Construction industry encouraged to invest in SMEs

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Posted in:Banking and Finance, berg Advisory, Business Finance, Corporate and Commercial, Real Estate|July 22, 2014 | Join the mailing list

As the
Telegraph recently highlighted
, SMEs are being neglected in big business contracts. Our Real Estate team explain why this will have an impact on the local and regional economies.

The Government is pushing big businesses to give more work to smaller companies but size still matters it seems as new research points out that bigger firms are getting better contracts.
Construction firm Balfour Beatty has committed to spend more than £1bn with SMEs in the UK during 2014, a 33pc rise on its 2013 spend. The Government is in the process of introducing a raft of new regulations aimed at encouraging big businesses to work with
more SMEs.

Ian Barker, Berg’s Head of Real Estate commented that:

‘The construction industry is a key piece in the economic growth jigsaw – increases in housebuilding and commercial development will drive economic growth and the SME sector will play a major part in this.

It is important big business doesn’t keep SME colleagues at arm’s length. The Government is directing major investment to local economies – so adding in commitments like this to include SME investment through big contracts will create a development footprint
on local and regional economies allowing wider growth.’

Under new rules from the EU, public sector and regulated businesses will no longer be able to favour large firms. Instead they will only be able to specify that suppliers have a minimum turnover figure up to two times the value of the contract. Corporates will
also have to explain why contracts were not split up into smaller lots, effectively shutting out SMEs.

For more information about any of the above or for practical advice on this or any other aspect of commercial development, please contact
Ian Barker of the Berg Real Estate Team on 0161 833 9211 or email him at

(The information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Berg or any of its partners or employees. Professional legal advice should
be obtained before taking, or refraining from taking, any action as a result of this article.)

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