The Commission believes that the public sector must be opened up so that the private sector is seen as a vital partner. Public sector procurement should be made more amenable to SMEs in Wales as the amount of funding that is available through public sector contracts dwarfs any grants or financial support that the public sector can offer Welsh firms.
According to recent research, the public sector in Wales spends £5 billion per annum on goods and services (with 31 per cent spent on goods, 50 per cent on services, 14 per cent on capital and 5 per cent on food). Local government is the largest spender, accounting for approximately 44 per cent of the total, followed by health 28 per cent and education 10 per cent. Whilst the Welsh Assembly Government is on record in stating that 50 per cent of this spending goes to firms based in Wales, there is no data available as to the level of spending within Welsh SMEs, although this is expected to be far lower.
The Way Forward
As the FSB (Federation of Small Businesses) in Wales has suggested, there needs to be a proactive culture of preference for Welsh companies to help develop the indigenous SME sector. The Commission therefore recommends that the Welsh Assembly Government should set targets, as the US Federal Government has done through its Office of Government Contracting, for spending its annual budget with local small firms. It should also explore whether some procurement exercises can be reserved exclusively for the SME sector.