Red tape that prevents small businesses from winning government contracts will be stripped away this month as part of a government initiative to help British SMEs gain better access to business opportunities within the public sector.

The reforms came as part of  The Report on Small Firms 2010-2015, published earlier today by Lord Young of Graffham, enterprise advisor to the Prime Minister. The report said the “arduous” pre-qualification questionnaire (PQQ) will be shelved permanently this month for contracts valued below EU thresholds for goods and services.

The PQQ can be up to 40 pages-long, and many small directors are put off by the request for a wide range of “irrelevant information”, putting them at a serious disadvantage when tendering against larger organisations.

Lord Young said:

“We will be making the whole procurement process transparent and open and will shortly announce further steps to enable small firms to compete for public sector contacts on a more equal basis. From what we have seen already in our work for central government, this will result in substantial improvements in innovation and even cost savings.”

The report also reinstates the Government’s pledge to eradicate late payments, which, it found, “not only impaired a supplier’s access to working capital but also discouraged them and others from competing for and delivering future public sector business.”

A third of public sector bodies still take over 30 days to settle their bills but as of this month, all public sector bodies will have a legal duty to pay within 30 days.

The Government will also do more to encourage entrepreneurship and skill development from a young age and will offer all head teachers an enterprise adviser to bring speakers into schools. They will also introduce a enterprise passport, a list of a student’s extra-curricular accomplishments, to encourage young people to build business skills outside the classroom, investing with £20 million into the new initiatives.

Lord Young said:

“Young people in school today will face a world in which more and more people work for themselves, work in small groups and sometimes for more than one company and change occupations from time to time.

It is going to be an exciting world but a different one and we must prepare them for it.”

Image by Department for Communities