Council ‘could put small firms out of business’

Published on 06/02/2013 12:46

COUNCIL proposals to save millions of pounds through bulk buying and new supply deals could end up putting small companies out of business and harming the city’s economy, it was claimed today.

Gordon Henderson of the Federation of Scottish Businesses said the planned saving of £50 million to be made in procurement over five years could only be achieved by economies of scale, but he warned that could squeeze local firms out of the bidding.

Procurement savings of £9m for the next financial year are included in the council budget which will be approved by councillors tomorrow.

The local authority has employed external consultants to find savings, many of which are expected to come from bulk buying and negotiating tougher deals with suppliers.

But Mr Henderson said: “My worry is that bulk buying means aggregating contracts to create fewer but larger deals thus taking them out of the reach of local small businesses and instead giving them to big businesses that operate on a UK or European level.

“Often small businesses are unable to tender for these large contracts because their small size precludes them at the pre-qualification stage.

“When a council aggregates contracts with other councils then any chance of their money being spent with locally based businesses is lost.

“If we are not careful then the £50m procurement cut could just take a huge amount of money out of the local economy and end up costing the council more when small businesses are struggling.”

He acknowledged the tight financial situation the council faced, but urged the city to be cautious over the proposed 
savings.

“The council needs to look at the knock-on effect of procuring only on price with no regard to aspects such as the local economy, local jobs, quality of service, and community benefits. I hope there will be further consultation on these cuts before new contracts are put in place.”

Finance convener Alasdair Rankin said the council was taking into account the concerns Mr Henderson had raised.

He said: “We do have a commitment to supporting the city’s economy as best we can and there are good reasons for procuring locally in any case, including the environment.”

He said the external consultants would produce more details by the end of the month. “We will have to look at exactly what is proposed.”

TORIES EYE COUNCIL TAX CUT

TORIES will propose a one per cent cut in council tax at tomorrow’s budget meeting, funded by a reduction of up to five per cent in council staff, along with improved productivity, leadership and management efficiencies.

They also want to “revisit” the idea of privatising environmental services and property maintenance, and spend more on roads and sports pavilions.

The Greens will urge a £10 million Warmer Homes programme targeted at the lowest income households to boost energy efficiency and tackle fuel poverty. They also propose £1.5m extra for school energy improvements and pledge to keep toilets free.