UK supply chain networks between public-suppliers and non-public-sector suppliers
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When governments award contracts, the benefits extend beyond the organisations that win them. Beneath every public sector contract sits a network of suppliers, subcontractors and SMEs that help deliver goods and services.
This new IPEC research explores these hidden supply chains to understand how public procurement supports regional growth, SME participation and economic resilience. Analysing data from more than 12,000 UK businesses between 2016 and 2022, the study provides new insight into where public spending ultimately flows and who benefits from it.
Key findings
- Public sector suppliers rely on more geographically diverse supply chains than businesses serving only commercial markets, helping spread economic activity across different regions of the UK.
- Following the pandemic, supplier networks became more concentrated, with organisations relying on a smaller group of suppliers. This may have implications for resilience, competition and opportunities for new entrants.
- SME participation increased across supply chains linked to both public and private markets, suggesting policies designed to support smaller businesses may be having a broader impact.
Why it matters
The Procurement Act 2023 and National Procurement Policy Statement place growing emphasis on regional growth, social value and SME participation. However, focusing only on direct government suppliers provides an incomplete picture of procurement’s impact.
This research highlights the importance of looking deeper into supply chains to understand how public spending supports local economies, creates opportunities for SMEs and strengthens innovation. It also provides evidence to help policymakers and procurement professionals make more informed decisions about how procurement can deliver economic benefits across the UK.
Read the full report to explore how public procurement shapes supply chains, regional growth and business opportunities beyond the organisations that hold government contracts.
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