Stacey Dingwall – Head of policy and external affairs at FSB Scotland

Gaps and inconsistencies in the way local authorities record their spending with small and local companies are highlighted in a new report by the Centre of Local Economic Strategies (CLES) for the Federation of Small Businesses in Scotland (FSB).

The Boosting Local Economies report finds that adopting a Community Wealth Building (CWB) approach, where public organisations aim to increase spending with local firms, can deliver benefits for small businesses.

However, it warns that accurate and consistent reporting of local authority spending is essential to delivering the Scottish Government’s ambitions to adopt a CWB approach across the country.

Naomi Mason, head of Scotland at CLES, said: “The research has shown that taking a community wealth building approach to public sector procurement does have benefits for SMEs, particularly small and micro businesses.

“We applaud the Scottish Government’s community wealth building commitments, however ensuring accessible and accurate reporting of procurement practices is essential. Working with local authorities to ensure data is recorded consistently and accurately is important, as is collaboration with industry bodies to ensure it is possible to break down analysis to micro level.”

The report also highlights a disconnect between the aspirations within local authorities to increase procurement spending with small firms and the barriers still felt on the ground.

Small firms continue to find procurement practices complex, with “procurement language and processes… felt to be unduly burdensome on small businesses”, the report notes.

Previous research by CLES has highlighted the “significant amplifier effect” that small businesses have in local economies with greater community benefits than the equivalent spending with large corporations.

The Scottish Government introduced a Community Wealth Building Bill to the Scottish Parliament in March.

Stacey Dingwall, FSB Scotland’s head of policy and external affairs, said: “The Scottish Government’s progressive procurement ambitions are admirable. With the introduction of the Community Wealth Building Bill, there is a chance to be bold and visionary in procurement practices.

“However, the legislation needs real teeth. Enshrining targets for greater local spending within the Bill will be critical to ensuring it delivers increases in procurement spending with local and small firms. Adding standardised reporting requirements within the Bill’s proposed community wealth building action plans, which local authorities would be required to develop, is also essential.

“The Scottish Government must also revisit the Procurement Reform (Scotland) Act 2014 to ensure it is fit for purpose and aligns with broader legislation and policy.”

The Boosting Local Economies report also highlights the importance of ensuring adequate resourcing of support for SMEs in order to deliver on ambitions to grow the sector. While there is praise from small businesses for the Scottish Government’s Supplier Development Programme, the report notes a “dissatisfaction and frustration” with the support available in some areas.