The committee concludes that while the government reported progress against its target for SME spending from 2010–15, ‘it is not clear that SMEs are better able to compete with larger providers or whether they are actually getting any more government business than before’.

Each year, the government spends around £45bn on goods and services supplied by non-public sector organisations. In 2014–15 it reported that 27% (£12.1bn) of procurement spending had reached SMEs.

In 2010, when spending with SMEs stood at 6.8%, the government set itself a target for 25% of government procurement spending to reach SMEs by 2015. Led by the Cabinet Office and the Crown Commercial Service (CCS), there have been ‘numerous initiatives’ to remove barriers to SMEs doing business with government, PAC says.

The report states: ‘However, momentum has been lost with some initiatives stalling or stopping altogether and the centre needs to reinvigorate its approach. To do so, the centre needs to move from a generic approach of lifting barriers, to a more focused approach, by helping departments to identify particular areas of government business where SMEs can bring the most benefit.

‘It needs to fill key posts so SMEs have a strong voice in government to raise concerns about barriers and making sure that all public sector contract opportunities are communicated properly.’

PAC said the government has changed its approach to measuring SME spending in four of the last five years, while the spend figures also do not reveal anything about the impact of government initiatives on competition between government suppliers.

The report states: ‘The government measures its target using direct and indirect spending with SMEs but does not have separate targets for each. Indirect spending reflects the amounts that government’s larger contractors choose to subcontract to smaller providers within their supply chains.

‘While increasing this may be welcome, it is not clear how this can be considered a meaningful measure of the government’s success in making it easier for SMEs to do business with government. It is not apparent why the government cares equally about direct and indirect spend and the Cabinet Office was not prepared to say what an appropriate split might look like’.

In August 2015, the government increased the target for SME spending from 25% to 33% by 2020 as a result of a manifesto commitment.

The committee says that ‘it is not clear how the government decided on 33% as a target or how achievable it is’ and urges the CCS to report back by March 2017 on what it has done to re-establish momentum towards hitting this target, as well as setting out how this is increasing competition.

PAC’s recommendations include the adoption of a new and consistent approach to measuring year-on-year performance for SME spending. It calls on the Cabinet Office and CCS to help departments identify the areas where SMEs can best add value ‘and how it will structure contracts and procurement to enable them to compete accordingly’.

The committee says there is evidence that SMEs are not always aware of all direct contracting opportunities, or subcontracting opportunities due to the way in which these are publicised. It singles on the Cabinet Office’s government digital service as an example of good practice, with an estimated 51% (£510m of £1bn) of government spending through G-Cloud since it started going direct to SMEs.

Meg Hillier, PAC chair, said: ‘The government has now committed to an ambitious, higher target for SME spending and there is clearly work to be done if that target is to be achieved. It's a simple point, but launching initiatives is not the same as delivering results.

‘We will expect to see a new and more focused approach that properly considers the role of SMEs. There are many areas of government business where there is an opportunity for UK small business to contribute to better performance. Too often they are still locked out by complex and lengthy procedures.’

The PAC's report is here