Policy paper

MHCLG small and medium enterprises (SME) action plan: 2025 to 2028

Published 24 March 2026

Applies to England

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

The Ministry of Housing, Communities and Local Government (MHCLG) recognises the significant contributions of small and medium-sized enterprises (SMEs) in driving economic growth in the UK. SMEs constitute over 99% of UK businesses and employ three-fifths of the private sector workforce.  SMEs are the backbone of the UK economy, and the government is committed to enhancing engagement and expanding opportunities for these entities to bid for the £300 billion in public contracts.

The government is dedicated to reducing barriers faced by small businesses, such as contract payment timelines and awareness of opportunities. Recognising that public procurement can be perceived as administrative and time-consuming, our ambition is to make it more accessible and tailored to market needs.

This action plan outlines our approach to addressing commercial challenges to improve outcomes for SMEs. We value the benefits these companies bring to our supply chains, including their agility, innovation, and customer service. We will also address the role of our larger suppliers in creating more inclusive opportunities.

Achieving our objectives relies on a diverse range of partners providing expert insight and delivery. This action plan pertains to our procurement and contract management. It is one of many areas where our activities impact SMEs.

We are committed to the National Procurement Policy Statement and aim to maximize the benefits of our contractual activities for the UK public. This includes incorporating Social Value outcomes in many of our contracts and maximising opportunities for SMEs to be part of our supply base, either directly or indirectly.

SMEs make a vital contribution to the UK economy by creating employment, investing in communities, and offering responsive and innovative solutions. While we have consistently achieved 20% of our contracted spend with SMEs directly, we aim to implement actions and considerations to further support SME engagement in our activities. This is just one of the ways MHCLG supports communities across the UK, making them great places to live and work.

Baroness Taylor

Parliamentary Under-Secretary of State in the Ministry of Housing, Communities and Local Government

Department overview

MHCLG plays a pivotal role in our mission-driven government. From laying the foundations for affordable housing to empowering communities and revitalising local governments, our work is essential.

With approximately 3,400 employees across the UK, we engage in a diverse range of activities, including planning, research, analysis, advisory services, and policy making.

Established in 2024 under a new Secretary of State, MHCLG is dedicated to delivering the homes our country needs, supporting community and faith groups, and overseeing local government, planning, and building safety. We collaborate with a wide array of organisations to achieve our strategic objectives.

As a ministerial department, MHCLG works with 15 agencies and public bodies  the largest of which are Homes England (HE), HM Land Registry and the Planning Inspectorate (PINS). Our Executive Agencies and Non-Departmental Public Bodies are committed to adopting the principles outlined in this plan.

The Procurement Act and its supporting regulations will improve SMEs’ access to government contracts and enable the ministry to engage more effectively with prospective suppliers.

Our spend with SMEs

MHCLG and its ALBs spent £430 million in Financial year 2023 to 2024 with third parties through contracts. It also has a number of concession agreements with third parties to provide key services. The Core Dept accounts for approximately £195 million of that spend.

In addition to its contracted spend, MHCLG has a number of agreements with Other Government Departments to provide it with goods and services. This includes the Government Property Agency (GPA) which is an Executive Agency of Cabinet Office, which provides services to our estate. SME spend through GPA is not captured within this Action Plan.

In financial year 2023 to 2024 the core MHCLG department awarded 109 contracts. At year end we had over 228 contracts on our contracts register.

The overall spending profile of MHCLG core department shows an upward trend, reflecting the growing delivery responsibilities of the department.

Homes England procurement activities take place in England; and their contractors and suppliers are predominantly UK and EU based.  Homes England’s total annual procurement spend for 2023 to 2024 was £205 million.

Homes England place general reliance upon the Crown Commercial Service (“CCS”) and government procured supply chains for its consumable goods and operationally focused services (IT, energy, fleet and temporary staff). In a typical year we procure around £18 million of these goods and services through CCS.

Homes England maintain a number of professional services and development Framework Agreements, which are made available to the wider public sector. We also maintain several other frameworks for exclusive use including site security and legal services.

The Frameworks enable users to draw-down professional multi-disciplinary services and development expertise. This includes the services of development or construction companies, with their associated goods, materials and labour-related supply chains. There are currently 4 professional services frameworks available to the wider public sector. These have a cumulative value of £410 million (Property and Finance £100 million, Development and Regeneration £200 million, Development Monitoring £40 million and Research and Economics £70 million). Home England also maintain several frameworks for our own use including Legal (£50 million).

Homes England also maintain a flexible Dynamic Purchasing System (DPS). The Delivery Partner DPS is similar to a Framework but remains open for housebuilders and developers to join as sites become available. This more flexible approach will help diversify the housing market and enable us to work with a wider range of housebuilders large and small.

In addition to the above-mentioned CCS and Framework purchasing, Homes England procure services, supplies and works directly from small and medium-sized enterprises (SME companies), predominantly based in the UK or the EU.

Find information about procurement at Homes England

HM Land Registry (HMLR) ministerial sponsorship transferred to MHCLG in June 2023.  As a non-ministerial Department, HMLR previously provided information on its contractual and SME spend to its former sponsor Department (the then BEIS and more recently, Department for Business and Trade). In future, HMLR’s annual third party spend will be published independently as it is a Non-Ministerial Department.

Why SMEs should work with us

As a department, and in line with the National Procurement Policy Statement we look to use Collaborative procurement mechanisms where these are available and provide value for money. This predominantly is Framework agreements or forms of Dynamic purchasing provided by Crown Commercial Service. Where framework agreements are unable to meet our business needs effectively, we would select a procurement mechanism that seeks open market bids.

The proportion of our spend through framework agreements is high. This reflects the nature of our business requirements. Our data shows that over 60% of the Core Departments spend is through Crown Commercial Service frameworks or Dynamic Purchasing Systems.

Information about Crown Commercial Service can be found on its website https://www.crowncommercial.gov.uk.

See information on how to become a supplier through Crown Commercial Service

Read the Crown Commercial Service SME Action Plan .

As a buyer through frameworks MHCLG will have limited role in diversifying the supply base within these frameworks. However, as the user of these frameworks there are a number of actions we can take to support the SME marketplace within those frameworks. These include better pre competition engagements to support effective bidding.

Unlike Frameworks which are closed to new entrants after award, Dynamic Purchasing Systems and Dynamic Markets remain open for suppliers to join throughout their term. Information on these can be found https://supplierregistration.cabinetoffice.gov.uk/dps

Homes England tender for and manage a range of specialist framework agreements and Dynamic Purchasing Systems. Information on how to become a supplier to Homes England can be found Homes England technical and professional frameworks

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 Find a Tender.

Our pipeline notices are a forward look for 18 months and are reviewed as necessary, with notices reviewed in six monthly intervals.

We advertise opportunities to bid for opportunities below the threshold for public contracts (currently £139,688) on Find a Tender when appropriate. We will also publish notices of planned procurements and Pre competition market engagements on Find a Tender.

Information on the Find a Tender system and guidance is provided below.

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

Search and apply for contract opportunities

Joining Frameworks / 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.

Search the Crown Commercial Service commercial agreement pipeline for upcoming agreements

Joining a Supply Chain

Further information about contracting with MHCLG can be found Procurement at MHCLG - Ministry of Housing, Communities and Local Government    

Departmental supplier events

As the proportion of our spend through framework agreements is high, we do not often run departmental supplier events that are not directly related to procurement events.

CCS has an events page for frameworks which can be included in this section.

Our actions and milestones  

Our action plan to assist SMEs in bidding for opportunities and collaborating with MHCLG outlines measures to enhance visibility of opportunities, foster engagement throughout the procurement process, and support SMEs as providers to the Department. This will help us achieve our SME direct spend target of 27.5%

We recognise common issues exist which limit our ability to access Small to Medium sized Enterprises into our competitions and supply chains. Whilst the range of barriers to SME entry are varied, within MHCLG we have identified some more common issues we seek to address. These include:

• lack of engagement with suppliers before competitions
• not making opportunities or how to engage with us clear enough
• onerous procurement procedures or contractual terms (including financial thresholds)
• insufficient notice and/or time provided to bid for opportunities

Our SME Action Plan is designed to address the known barriers for SME participation in our procurement competitions and ensure fair and equal opportunity to bid for and win those opportunities.

Improvement action	Benefit to SMEs	Milestones & what are the next steps to achieve this?
Increase frequency of pipeline publication – including identifying routes to market and suitability for SMEs	We recognise that getting the best quality and costed bids for opportunities relies on businesses being able to plan to bid for opportunities. The more open we can be early will help companies of all sizes identify and consider opportunities to bid for our work. This is increasingly true for SMEs that will invest in bidding for opportunities. Providing as much notice and clarity of opportunity will allow companies, and particularly SMEs, decide on whether to show interest, set aside resources to bid.	To support this, we will publish our procurement pipeline notices (UK1) for procurements where contracts are expected to be above £2 million in value and procured under the Procurement Act 2023 by 26th May 2025. First milestone: Published pipeline notices (UK1) by 26th May 2025 Second milestone: Published pipeline notices (UK1) by 26th May 2026 Where possible we will include all identified opportunities, recognising that limiting our pipeline reporting to above a set value threshold will reduce the number of potential opportunities SMEs may wish to pursue.
Increase information available on how to work with MHCLG	We will review and update our information to ensure that it is useful to all organisations that are interested in working with us. Whilst we will do this in ways which are fair and transparent to all types of organisation, we will focus on organisations that may be new to working with our Department. This may include guides on using our eSourcing systems to bid.	As a Department, we will increase our engagement through cross Department events to speak about what we do and how to work with us. This will include ‘Meet the Buyer’ events. 1st Milestone: to have attended 2 meet the buyer events by 31 December 2025 2nd Milestone: to have attended 4 meet the buyer events by 30 December 2026
Maintain pre-competition market engagement with increased focus on barriers to SME participation	We recognise that pre competition market engagement provides benefits to both buyers and potential suppliers. For buyers, we benefit from greater input to our needs and how these can be delivered. We also benefit from supplier side insight into our form of contracts and terms and conditions allowing us to consider changes that will help support bidding and providing value for money outcomes. For suppliers, we recognise that these events provide greater insights into our organisation and its needs allowing organisations to make informed choices about bidding for our opportunities. These events can also provide a valuable networking opportunity both for the specific opportunity and more widely whereby supply chains can be developed.	Wherever feasible, we will host pre-market engagement events to support better procurement outcomes for both buyers and suppliers. We will undertake this engagement in ways which will help SMEs provide clear feedback not only on the requirements, but also on the terms of participation for the competition, where practicable. 1st Milestone: to host virtual market engagement events in 80% of procurements where this action is considered to add benefits to buyers and suppliers. By 31 March 2026 2nd Milestone: to host virtual pre-market engagement events in all procurement opportunities where this adds benefit for buyers or suppliers by 31 March 2027
Ensure pre-  market engagement events are SME accessible	Engaging with opportunities can add significant costs for suppliers. This can include lost staff time and costs of travel. We will consider how best to undertake market engagement for each specific procurement but wherever possible will use technology to provide virtual events. These will include easy and free to access platforms for both the events and any questions and answers. Where possible events will be recorded allowing those unable to participate to view these.	Any such events and accessing any recordings would be subject to completion of standard agreements to protect any confidentiality.
Increase Departmental governance arrangements to ensure planned procurements and subsequent contract management consider   Small to Medium Sized Enterprises and their benefits and needs	Our assurance of procurement will be enhanced to ensure that our opportunities include appropriate consideration and application of all commercial policy and objectives. This will include assuring the procurement timetables, terms and conditions, routes to market and procedural steps. For SMEs this will mean that we are considering early whether our proposed commercial models are likely to be effective and have considered alternatives sufficiently. This will also ensure that the process we apply considers the needs of the supply market effectively in order that we can generate good quality bids.	In practice this will mean that we will examine whether our projects build in the right amount of time for interested parties to bid, ensure that terms are proportionate to the requirement (including insurance needs), ensure that time is built in to support those unused to bidding for work with central departments to get the opportunity to ask questions and access support to bid (constrained by what can be done by the regulatory framework) and materials to support use of our eSourcing systems is readily available. Milestone: to set up a commercial assurance board which will ensure that planned procurements consider SMEs and their benefits and needs by 31 December 2026.
Inclusion of wider social value outcomes in a proportionate way	MHCLG is committed to driving good outcomes from its procurements. This includes wider social benefits from its contracts. We are committed to delivering ‘social value’ in line with Procurement Policy Note 002  identifying appropriate social value benefit areas for our procurements.	We believe such benefits are key to maximising the impact of Government spending and provide opportunities for SME organisations to show their innovation and impacts. 1st Milestone: to have developed 2 case studies which give the SME perspective of doing business with MHCLG that evidence social value by 31 December 2025 2nd Milestone: to have appointed a SME champion to act as an advocate for the SME agenda, drive change and embed across the department by 31 March 2026
Prompt payment of invoices	MHCLG is committed to prompt payment and is improving its internal systems and processes to ensure suppliers are paid accurately and on time. We recognise that providing payments to invoices promptly supports cash flow. We want to be seen as a partner of choice for all organisations. Paying promptly will support his ambition. https://www.gov.uk/guidance/prompt-payment-policy	Where suppliers need support in resolving any payment issues, they should contact us at sap.helpdesk@communities.gov.uk where we will quickly examine any issues and seek swift resolution. Milestone: to have 90% of invoices paid within 5 days by 31 March 2026
Increasing Contract Management capability	MHCLG is committed to improving the experience of working with MHCLG as a supplier. Part of this is to provide a better experience through the way we manage our contracts, ensuring that we are clear in our expectations within the contract term, respond appropriately where suppliers want to propose changes and monitor performance and payments effectively.	The Department has recently implemented a new Contract Management Framework and is rolling out training, skills and toolkits for a Contract Managers. Milestone: to have 95% of contract managers foundation accredited or actively working towards accreditation by 31 December 2025

Case study

Supplier: Central British Fund for World Jewish Relief

Contract description: MHCLG aimed to increase access to suitable English language training and employment support to assist Ukrainians in entering or gaining higher-paid employment. The contract includes the assessment of learners’ initial English Language skills and identify barriers to entering the employment market, or into higher paid roles, and develop tailored support plans. WJR will also provide English Language tuition to up to 10,000 Ukrainians, of which two thirds are unemployed and one third are in low-paid employment. The contract also includes the provision of high-quality, individualised employability support to up to 10,000 Ukrainians in parallel to providing English Language classes.

Contract value: £9,291,961

Contract details: English for Speakers of Other Languages and Employment Support - Contract awarded 

Route to Market: Open Procedure under Public Contracts Regulations 2015, advertised on Find a Tender Service

CEO: Paul Anticoni

Data company established: 1933

What the organisation does: World Jewish Relief is the UK Jewish community’s international development and humanitarian agency. The organisation works to tackle Jewish poverty and reach beyond their community. They create opportunities for those out of work to become self-reliant, we bring dignity to the elderly, assistance to refugees and we respond to international disasters.

Company HQ: London

Website: World Jewish Relief

Social Media: LinkedIn
Twitter

Income: £16 million

Number of employees: 49

Supplier experience

In relation to the contract awarded, how did you find the procurement process?

The procurement process was relatively simple in contrast to an extensive and lengthy Pre-Tender Market Engagement process. The relevant officers responded quickly and promptly to all questions, and the timetable was adhered to.

What worked well and what could have been done better?

As above, additional time to prepare bid documents would have been welcome. Even more valuable would have been the inclusion of a mobilisation period beyond 1 month. The necessity for services to be up and running within 4 weeks was incredibly demanding and not sufficient for a programme of this scale and size.

One further area that could be improved is the accessibility for third sector entities to respond to such contracts in terms of administration and time needed to prepare bid documentation.

This is also relevant to the social value requirement* This demand is more than understandable for contracts awarded to profit making entities but perhaps could be altered for registered charities who, as in our case, must use charitable funds to deliver on this element.

The department have also chosen to conduct an in-depth research programme to identify the benefits of such a programme for this cohort. There have been many demands relating to this aspect which at times have been in conflict with the commercial aspect of the contract.

‘The tender response should provide the authority with a high degree of confidence that the Provider has the experience and expertise to directly contribute a minimum of 10% of the contract value to social value (going beyond what the core delivery of the contract achieves and beyond any social value outputs already achieved or that the organisation would otherwise already be achieving’).

What benefit does your company receive from supplying to the public sector?

We have been able to continue delivering on one of our key charitable objectives to ‘create opportunities for those out of work to become self-reliant’. Furthermore, we have been able to expand our activity UK wide (our domestic work had previously been only in England).

We hope to be able to learn from the independent evaluation being conducted by the department to identify any areas for further development.

What was/is/will be the outcome of the contract for the client?

MCHLG has extended the contract for WJR to deliver on its ambition to increase access to suitable English language training and employment support. The Programme to date has receive very positive feedback. We will receive intermediate evaluation results of the programme in late autumn this year.

How would you like to work with the public sector in the future?

World Jewish Relief would be keen to continue working with the public sector on projects with a similar scale and reach as STEP Ukraine. We have been able to refine and improve our practise by working at scale adjusting to regional variations and benefiting from the infrastructure the contract provides.

Group direct spend and targets

Financial year	Direct spend with SMEs % Target	Total procurement spend (£)	Direct spend with SMEs (£)	Direct spend with SMEs %
2019/20	N/A	217m	51m	23.7
2020/21	N/A	234m	46m	19.9
2021/22	N/A	227m	60m	26.6
2022/23	N/A	306m	79m	26.1
2023/24	N/A	420m	125m	29.8
2024/25	N/A	439m	115m	26.3
2025/26	N/A	Not available	Not available	Not available
2026/27	N/A	Not available	Not available	Not available
2027/28	27.5	Not available	Not available	Not available

Executive agencies and non-departmental public bodies (NDPBs)

(where total procurement spend is in excess of £100m per annum).

Note: the following figures have been included in the department’s overall figures above but for transparency purposes are split out below

Individual Executive agency and non-departmental public body (NDPBs)
Please list out all those in scope separately.

Homes England

Financial year	Total procurement spend (£)	Direct spend with SMEs (£)	Direct spend with SMEs %
2021/22	119.5m	32.1m	26.8
2022/23	162.1m	32.6m	20.1
2023/24	206.8m	38.6m	18.7
2024/25	221.0m	42.2m	19.1

Individual Executive agency and non-departmental public body (NDPBs)
Please list out all those in scope separately.

Planning Inspectorate

Financial year	Total procurement spend (£)	Direct spend with SMEs (£)	Direct spend with SMEs %
2021/22	13.7m	1.9m	14.5
2022/23	18.6m	1.8m	9.8
2023/24	17.4m	9.1m	52.1
2024/25	15.8m	4.6m	29.5

Figures in this document are shown in millions or rounded to one decimal place, including percentages; as such, recalculations using these rounded values may not exactly match the totals, which are based on full underlying data.

View historical central government 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.

Latest report covering July to September 2023

• 78.95% of invoices were paid within 5 days
• 98.26% of invoices were paid within 30 days

Report covering April to June 2023

• 81.82% of invoices were paid within 5 days
• 96.96% of invoices were paid within 30 days

Report covering Jan to March 2023

• 78.03% of invoices were paid within 5 days
• 98.04% of invoices were paid within 30 days

Report covering Oct to Dec 2022

• 79.69% of invoices were paid within 5 days
• 97.84% of invoices were paid within 30 days

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

MHCLG Commercial

commercial@communities.gov.uk

Find out about our department