FSB calls for £6bn Scottish council procurement spend on smaller firms

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The average Scottish council spends less than a fifth of their procurement budget with local small and medium sized enterprises (SMEs),  according to data uncovered by the Federation of Small Businesses (FSB).

Launching its manifesto ahead of the May 4 council polls, the small business campaign group says Scotland’s incoming town hall administrations must pledge to increase spending with local firms. Scotland’s 32 local authorities spend over £6.1 billion a year procuring goods and services.

Statistics collated by the Improvement Service – the national organisation tasked with improving local government – show that the average Scottish council spent only 19.7 per cent of their procurement budget with smaller firms in their area in 2015/16.

There are 348,000 SMEs operating in Scotland – accounting for 99.3 per cent of all businesses and providing an estimated 1.2 million jobs.

The data shows there’s variation across councils in relation to procurement spend – with West Dunbartonshire council delivering just 5.8 per cent of their budget with local firms. At the other end of the spectrum, Shetland Islands council uses more than half (53.6 per cent) of its spending power boosting the local economy.

FSB says it understands why smaller councils are likely to have lower levels of local procurement. But it highlights that all of Scotland’s city councils, with the exception of Aberdeen, spend less than one pound in four with local SMEs – with Glasgow and Dundee falling behind the national average.

Andy Willox

Andy Willox

FSB’s Scottish policy convenor Andy Willox, said: “Council budgets are under significant pressure. That’s why it is important that they squeeze every drop of value out of their spending power by targeting it on their local economies.

“We’re calling on every Scottish council to increase their spending with local firms by two per cent per year, delivering a £600m boost to Scottish business by 2021.”

FSB’s procurement call is a key recommendation from their 2017 Scottish local government election manifesto, launched today. The group is also pressing for action on local roads and action to ensure city deals work for local economies.

Mr Willox said: “Most smaller firms have far more contact with their local authority than central government. And we know that smaller firms are key to prosperous local economies. In these uncertain times, strong partnerships between councils and their business communities are more important than ever.

“Our manifesto sets out practical measures councils can implement to boost their local economies and reduce demands on council services.”

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