The Federation of Small Businesses (FSB) said only 5 per cent of that budget is spent with firms with fewer than ten employees despite them accounting for 94 per cent of the nation’s businesses.
The FSB also said the value of procurement contracts won by smaller firms has been in decline north of the Border since 2016. It argues that by removing the barriers to smaller firms winning public work, ministers could boost the economic and social impact of their spending.
With reforms to procurement pledged in the agreement between the Scottish Greens and the SNP, the business-focused organisation wants stretching local spending targets set for public bodies.
The FSB also wants to see action to develop local supply chains for projects to reduce carbon emissions, such as schemes to improve the energy efficiency of buildings.
Andrew McRae, FSB’s Scotland policy chair, said: “Too many small businesses in Scotland lose out to multinationals when it comes to winning public work.
“And with big plans on the horizon to make our buildings more energy efficient, there’s a risk that the design of contracts could exclude independent firms. That’s why many will have been pleased to see the SNP and Greens agree to change the systems the Scottish public sector uses to buy goods and services.
“These reforms could make it easier for more locally-based firms win valuable green contracts, helping these businesses develop the skills required for a lower-carbon economy. And by maximising the number of local suppliers, you boost the economic and community benefits of public spending.”
In a report published the day before it is expected that the First Minister will outline her government’s programme, FSB makes the case for an action plan to help local and independent businesses recover from the Covid crisis.
The document – titled Rebuilding our Strength – argues that Holyrood should provide paternity and adoption social security support for self-employed parents, a move it says could encourage more people to set up in business.
The FSB says Scottish ministers should also take inspiration from New Zealand and the United States by establishing a small business unit in the Scottish Government.
“This team would, for example, ensure that new government regulations don’t place a disproportionate burden on small businesses,” said Mr McRae.
“Scotland’s small business and self-employed community made huge sacrifices over the last two years. We’re looking for Holyrood to have these operators’ backs as we enter the recovery phase.
“MSPs from across the political spectrum must do more for the country’s self-employed who are regularly forgotten during policy debate. We’re making the case for new protections for those that work for themselves to take the edge off the risks of setting up on your own.
“Small firms also want someone fighting their corner in Scotland’s corridors of power. In New Zealand and the USA, they’ve designed systems to ensure policymakers don’t just think about big business and the public sector when developing proposals. Now is the time for Scotland to do the same.”