Balfour Beatty encourages UK business to publicly commit to SME spend targets

Today, at the start of Supplier Diversity Week (13-16 October), infrastructure company Balfour Beatty invites other UK companies to follow its lead and commit to ambitious spending pledges with small and medium sized businesses (SMEs).

At a launch of a new report by the UK’s leading membership organisation for fast growing black and ethnic minority SMEs, MSDUK, the company will reveal how it has managed to collect accurate data on the size and location of businesses it is spending with and how this has enabled it to commit to £1billion of UK construction spend with SMEs in 2014.

The report from MSDUK, ’The Road to Inclusive Procurement’, which is being launched at a policy summit hosted by Baroness Hayman and attended by BBC Dragons’ Den star and co-founder of Outsourcery, Piers Linney, at the House of Lords today, finds that participation rates of small and medium enterprises (SMEs) in public procurement in the UK are among the worst in Europe, despite an ambitious Government target spend of 25% with SMEs by 2018

It suggests that big business, along with government, can do more to collect data on SMEs and target spend accordingly, as is done in the U.S. The report finds that while new policies such as the SME Agenda (2011), the Equality Act 2010 and the Public Services (Social Value) Act 2012 are helping the UK’s small business sector, they are not working together to ensure that SME participation in the economy matches other European nations.

Balfour Beatty is so far the only publicly listed company to have publicly pledged to spend with SMEs, a commitment endorsed in May by the Prime Minister, David Cameron during a visit to one of its central London construction projects.

Martin Chown, Director of Supply Chain and Procurement at Balfour Beatty, says: “Small businesses create local jobs and apprenticeships and they are the innovators, engineers and exporters of the future. We are pleased that we have been able to overcome many of the challenges of capturing data on our supply chain, and as a result have been able to target our supply chain spend with SMEs.

“I would encourage more big businesses to do as we have done, and show that they are serious about diversifying their spend to ensure we have a more resilient and sustainable economy.”

Mayank Shah, CEO at MSDUK, says: “Public procurement is worth a staggering £230bn a year to companies who supply to government departments, agencies and public bodies, but more needs to be done to create a level playing field for UK SMEs including black and ethnic minority owned SMEs, who contribute £25-32 billion to the UK economy but operate in some of the most economically deprived areas of the country.

“By pledging £1bn spend in what remains the largest commitment ever made by a UK company to small and medium sized enterprises, Balfour Beatty has already demonstrated what can be done when the public and private sector work together to achieve a common goal”.

The report launched by MSDUK today urges other UK companies to follow Balfour Beatty’s lead and help Government achieve its target spend of 25% with SMEs by:

  • Capturing data and independently auditing the type and size of current supply chain partners in order to have a baseline from which to improve and define targets
  • Simplifying processes and addressing the administrative burden that continues to overwhelm SMEs by reducing the time and cost required for procurement bids
  • Training and educating internal procurement teams on the benefits of inclusive and diverse supply chains and the processes that help to drive this

You can request a copy of our new report by emailing diversity@msduk.org.uk.