The last two years have been particularly difficult for early stage businesses.

We’re in an era where traditional manufacturing is in decline and outsourcing to foreign shores is a constant threat. There is more pressure than ever on British businesses to innovate and create the products and services that will generate jobs and wealth to ensure we continue to be a business leader.

It is not surprising, given the financial climate, that corporate spending is being cut. In my own industry – IT – this trend has been very noticeable, especially after the dot com boom. Subsequently it has been even more difficult than usual to bring innovative products to market, even when they allow people to do their jobs more efficiently. Traditionally, in times of recession, governments come to the rescue through increased public spending. This is indeed true today with massive programmes in place in many areas of government and the public sector – most notably in the health and education markets.

Unfortunately, given the government culture of appointing prime contractors for large projects, little of this spending is filtering through to smaller companies. One exception is education, where due to its heavily devolved purchasing process, schools are making buying decisions and choosing to use smaller and more local suppliers.

However, the overall picture is poor. It’s in contrast with the US, where government has mandated, through a programme called Set Aside, that about a quarter of government and public sector spending must go to smaller suppliers.

Undoubtedly, it is difficult to be prescriptive and a scheme such as this is difficult to police. There ought, at least, to be a statement of intent from the UK government that everyone with some control of public funds should buy in to the principle that smaller organisations should be helped to flourish.

However, even if there were legislation, cultural changes are also necessary. Large companies in the UK are unused to – and generally not good at – feeding business to newer, smaller suppliers. Government regularly proclaims the importance of entrepreneurialism, yet allows large organisations to be conservative in their buying practices.

Conservatism no longer buys safety. Given the degree of turmoil that businesses have seen over the last few years, a pedigree of many years in an industry can no longer be taken as an indicator of the future viability of that organisation as a supplier.

So the playing field has, in effect, been levelled and big companies can no longer use lack of history as an excuse for discounting suppliers. But even though this is a widespread problem the lead must come from government. Unless they endorse something akin to the US’s Set Aside scheme, organisations cannot be criticised if they do not take, what is perceived as, a chance with newer suppliers.

Despite not having yet taken a lead in this area, the UK government has, at least, made positive moves elsewhere that will benefit smaller businesses. The providing of unsecured funding – either directly through the Loan Guarantee Scheme, or indirectly by providing tax incentives for investment by private individuals in high-risk early stage businesses – is one example. But those moves ought not to be made in isolation. They need to be complemented by creating an environment where organisations automatically turn to new suppliers when they are drawing up their procurement lists.

Bob Jones co-founded Equiinet in 1998. He previously started and sold three data communications companies. The third, Sonix, was sold in 1995 for $70m to 3Com. He left 3Com in 1997 to join Schroder Ventures as part of its IT Industry Investment Scheme.