How HS2 is boosting SMEs, with 2024 procurements over £1bn

HS2 Ltd says that its construction project - Britain’s biggest - is helping the UK’s small business community to thrive.

It comes following the release of new figures which show HS2’s civils contractors doubled their total spend with SMEs – companies with 250 or fewer employees – in 2022/23 compared to the previous financial year.

Small and medium sized businesses, which account for over 70% of HS2’s supply chain, shared a slice of £942M – a marked increase on the £456M total spend in the previous year.

HS2 Ltd says that the cash injection delivered a boost for construction companies across the country, battling with rising inflation and supply chain pressures linked to the pandemic and Ukraine war.

The scale and momentum of HS2’s construction in 2022/2023 saw the project hit peak construction and its workforce topping a record 30,000.

Robin Lapish, HS2’s Supply Chain Lead said: “From the outset, we put robust targets in place to ensure UK-based SMEs would benefit from HS2’s vast construction programme. Our contractors, through their own procurement processes, embraced the challenge we set them and as a result, just shy of a billion pounds flowed into small businesses, across the country, in just one year of our civil engineering programme.

Further growth predicted

“2024 promises to be another year of opportunity, with a procurement pipeline worth over £1bn set to be released by our construction partners, plus the award of our railway systems contracts, totalling £5bn. We want to see more local businesses stepping forward and benefitting.”

HS2’s seven construction partners (stations and civils) hit a combined average of 20% total spend with SMEs in 2022/23.

Align JV and EKFB JV, both delivering the central sections of the HS2 route, exceeded the average, with respective total spends of 33% and 26%.

EKFB JV’s approach to supplier diversity was commended by the Chartered Institute of Procurement and Supply back in 2020, when it received the ‘Best Initiative to Build a Diverse Supply Base’ award.

Benefits felt locally

Chris Read, Supply Chain Management Lead at EKFB JV, credits the team’s early focus on achieving supplier diversity with its continued success: "We developed a detailed action plan as soon as we secured our civils contract with HS2 Ltd, setting out a procurement approach that would ensure both SMEs and local businesses benefitted.

“Today, 70% of our supply chain are SMEs and in the last year, 20% of EKFB’s contracts were awarded locally.

Business growth is being felt at a local community level too, with haulage specialist, Vaughan Plant Haulage LTD, among the many SMEs continuing to benefit from repeat contract awards. Its Managing Director, John Vaughan explains: “Naturally, the upturn in work has meant we have been able to employ more skilled staff, most of which are local to the project.

"As a whole, working with HS2 has proved to be very beneficial to our business. Not only to us but many other local businesses who are now presented with new opportunities that were not there before.”