Policy paper

DESNZ 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 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. This 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

SMEs are drivers of the British economy. They make up over 99.85% of UK business population. At the start of 2025 there were estimated to be 5.6 million small businesses in the UK.

Government is committed to reducing the barriers that small businesses face in engaging with and securing government procurement contracts. The 2023 Procurement Act makes provisions to make procurement processes simpler and more transparent, which will be beneficial for smaller businesses.

Using research conducted by the Cabinet Office Small Business Advisory Panel on common issues, we have published a set of actions for the next year for our department. We will track our progress and review the actions on an annual basis, updating them where appropriate.

Small businesses and social enterprises are more likely to generate diverse and thriving local economies, creating jobs and economic growth. Increasing procurement spend with these suppliers is a national priority to drive economic growth. We benefit from small businesses’ ability to be responsive and come up with innovative solutions. As departments who are working on creating new and robust industries of the future, aligned with the government’s mission, including the ‘Industrial Strategy’ will put UK firms, small businesses and social enterprises in the best possible position to compete for and win public contracts.

Department overview

DESNZ

The Department for Energy Security and Net Zero (DESNZ) is a ministerial department, supported by 14 agencies and public bodies. DESNZ is securing our long-term energy supply, bringing down bills and halving inflation. The department’s key responsibilities are:

• delivering security of energy supply
• ensuring properly functioning energy markets
• encouraging greater energy efficiency
• seizing the opportunities of net zero to lead the world in new green industries

DESNZ was established in 2023 and is focused on the energy and net zero portfolios from the former Department for Business, Energy and Industrial Strategy (BEIS). For more information about what we do, see the DESNZ organisation page.

ICS

Integrated Corporate Services (ICS) is a shared corporate entity providing HR, Finance, Security, Digital, Estates, and Commercial services to:

• Department for Energy Security and Net Zero (DESNZ)
• Department for Science, Innovation and Technology (DSIT)

Some digital services are also provided to the Department for Business and Trade (DBT).

The ICS was formally established in July 2023 following the machinery of government changes to the former Department for Business, Energy, and Industrial Strategy (BEIS).

The ICS is responsible for the implementation, monitoring and reporting of the first SME action plan, on behalf of DESNZ. The action plan concentrates on core DESNZ. Many of our partner organisations have their own programmes of work to support SME suppliers and actively seek opportunities to work with and share best commercial practices.

Why SMEs should work with us

We welcome engagement with SMEs in our departments, whether that is through directly supplying, joining a framework agreement or working with our suppliers in their supply chain.

As recognised in the 2023 Department for Business and Trade (DBT) ‘Payment and cash flow review report’, cash flow is a significant issue facing SMEs. Concerns about cash flow and late payments significantly limit an organisation’s ability to invest in skills and opportunities that would help to further develop their business.

The development of suppliers is a significant theme of the action plan. Suppliers should be supported to learn from their previous attempts, access resources and guidance to rectify any areas of improvement and the opportunity to learn from their peers.

DESNZ is a department with the mission of developing and supporting the growth of new and emerging sectors. SMEs are a vital part of those sectors. They may have been set up to respond to new challenges and take advantage of nascent opportunities with new products, services and technologies. Their small size may allow them to respond more quickly and trial potential alternatives to existing solutions, which may stimulate growth in their sector. The growth of small businesses can help reduce harmful environmental effects, offer jobs in industries that need more skilled workers, and create employment opportunities in local communities to spread the benefits across the country.

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 Find a Tender.

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 use the Central Digital Platform, the enhanced Find a Tender service.

You can search and apply for contract opportunities.

Joining frameworks or DPS

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 call off orders.

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 commercial agreement pipeline for upcoming agreements.

Joining a supply chain

Small businesses may wish to join a supply chain and supply indirectly to our departments. All successful contracts are recorded on Contracts Finder so organisations can check who was awarded the contract then check the awardee’s website for potential contract opportunities. Many industry bodies and trade associations also advertise opportunities in supply chains. As part of the actions set out in the supplier diversity action plan, we will be requiring more of our suppliers to register sub-contracting opportunities on Contracts Finder over a certain threshold so that SMEs may benefit from indirect opportunities with our departments.

Further information on how to do business with our department.

Helpful information so you can start supplying to government.

Our 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 DESNZ engages the market, this will be advertised via the central digital platform for public procurement, Find a Tender, as required by public procurement legislation.

We are planning to offer opportunities for potential consortium-building workshops; allowing organisations to meet one another that may be interested in creating a joint bid for government procurements. Information on these events will be available on our procurement page.

CCS also has an events page for frameworks which can be accessed on the Crown Commercial events page.

Our actions and milestones

The Cabinet Office Small Business Advisory Panel has identified some barriers that small businesses face when contracting with government.

Addressing these barriers can improve the process of doing business with us and help small businesses win more work. These improvement actions have been developed to reduce and remove barriers for small businesses looking to work with us.

These milestones are for the next 12 months. A review will be conducted and the actions will be refreshed.

Improvement action	Benefit to SMEs	Milestones
Reduce the complexity of the procurement process	Suppliers are involved in shaping and improving ways of working with small businesses.	Complete a consultation with suppliers to understand their experiences of the procurement process, to inform improvements.
Make suppliers aware of opportunities to bid for	Suppliers can find and navigate potential opportunities easily.	Promote the commercial pipeline more widely to encourage awareness and engagement.
Make suppliers aware of opportunities to bid for	Suppliers can find potential subcontracting opportunities on Contracts Finder easily.	Remind prime contractors of their responsibilities to publish subcontracting opportunities on Contracts Finder.
Be aware of unconscious biases	Supplier’s experience of working with government departments is improved.	Hold insight sessions with commercial colleagues to show the barriers that different small businesses face in bidding for government work and how they can be mitigated to ensure the unintentional exclusion of small businesses. Conduct a buyers’ survey to establish their awareness and understanding of the challenges of small businesses and how to address them. Once a baseline is established, run the survey regularly to ensure that other actions are effective in improving colleagues’ knowledge.
Conduct preliminary market engagement	Suppliers are given the opportunity to give views, exchange ideas, give clarity, and, if necessary, address concerns.	Work with CCS Crown Representatives, Cabinet Office Small Business Team and department SME Champions to ensure that market engagement sessions are inclusive of small businesses.

Case studies

We want to remove barriers for SMEs to compete and win government contracts. Case studies show how DESNZ is working with SMEs and helping the public sector make significant savings.

As part of our continuous improvement and growth we will identify opportunities for suppliers to share their experiences of working with us. Details of these case studies will be available from our procurement page.

Help to Grow: Management

An intensive national training programme that aimed to improve SME leadership and management skills. This programme aims to support 30,000 SME business leaders to increase productivity, seize investment opportunities and grow their business. This 12‑week programme, which includes 1:1 mentoring, is designed to fit around full-time work, is provided by leading business schools across the UK and is backed with a 90% government subsidy.

Funding schemes

At national level, funding schemes that aimed at supporting small businesses included the Boiler Upgrade Scheme, offering grants of up to £6,000 towards heat pumps; the Workplace Charging Scheme, which provides support towards the upfront costs of electric vehicle charge-points and their installation; and the Cycle to Work Scheme which allows employees to hire equipment via salary sacrifice and can enable tax savings for both the employee and employer.

Work with BSI

We previously teamed up with BSI and sponsored 100,000 free copies of the BS EN ISO 50005 Energy Management System standard, to support SMEs to manage their energy performance. The standard provides SMEs with a means to develop a practical, low-cost approach to energy management, to reduce energy consumption, energy bills and greenhouse gas emissions.

Our spend with SMEs

DESNZ was created in February 2023 from the dissolution of BEIS. As a result, the departmental spend figures have not been published. Below are the DESNZ group spend figures.

Financial year	Direct spend with SMEs (% Target)	Total procurement spend (£)	Direct spend with SMEs (£)	Direct spend with SMEs (%)
2023 to 2024	No target	£771m	£175m	22.7%
2024 to 2025	No target	£725m	£208m	28.7%
2025 to 2026	29%	TBC	TBC	TBC
2026 to 2027	29%	TBC	TBC	TBC
2027 to 2028	29%	TBC	TBC	TBC

Our SME direct spend target for 31 March 2028 is 29%

This target includes our arms length bodies (ALBs), is based on our historic SME direct spend and comes at a time where there is great uncertainty associated with future DESNZ mission related spend. We have consulted with both Crown Representatives for small businesses and voluntary, community, and social enterprises (VCSEs) in setting the target and developing our SME action plan.

We are committed to doing all we can to encourage participation and spend with SMEs. We have a number of commitments as part of our SME action plan which will reduce and remove barriers to participation. We are also conscious of a number of headwinds due to significant activities across the DESNZ group that will influence SME direct spend. In particular Great British Nuclear (GBN) and UK Industrial Fusion Solutions (UKIFS), will be awarding multi-billion-pound construction contracts for the UK’s Small Modular Reactor (SMR) programme and STEP (Spherical Tokamak for Energy Production) respectively.

With the Spending Review outcomes, we have limited visibility of our procurements over the next few years, which makes it challenging to accurately forecast our spend and how that may contribute towards or inhibit our commitments to SMEs. However, we feel the 29% proposed direct spend target for SMEs will appropriately stretch DESNZ and our ALBs while remaining achievable and realistic.

• View historical central government spend with SMEs

These publications provide data on the central government’s direct and indirect spend with SMEs.

Our payment performance

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 jeopardise their 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. 30-day terms also apply in public sector supply chains. Our department’s latest payment performance is set out below.

DESNZ latest report covering July to September 2025

• 92.05% of invoices were paid within 5 days
• 98.66% of invoices were paid within 30 days

View our payment statistics

View 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

Commercial ESG - Integrated Corporate Services
CommercialESG@ics.gov.uk