PAYE umbrella contractors hoping to benefit from the coalition’s pledge to share the State’s contracts with smaller businesses will be disappointed to learn that, so far, the scheme has been a dismal failure.

Independent lawyers from the enterprise advisory organisation UK200Group found that a walloping 92% of government contracts remain in the clutches of major corporations. The ministerial pledge to abolish the age of gigantic IT contracts and award 25% of contractual orders to owner-manager SMEs, which include contractors working through umbrella companies and limited companies, appears to have run aground. The grand total share obtained by smaller contractors in Q3 last year amounted to a paltry 7.8% in ten departments

The UK200Group does not mince words – this nugatory share indicates that the government and civil servants are effectively “ignoring SMEs,” despite promises to the contrary. The initiative, the group asserts, has “barely got off the ground.”

Jonathan Russell from accountancy firm Rees Russell said that there was a “fundamental flaw” in the mind-set of civil servants, who continue to talk about how smaller companies must learn to buy from government. He went on:

“It is the Civil Service that need to learn how to be buyers; as long as the Civil Service presumes that people should sell to them, they will continue to waste public money.”

“The whole current procurement system is from its past track record proved as flawed by the overspends, under delivery and lack of control. A plea to government – don’t run courses for SMEs on how to sell to public bodies, run courses for the public bodies on how to buy.”

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