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July 28, 2014

Labour: ‘Real barriers’ exist for small Government IT suppliers

How would Labour help SMBs in power?

By Joe Curtis

"Real barriers" remain for small businesses trying to sign public sector IT contracts, according to Labour.

Shadow Cabinet Office minister Chi Onwurah attacked the Government for its "Big IT mindset" in an interview with CBR last week.

She said the Coalition lacked a focus on small businesses despite its target of spending 25% of all expenditure on them by 2015, and vowed to improve on its record if the opposition party comes into power next May.

Onwurah told CBR: "Not enough government spend is going to small businesses. That’s clear. There’s been a lot of talk about encouraging small businesses by this Government but it hasn’t translated into reality.

"When I speak to small businesses this Government isn’t that popular because there are still real barriers, one of which is being paid on time. It’s a Big IT mindset."

The Cabinet Office’s Mystery Shopper Service – an anonymous feedback process for Government suppliers – filed a report in June that found 64% of all contract management issues raised regarded payment, adding that many suppliers were not being paid at all.

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But the Coalition has also achieved a £191m spend on firms, many SMBs, via its G-Cloud framework, though recent think tank figures from the Institute of Government demonstrate it spent £4.3bn on the ‘Big Six’ IT firms in both 2013 and 2012.

Onwurah claimed Labour would increase its spend on SMBs compared to the Government, but stopped short of setting an explicit target to achieve.

She also refused to speak ill of Big IT companies, despite admitting that some had lobbied the party on its IT policy in the form of submissions to its Digital Review.

"The experiences of larger companies in engaging with government can be very useful in showing where the shortcomings have been in the past," she said. "A key question for us is how do we improve the delivery of government IT."

Under Cabinet Office minister Francis Maude, Whitehall has been focused on replacing single IT supplier contracts with multiple providers.

The Home Office is the latest Whitehall department to seek to replace long-term single supplier IT contracts with computer systems provided by multiple small suppliers, but has experienced problems transitioning.

The Labour MP said that rather than demonise Big IT or marginalise SMBs, Labour would seek a "mixed economy of suppliers".

"Some of the themes coming out of the submissions are around having a more intelligent buying customer in Government for companies of all sizes to work with," she said, suggesting that large firms could work with smaller businesses.

"SMBs who responded were very impassioned about this as well. Small businesses also need larger businesses in the supply chain in the market to share risk with. They need someone they could talk to who understood the industry, understood the challenges, understood the business."

Labour received between 60 and 70 submissions to its Digital Review, which are likely to inform its digital strategy, which should be revealed in the autumn.

Onwurah said that creating a baseline of digital skills among local government employees was a priority, following a BT survey that found just 25% of councils are ready to invest in staff’s IT literacy.

More than a third of 200 respondents added that workers lack sufficient IT knowledge, despite the Government’s Capabilities Plan to improve civil servants’ IT skills.

Onwurah said: "This Government has been successful in attracting great digital talent to the Government Digital Service and to key positions in other departments but I haven’t been able to see a big upskilling in the general level of skills."

A Cabinet Office spokesman said: "Before the last general election smaller business were almost excluded from working with Whitehall. Our reforms have levelled the playing field for innovative IT and digital suppliers of all sizes.

"Despite some progress supporting SMEs we know there’s a long way still to go as legacy contracts signed before 2010 unwind.

"Through our civil service reform programme, we are addressing long-standing gaps in digital skills in Whitehall. And our Digital Inclusion strategy brings together public, private and voluntary sector organisations to help reduce the proportion of the population who are offline by 25% by 2016."

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