Welsh SMEs missing out on their share of £187 billion in public sector contracts due to Britain’s EU membership

Vote Leave campaigners have today highlighted the “onerous” impact of EU membership on small firms competing for public procurement contracts.

The claims come exactly two weeks before voters go to the polls in the EU referendum.

Research by the UK government last year found that just 13% of Welsh SMEs were planning to bid for public sector contracts – in spite of the fact that the sector has the potential to unlock around £187 billion worth of contracts each year.

EU public procurement legislation imposes complex tendering requirements for public sector contracts, with SMEs regularly complaining that the threshold at which procurement law applies is set too low to enable fair competition.

The UK Government itself has admitted that the “rules are onerous, especially for SMEs”, leading to “a regulatory cliff edge that inhibits SMEs from bidding for work above the threshold”.

Indeed, a study for the European Commission has found that procurement costs amount to 30% of the value of a small contract, and that procurement exercises cost £45,000 on average and delay contractual awards by 193 days.

Leader of Vote Leave Wales, David Jones MP, said:

“SMEs are the lifeblood of the Welsh economy, making up 99% of all Welsh businesses, and it is clear that Britain’s membership of the EU is making it all too difficult for them to access public sector contracts.

“Only a vote to Leave the EU will enable the UK Government to take meaningful steps to reform the procurement process and to strip away the unnecessary bureaucracy and red tape that makes it prohibitively expensive for small firms to compete for and win government business.

“Procurement procedures could play a vital role in growing the Welsh economy, by creating employment opportunities, encouraging firms to grow and expand.

“Sadly, however, the average cost of a procurement exercise is £45,000, which makes it next to impossible for SMEs to compete with their bigger rivals; and even the UK Government has admitted that the threshold at which EU law applies is too low.

“The fact is, whilst the cost of EU membership is paid by everyone, its benefits are almost exclusively felt by the biggest firms and that cannot be right.

“Wales has a thriving entrepreneurial culture and we need to do all we can to ensure that it’s a great place to start and grow a business. After all, if every small firm in Wales were freed to take on just one extra employee, unemployment in Wales could we eradicated at a stroke.

“That’s why we need to Vote to Leave the EU on June 23 and take back control of our economy, freeing SMEs from stifling EU regulation and red tape.”