Balfour Beatty has this week backed the launch of a report urging measures to help ethnic minority and black-owned (EMB) businesses win their fair share of the UK’s public procurement spend.
The road to inclusive procurement is a report from Minority Supplier Development UK (MSDUK), an organisation that helps large companies to diversify their supplier base and facilitates connections with EMB businesses, for instance via “meet the supplier” events.
The report was launched to mark Supplier Diversity Week (13-18 October) at the House of Lords, at an event hosted by Baroness Hayman with speakers including BBC Dragons’ Den star and Outsourcery co-founder Piers Linney.
The report commends current government efforts to increase the share of public spending that flows through SMEs’ books to 25% of total spend, and also to diversify the range of SMEs that benefit. These policy aims are achieved via the SME Agenda, the Social Value Act and the Equality Act, which places an Equality Duty on public bodies to use public procurement to improve equality.
However, it says there is a lack of data on the effects of this push for greater supplier diversity, and a lack of guidelines on achieving social value.
Pictured at the launch event are Martin Chown, Balfour Beatty; Chi Onwurah MP, Mayank Shah, MSDUK, Piers Linney, Baroness Hayman, Arnab Dutt of SME Texane and Dr Mark Lloyd Davies, Johnson and Johnson.
Meanwhile, EMBs are estimated to account for 6-9% of SMEs in the UK and ethnic minorities currently make up 14% of the British population, a percentage that is expected to double in the next 25 years. The report say this "indicates that the number of ethnic minority-owned SMEs will continue to grow become increasingly important to socio-economic growth in Britain.”
The report launched by MSDUK urges other UK companies to follow Balfour Beatty’s lead and help government achieve its target spend of 25% with SMEs by:
- Capturing data and independently auditing the type and size of current supply chain partners in order to have a baseline from which to improve and define targets;
- Simplifying processes and addressing the administrative burden that continues to overwhelm SMEs by reducing the time and cost required for procurement bids;
- Training and educating internal procurement teams on the benefits of inclusive and diverse supply chains and the processes that helps to drive this.
Mayank Shah, chief executive of MSDUK, said: “Public procurement is worth a staggering £230bn a year to companies who supply to government departments, agencies and public bodies, but more needs to be done to create a level playing field for UK SMEs including black and ethnic minority owned SMEs, who contribute £25bn-£32bn to the UK economy but operate in some of the most economically deprived areas of the country.”
Martin Chown, director of supply chain and procurement at Balfour Beatty, said: “Small businesses create local jobs and apprenticeships and they are the innovators, engineers and exporters of the future. We are pleased that we have been able to overcome many of the challenges of capturing data on our supply chain, and as a result have been able to target our supply chain spend with SMEs.
“I would encourage more big businesses to do as we have done, and show that they are serious about diversifying their spend to ensure we have a more resilient and sustainable economy.”
A Balfour Beatty spokesman added that Balfour Beatty directs 50-60% of its spend towards SMEs, in line with the industry average. Its total spend with SMEs amounts to £1bn, higher than any other firm in the construction sector. But Balfour Beatty is as much in the dark about the percentage of EMB-owned businesses in its supply chain as any other UK organisation, as there is no system of gathering data on the ethnic origin of business owners.
The MSDUK report urges the UK government to institute a system of collecting information on the ownership of UK enterprises.
Joset Wright-Lacey, President of the American association of minority suppliers, the NMSDC, said: “Congratulations to Balfour Beatty for taking what can only be described as an aggressive leading role in driving targeted SME spend among large businesses in the UK. I hope that their example and effort will act as a call to action to the rest of UK industry.”
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