Government Targets for Small Business Fatally Flawed

LONDON, December 1, 2010 - The procurement intentions and targets of government are fatally flawed
as, without a change in law and European treaty obligations, the deliberate
favouring of Small and Medium sized Enterprises is not lawful. As a result,
the government cannot make any commitment to procure any proportion of its
requirements from that or any other sector.

This has been underlined by the Enterprise Trust, a think tank for
industry with specific interests in government procurement policy as it
effects SMEs.

Last week, the Trust pointed out to Frances Maude, the Minister for the
Cabinet Office, the flaws in the government's stated procurement objectives
and today The Trust has published a new report into the 40 year old success
story of the American model for procurement from small business. This would
be illegal throughout the European Union.

According to The Trust, government cannot discriminate by setting aside
any proportion of its procurement spend in favour of any sector. This is
despite Coalition promises that a quarter of all government procurement
should be through SMEs, a target that can only be achieved by setting aside a
proportion of its procurement spend.

Blocking this objective are the laws against discrimination against any
one commercial or industrial sector as laid down in law by treaty obligations
between the European Union and the World Trade Organisation. The Trust points
out that such laws are unnecessary as competitive economies such as those of
the United States, Japan and South Korea are not signed up to them.

In a letter to Frances Maude, Enterprise Trust Chairman William Poeton
pointed out that until a legal challenge to the WTO is mounted, no government
can alter procurement policies. This allows markets to be effectively
controlled by dominant firms.

The Trust believes that a challenge to the WTO would find favour with the
business community throughout Europe and that a "Set Aside for Competition"
policy based on the American model should drive billions of pounds and
millions of jobs into the economy.

The Trust also believes that an Ombudsman should be appointed to guard
the interests of the SME sector. and a general reclassification of SMEs
should be started as soon as possible.

Editors note: The report into the US Small Business Administration is
published today on www.enterprisetrust.org.uk

Media Contacts: Ben Anderman, General Secretary, +44(0)20-7431-8382, Malcolm Harrison +44(0)20-7581-8335