The spend, which will be the largest ever by a UK construction company, is a third up on last year’s level and is expected to bring a big jobs boost to Tier 2 and 3 firms.

The Prime Minister joined Nicholas Pollard, Balfour Beatty’s UK construction chief executive officer, as he unveiled the pledge to highlight the Government’s own goal of 25% of central Government spend going to small and medium sized businesses by 2015.

Pollard estimated the spend will help support around 200,000 jobs within smaller businesses, 50,000 more than in 2013.

Balfour Beatty’s UK construction business boasts over 8,000 active supply chain partners. More than three quarters of these are classified as small and medium sized firms.

Speaking at a Balfour student accommodation job in Westminster, the Prime Minister, said: “Giving businesses the confidence to invest and create jobs is a key part of our long term economic plan.

“Balfour Beatty’s commitment to spend a record £1bn on small and medium sized businesses this year is very welcome evidence that this plan is working – supporting thousands of jobs within small and medium businesses, which will give hard-working people economic security for the future.”

Pollard added: “We are delighted the Prime Minister could be with us today to celebrate our £1 billion spend with small businesses this year, 98% of which are British companies.

“Small businesses create local jobs and apprenticeships and they are the innovators, engineers and exporters of the future.

“We are committed to supporting them so that we can build a better Britain together; leaving a lasting legacy in the communities we touch across the UK.”

Jonathan Howard, Director at scaffolding firm Robert West, said: “The stability of our relationship with Balfour Beatty allows us to thrive and progress as a business and we welcome additional investment being targeted at smaller businesses like ours.

“We certainly support Balfour Beatty’s commitment to increasing spending with small and growing businesses like ours.”