Policy paper

Department for Business and Trade’s small and medium-sized enterprise (SME) action plan: 2025 to 2028

Published 24 March 2026

How we are backing your business

Through Backing your business: our plan for small and medium-sized businesses, we are delivering the most comprehensive package of support for small and medium-sized enterprises (SMEs) in a generation.

Growth is this government’s number one mission and SMEs are the engine room. Our plan is to make the UK the best place to start and grow a business, with a culture that supports entrepreneurship in every community and high street.

We’re delivering:

• the most significant legislation to tackle late payments in over 25 years, giving the UK the strongest legal framework on late payments in the G7
• a new Business Growth Service to simplify finding advice and support, including a new streamlined digital offer – Business.gov.uk, ending the chop and change of previous government business support programmes
• a package of support tailored to high streets to make it easier for SMEs to set up shop, ranging from a new licensing framework to targeted funding for places
• a massive £4 billion finance boost to increase access to finance for entrepreneurs – to inspire the next generation of small business owners, make the UK the best place to start and grow a business, and build a culture that celebrates and champions entrepreneurs

We also committed to making SMEs a national priority, ensuring they have a fair opportunity to win public contracts and setting ambitious SME targets for each department. Each departmental SME action plan sets out the steps government departments are taking to maximise SME and start-up spend across their department and wider agencies. These plans also include departmental targets for direct spend with SMEs and the actions being taken to remove and reduce barriers to SMEs bidding for government contracts.

The Procurement Act 2023 creates a more simple and transparent procurement regime, making it easier for SMEs to do business with the government. DBT’s action plan sets out why SMEs should work with us, where to find opportunities, and the actions we are taking to reduce barriers for SMEs in bidding for work.

The plan is monitored through an annual publication (as a minimum) of our direct spend with SMEs as a percentage of our total procurement spend.

SMEs are suppliers that have fewer than 250 staff, and have a turnover of an amount less than or equal to £44 million or a balance sheet total of an amount less than or equal to £38 million. For more information, see Clause 123 of the Procurement Act 2023.

Foreword

Accounting for over 99.85% of all UK businesses, three-fifths of total employment and around half of the turnover in the UK private sector, the UK’s 5.5 million SMEs are the lifeblood of our economy and the engine room of economic growth. For more information, see the Department for Business and Trade’s (DBT) Business population estimates 2025.

We want the UK to be the best place to start and scale a business, with a culture that celebrates and champions entrepreneurship. Our goals include:

• helping businesses export
• promoting ethical practices
• aiding international expansion
• attracting overseas companies
• connecting UK businesses with overseas buyers

We help businesses to start, scale-up, and succeed.

With these goals in mind, I am delighted to publish the first DBT SME Action Plan.

This action plan sets out our goals for improvement over the next 3 years and describes our strategy to minimise and eliminate obstacles for SMEs to access more DBT contracts. The plan also sets our objectives for improvement, focusing on actions across the DBT commercial lifecycle. We will also publish an SME Strategy later this year, outlining this government’s whole approach to driving SME growth and productivity – from boosting scale-ups to supporting budding entrepreneurs.

In December 2024, DBT announced a new Business Growth Service (BGS) which will support this action plan and the SME Strategy, by making it easier and quicker for businesses across the UK to get the help, support and advice they need to grow and thrive. A national service with local delivery at its heart will launch in summer 2025, bringing together core business support services and the England-wide Growth Hubs network under one single, trusted banner. Following launch, the evolution of the BGS will be iterative with the aim of integrating a broader range of government business support services. DBT is also committed to ensuring that our free trade agreements (FTAs) deliver for SMEs and businesses all over the UK – SMEs will have the opportunity to take advantage of these new agreements to increase and diversify their export markets.

In the spirit of breaking down the barriers that SMEs face, if you have any questions, comments or suggestions, you can contact us. I would like to thank you all for working with us and I look forward to continuing DBT’s support for SMEs.

Minister McDougall, Parliamentary Under-Secretary of State for Small Business and Economic Transformation

SMEs are already a core part of our supply chain and strategic contracts. We aim to ensure that we are lowering barriers to entry for SMEs across the fullest appropriate range of our procured goods and services and will continue to ensure the barriers stay down. 

Our first DBT SME procurement-focused action plan is dedicated to further reducing barriers to entry for SMEs to our departmental spend. We also continue to improve:

• access to DBT contract opportunities
• our data quality and reporting
• communication with our suppliers to deliver our commercial SME agenda 

Alongside our action plan, the new Procurement Act offers a simplified procurement regime and will create changes in the way public sector bodies undertake procurement. We are proactively engaged with the rules reform agenda, and will be ensuring SME-friendly principles are ingrained in our refreshed procurement processes. Decisions taken in previous years to provide in-house service delivery led to a material reduction in our spend with SMEs. Since then, we have been working hard to identify and remove barriers for SMEs to our departmental spend, and I am pleased to see our spend with these now climbing again. While much has been done already, we will continue to take action to embed the positive changes already made and to drive up that spend even further.

Alongside monitoring spend with SMEs, we will also continue our focus on the number of contracts we place with them. We fully understand the benefit to a SME of holding a contract with government, whether this is in supporting essential cashflow through guaranteed and prompt payment, or leveraging perception of these contracts to win more contracts with other customers. We will therefore continue to ensure that many SMEs can access these benefits through DBT’s spend.

Our action plan describes how we will approach this next phase of support for SMEs to be a part of our supply chain.

Karen Lawrence, Commercial Deputy Director, and Commercial SME Champion

As the Crown Representative for small and medium-sized businesses, I very much welcome the publication of this action plan by DBT for their work with SMEs. This plan outlines the initiatives taken by the department to foster growth, resilience and innovation within the small business sector, in particular the BGS ‘Help to Grow’ programme, in addition to the appointment of a Commercial Small Business Champion for the department. As we look to the current year, this is the first time ever that small businesses have been written into primary legislation with the Procurement Act 2023 coming into force in February 2025, making it easier for small businesses to engage. I am pleased to see the department’s actions to enable successful implementation and working to achieve strong and sustainable economic growth with small business.

The role of the Crown Representative is to lead the relationship between the government and small businesses to promote and champion their needs. I can see that DBT has been actively supporting this important area, both through the initiatives for small businesses and through the targeted policy and plans for implementation of the Procurement Act 2023. It is reassuring to see DBT looking for new and innovative ways to reach out to smaller businesses. 

Shirley Cooper OBE, Small Business Crown Representative

Department overview

This is the first DBT SME procurement-focused action plan. It outlines our ambition as a new department for reducing and removing barriers to procurement. 

DBT is the department for economic growth. We support businesses to invest, grow, and export, creating jobs and opportunities across the country. We are a ministerial department, supported by 19 agencies and public bodies.

For more information about what we do, see the Department for Business and Trade homepage.

Why SMEs should work with us

DBT values SMEs for their agility and innovation in delivering government contracts. By engaging with SMEs, the government (via the Cabinet Office SME Panel) has identified the barriers these firms face in accessing government spending, which DBT has committed to addressing. These barriers include:

• not being aware of opportunities
• requirements being too vague or too specific
• lack of constructive feedback
• lack of market engagement
• contract risk allocation
• contract structure
• resource requirements for bidding
• timescales required for bidding being too short
• financial thresholds required
• unconscious bias

DBT is addressing these barriers through improvement actions and milestones, led by Senior Commercial SME Champion Karen Lawrence (Commercial Deputy Director). This senior-level focus on the SME agenda facilitates improvements to our commercial activity. We have also integrated the SME policy agenda into the performance objectives of all accredited commercial colleagues, ensuring it is a key priority in our commercial outputs.

Beyond DBT contracts, DBT actively supports SMEs to do business in the UK and globally. Business.gov.uk is the central hub for UK business resources, combining practical guidance, financial support, and international trade assistance. You can:

• access business support and guidance for starting, running, and growing a business in the UK
• navigate government-backed finance options
• seek export and trade support
• get guidance and insights to help set up and grow your business in the UK
• get access to business networks, trade associations, and UK experts in finance, law, and tax

Links to departmental commercial opportunities

Direct opportunities

One of the most important things contracting authorities can do is to provide the market with information about current and future public contract opportunities by publishing a forward-looking procurement pipeline. The Procurement Act 2023 achieves this by requiring the publication of pipeline notices in certain circumstances. This is of particular benefit to SMEs as it provides them with time to plan for future work, ensuring a competitive and diverse market.

Pipeline notices (UK1) for any intended requirement over £2 million are published on our Find a Tender service.

Our pipeline notices are a forward look for 18 months and are reviewed and updated every 6 months, or as necessary.

Read about how to look at the notices, notifications and the use of data.

You can search and apply for contract opportunities.

Joining frameworks and Dynamic Purchasing Systems (DPSs)

Joining a commercial agreement, such as a framework or Dynamic Purchasing System (DPS), can put SMEs in front of buyers actively seeking their services.

Framework agreements establish terms for future contracts, providing a pool of pre-selected suppliers from which public sector buyers can award call off contracts

DPSs are an ‘always open’ electronic list of pre-qualified suppliers that public sector buyers use to quickly and flexibly purchase goods, services or works.

You can search the Crown Commercial Service (CCS) commercial agreement pipeline for upcoming agreements.

Over 80% of DBT procurement spend is through CCS agreements, making it the primary way for suppliers to access our contracts. This follows best practice as outlined in The Sourcing Playbook, requiring this type of spend to go through government frameworks. Not all CCS frameworks include SMEs, therefore we will review the success rate of SME contract awards via frameworks and consider alternative approaches where suitable.

Joining a supply chain

Find out more information on how DBT procures goods and services.

Departmental supplier events

We are committed to hosting supplier and market events as part of pre-market engagement, where this is applicable to a procurement. Typically, these take the form of online engagement sessions, to help reduce barriers to access (by reducing both cost and travel expectations). When DBT engages the market, this will be advertised via the central digital platform for public procurement, Find a Tender, as required by public procurement legislation.

You can sign up to the DBT eSourcing System to view our contract opportunities, access DBT tender documents free of charge, and bid for contracts.

You can find information about DBT events providing broader support for SMEs on our trade events calendar. This includes DBT sponsorship opportunities which are a way for SME brands to get significant market exposure for their brand.

You can also explore the CCS events page.

Our actions and milestones

All DBT actions are targeted to remove or reduce the main barriers for SMEs in competing for contracts. We will continue to review and improve our spend data capturing and reporting processes to ensure accurate reporting of DBT SME spend. Specifically, we will be looking at the following improvements.

Improve access to DBT contract opportunities

This will help reduce the following barriers for SMEs:

• not being aware of opportunities
• requirements being too vague or too specific
• lack of market engagement
• contract structure too complex

Milestones

We are working towards the following milestones for this action:

• from April 2025: deliver commercial training to increase the capability of the commercial team and encourage innovative thinking in approaching the market and procuring in a SME-friendly way
• by October 2025: refresh all priority category strategies to outline the approach to barriers to entry, market development, and innovation opportunities for SMEs
• from April 2025: actively improve our use of market engagement for non-framework purchasing. All our market engagement will be digital by default to support suppliers across all regions to access DBT contracts. We are committed to improved dialogue to ensure clarity of our requirements and establish market readiness
• from 2025 to 2026: leverage the opportunity presented by the new Procurement Act where appropriate to create SME-only tender lists for below-threshold procurements
• on an annual basis: review and standardise DBT contract terms, aligning them closely to the government model contracts, in accordance with PPN 013 helping suppliers by offering familiar, clear and consistent terms and conditions
• from May 2025: use the short form contract for non-complex above-threshold procurements, wherever it is proportionate and appropriate to do so

Improved data quality and reporting

This will help reduce the following barriers for SMEs:

• unconscious bias
• not being aware of opportunities
• timescales required for bidding being too short

Milestones

We are working towards the following milestones for this action:

• ongoing action: improve supply chain visibility by continuing to collect indirect SME spend data and improve on the process for our annual indirect spend survey
• ongoing action: work with CCS to review our framework spend to check its proportionality with the SME ratios on those frameworks (participation and overall share of actual spend) and consider alternative approaches, where suitable
• ongoing action: publish an external commercial pipeline of anticipated outsourcing activity over an 18-month period, reviewing it on a 6-monthly basis. From April 2025, DBT will explore existing commercial activity with a view to improving the pipeline, such as increasing the forward look beyond 18 months
• ongoing action: continue to publish details of all in-scope opportunities, awarded contracts and required documents on Find a Tender
• from September 2025: produce an internal dashboard which will include SME spend analysis to provide insight on categories of spend with SMEs
• by end of 2025 to 2026: collaborate with DBT’s partner organisations to improve our understanding of our partner organisations’ SME spend data and reporting, with an ambition to share best practice and establish a joint ambition to continue reducing barriers to SMEs and implementing better practice. From 2027 to 2028, include relevant partner organisations in the direct SME spend target. We will aim to include priority partner organisation spend earlier than this

Communicating with suppliers

This will help reduce the following barriers for SMEs:

• not being aware of opportunities
• lack of market engagement

Milestones

We are working towards the following milestones for this action:

• ongoing action: signpost SMEs to commercial information and opportunities by regularly updating the Procurement at DBT webpage
• ongoing action: collaborate with stakeholders across government, including the departmental SME Champions, SME Crown Representative and the Cabinet Office SME policy team, to support the SME commercial agenda and share best practice, including exploring the use of social media to advertise appropriate procurement and market engagement opportunities
• ongoing action: monitor the DBT SME mailbox daily, ensuring SMEs can access information and contact DBT regarding any procurement queries. SMEs can email: smeprocurement@businessandtrade.gov.uk

Case studies

We know that case studies can encourage other SMEs to bid for future opportunities. Therefore, we will collect case study examples for future updates to this action plan. With these case studies, we will aim to highlight successful engagements, challenges overcome, and the tangible benefits realised by SMEs through their participation in procurement processes.

One recent example includes the latest DBT Future Digital Commercial Roadmap supplier engagement event. This event was hosted by representatives from DBT’s Digital, Data and Technology (DDaT) directorate in collaboration with DBT’s Commercial team, and it saw an impressive turnout of SME participation. Of those suppliers who attended the event, 91% were SMEs. The event provided a platform for SMEs to engage directly with DBT and gain insights into upcoming procurement opportunities in the digital category, fostering a collaborative environment for future partnerships.

Our spend with SMEs

Our direct SME spend target for 31 March 2028 is 18%. We are also setting an SME contract volume target of 55%.

To set this target, we reviewed past SME spend data and our current pipeline. In the spirit of reducing barriers to SMEs, we also think it is important to provide our data for other metrics, including contract volume with SMEs and indirect spend with SMEs. Annual reporting over the next 3 years will track and report these metrics, in addition to reporting our progress towards achieving the 18% direct SME spend target and 55% SME contract volume target.

Currently our target and data reported covers DBT as a central government department only and excludes DBT’s partner organisations (all of which spend less than £100 million annually, removing them from the scope of mandate of this policy agenda). Despite this, we plan to work with our partner organisations to expand our collection of direct SME spend data and reporting. Our goal over the next 3 years is to collaborate with our partner organisations to share best practices in reducing barriers to SMEs, and from 2028 onwards, we aim to include partner organisations in the direct SME spend target.

Direct spend with SMEs

Financial year	Direct spend with SMEs (target %)	Total procurement spend (£)	Direct spend with SMEs (£)	Direct spend with SMEs (%)
2022 to 2023	No target	£149,746,714	£24,799,268	16.6%
2023 to 2024	No target	£156,613,455	£21,614,377	13.8%
2024 to 2025	No target	£229,815,875	£41,597,901	18.1%
2025 to 2026	18%	To be confirmed	To be confirmed	To be confirmed
2026 to 2027	18%	To be confirmed	To be confirmed	To be confirmed
2027 to 2028	18%	To be confirmed	To be confirmed	To be confirmed

Indirect spend with SMEs

Financial year	Indirect spend with SMEs (target %)	Total procurement spend (£)	Indirect spend with SMEs (£)	Indirect spend with SMEs (%)
2022 to 2023	No target	£149,746,714	£13,632,895	9.1%
2023 to 2024	No target	£156,613,455	£12,692,708	8.1%
2024 to 2025	No target	£229,815,875	£8,456,200	3.7%
2025 to 2026	No target	To be confirmed	To be confirmed	To be confirmed
2026 to 2027	No target	To be confirmed	To be confirmed	To be confirmed
2027 to 2028	No target	To be confirmed	To be confirmed	To be confirmed

Contracts placed with SMEs over £12,000 (including VAT)

Financial year	Number of contracts with SMEs	Percentage of contracts with SMEs
2022 to 2023	90	18%
2023 to 2024	223	54%
2024 to 2025	146	49%
2025 to 2026	To be confirmed	To be confirmed
2026 to 2027	To be confirmed	To be confirmed
2027 to 2028	To be confirmed	To be confirmed

You can also view past central government spend with SMEs.

Our payment performance

The government is leading by example and paying our suppliers promptly. Late payment is an issue for businesses, especially smaller businesses, as it can adversely affect their cash flow and ability to trade. The government recognises that the public sector should set a strong example by paying promptly.

The public sector is required to pay their suppliers in 30 days and report on their performance on an annual basis. These 30-day terms also apply in public sector supply chains. Our department’s latest payment performance is set out as follows.

Between July to September 2025:

• 95% of invoices were paid within 5 days
• 99% of invoices were paid within 30 days

You can:

• view our payment statistics.
• view further information on government’s payment policy and legislation.

SME Hub

The small and medium business hub is a dedicated space for SMEs looking to work with the government. Here you will find links to other departmental action plans and centralised guidance on bidding for government work.

Contact us

Share your SME feedback. Whether you are a current supplier or interested in working with us, your input is valuable.

You can contact us via email: smallbusinessprocurementsupport@businessandtrade.gov.uk.