because it is so small. Does the Minister agree that organisations in the voluntary, community and social enterprise sectors and charities such as Pathways have an important role to play in providing solutions for the public sector?