The Scottish Government has been called on to set out plans to improve public sector spending by the Federation of Small Businesses (FSB) in Scotland.
The move comes as a the FSB publish a report that reveals Scottish councils, on average, spend less of their budget with local firms than the UK.
In Scotland the average figure is 27% compared with the UK-wide average of 31%, according to the study.
Local businesses in Scotland generate £60 million for their local economy from an average council spend of £43 million a year.
The FSB in Scotland have suggested that a programme of change for Scottish public sector purchasing should be produced alongside the Scottish Government’s forthcoming Procurement Reform Bill.
Andy Willox, the FSB’s Scottish policy convenor, said: “While not underestimating the challenges that Scotland’s local authorities face, we hope that this report encourages them to realise that spending locally will boost their local economy. Further, the study shows that while spending with large local businesses is good, spending with small local businesses is even better.
“We, of course, realise that councils can’t purchase on the basis of geography but they can ensure that they break contracts into appropriately sized lots, they can remove disproportionate terms and conditions and they work with their local business community to understand the barriers to local firms’ success.”
Patrick Harvie, enterprise spokesman for the Scottish Greens, said: “Investing in independent local firms rather than big business can create benefits for our economy, for our communities and for the environment. The Scottish Government and local authorities need to do much more to make it easier for small firms to bid for contracts, to help ensure that taxpayers’ money stays circulating in the local economy.
“The forthcoming Procurement Bill could open up huge opportunities for small businesses, if the Scottish Government has the political will for it. Meanwhile, ministers and agencies need to stop giving big businesses unfair advantages like corporate welfare grants which have seen millions of pounds handed over to multinational tax dodgers.”
A Scottish Government spokesman said: “We have yet to see the full report from the FSB so various factors many need to be taken into consideration in terms of these figures and claims.
“On a national level, Scotland has a good track record on spending with SMEs and this Government has taken significant steps to make it as simple as possible for SMEs, including micro businesses, to compete for public sector contracts.
“More Scottish-based businesses than ever before are winning business with the Scottish public sector through Public Contracts Scotland (PCS). In 2012, 82% of suppliers awarded contracts through PCS were SMEs.
“We recognise however, that more can be done to help SMEs and that is why we will introduce the Procurement Reform Bill to Parliament later this year. This Bill will aim to tackle unnecessary inconsistencies for suppliers doing business with the public sector and help ensure that doing business with the public sector can be simple, transparent and more accessible to suppliers - irrespective of size.”
COSLA President Councillor David O’Neill, said: “This is an area where councils are somewhat between a rock and a hard place. Scotland’s councils as the champions of localism want to support local businesses wherever possible but still have to be mindful of procuring in a way that meets EU legislation requirements.
“Councils have also shown absolute support and total commitment for directing procurement to local firms where possible but this requires capacity building in some instances and balance between community benefit and best value as money gets even tighter.”
The report called ‘Local Procurement, making the most of small businesses, one year on’ was produced in conjunction with the Centre for Local Economic Strategies (CLES) from the analysis of surveys and interviews with 177 UK local authorities including 24 in Scotland.