Central government direct and indirect expenditure with small and medium-sized enterprises 2016/17
0.1 Direct and indirect central government spending with small and medium enterprises
The government wants small and medium-sized enterprises (SMEs1) to benefit from 33% of central government procurement spending, directly or indirectly through the supply chain, by 2022.
The ratios on this target are presented as the sum of two digits: direct expenditure and indirect expenditure, as the figures are calculated using different methodologies. Their addition gives the number against which the overall goal is measured.
0.2 Breakdown of departmental expenditure data for SMEs (£ m) 2016/17
Consult the departmental distribution table of small and medium-sized enterprises for the 2016/17 financial year compared to the figures for the 2015/16 financial year.
- Indirect expenditure figures are reported annually by suppliers as part of the centrally coordinated supplier survey. These figures are indicative and were not provided by the ministries.
- From fiscal year 2016/17, BIS and DECC officially report as BEIS.
- FCO expenditure figures are calculated using UK expenditure data.
- The total amount of MOD purchases and direct expenditure relates only to the main department, thus excluding its executive agencies and the NDPB.
- Other Data communicated by the suppliers for the central government without breakdown by department.
These figures on SME expenditure are management information which has been published for the sake of transparency. The data sources for direct and indirect expenditure are described in more detail below.
Given the differences in methodology between direct and indirect expenditures and the changes in methodology from year to year, care should be taken when making comparisons over time. We draw users’ attention to the scope and coverage of the departmental estimates included in the footnotes of the table.
0.5 Methodology: Direct expenditure
To calculate direct spend, we use Dun and Bradstreet, one of the leading providers of business information, to classify all government providers as either SME or non-SME according to the EU definition. We then use the department’s accounting systems to calculate how much money was directly spent with these SMEs.
Departments are encouraged to include the central department and its executive agencies and non-ministerial public bodies (NDPBs). Returns are reviewed and signed off by sales managers.
0.6 Methodology: Indirect expenditure
Indirect spend with SMEs along the supply chain was collected through a survey conducted by the Crown Commercial Service of the top 500 suppliers (by spend), department by department. The percentage of revenue declared by suppliers, subcontracted to SMEs, was applied to the expenditure data of departments to obtain their indirect expenditure associated with SMEs.
Category averages calculated from responding suppliers were then applied to non-responding suppliers to obtain a more complete picture. The ministries have approved this data. As the survey only applies to the second level of subcontracted expenditure, it is likely to represent an underreporting of SME figures. The figures relating to indirect expenditure should therefore be regarded as indicative.