Cabinet Office and Treasury publish SME action plan with 30% and 22% spend targets

The Cabinet Office and HM Treasury published a joint small and medium-sized enterprise (SME) action plan on 2 November 2026, setting targets of 30% and 22% of procurement spend with SMEs by the end of 2027/28.

The plan covers April 2025 to March 2028 and, according to the two departments, sets out how they will reduce barriers and increase opportunities for SMEs to work with government.

GOV.UK also carries an earlier version of the plan, which it labels as published under the 2024 to 2026 Starmer Labour government.

Chris Ward, Parliamentary Secretary at the Cabinet Office, said in his foreword: "SMEs are the backbone of our economy, driving innovation and growth across the UK."

The targets

The Cabinet Office has set a target of 30% of procurement expenditure with SMEs by the end of the 2027/28 financial year. HM Treasury has set 22%.

The plan defines SMEs as suppliers with fewer than 250 staff and a turnover of £44m or less, or a balance sheet total of £38m or less. It will be refreshed every year to reflect progress and new actions.

Lord Livermore, Financial Secretary to the Treasury, said in his foreword: "Small and medium-sized enterprises are central to the UK's economic strength and resilience."

How the departments plan to get there

For consultancies and other professional services firms, the plan's practical detail is in its mechanics. The two departments publish commercial pipelines giving a forward look of up to 18 months, and the plan notes that the Procurement Act 2023 requires UK1 pipeline notices to be published on Find a Tender for any intended requirement over £2m.

The departments say the Procurement Act 2023 creates a simpler, more transparent regime that makes it easier for SMEs to do business with government.

Supply chains are a stated route to the target. The plan says participation in supply chains will be a key way to raise SME spend, and cites the Cabinet Office's Strategic Delivery Partner contract with CGI, which carries a commitment to flow through a minimum of 30% of spend to SMEs.

The departments also work with the Government Commercial Agency to run in-person and virtual supplier events across the country. The agency's own website states that Crown Commercial Service became the Government Commercial Agency on 1 April 2026.

The wider policy

The departmental targets stem from Procurement Policy Note 001, issued in February 2025, which applies to all central government departments, their executive agencies and non-departmental public bodies. It requires each department to set a three-year target for direct spend with SMEs from 1 April 2025, signed off by the relevant minister, and a two-year target for direct spend with voluntary, community and social enterprises from 1 April 2026, with results reported annually.

The Cabinet Office's departmental targets table shows a wide spread. The Department for Science, Innovation and Technology has the highest direct SME target at 40% and the Department for Transport the lowest at 5.75%, although the Department for Transport Group has set a combined direct and indirect target of 33%.

Department	Three-year direct SME spend target
DSIT	40%
Cabinet Office	30%
HM Treasury	22%
Department for Transport	5.75%

The Ministry of Defence has set a target to increase direct and indirect SME spending by £2.5bn to £7.5bn by May 2028.

When the targets were announced on 24 March 2026, the Cabinet Office said they would deliver over £7.4bn a year to small businesses by 2028, with nearly half of departments setting a direct target above 20%. It said the targets cover direct spending only, with billions more going through supply chains, and cited Logan Construction, based in the South East, as an SME that has won a number of government construction contracts.

Under PPN 001, departments must report their results annually, and the Cabinet Office and HM Treasury say their plan will be refreshed each year to reflect progress and new actions.