Councils in Scotland spend less on local firms

Picture: PA
Picture: PA
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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 the FSB publishes 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 per cent compared with the UK-wide average of 31 per cent, according to the study.

Local businesses in Scotland generate £60 million for their local economy from an average council spend of £43m a year.

The FSB in Scotland has 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 convener, 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 work with their local business community to understand the barriers to local firms’ 

A Scottish Government spokesman said: “We have yet to see the full report from the FSB so various factors may 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 [small and medium-sized enterprises] and this government has taken significant steps to make it as simple as possible for SMEs, including micro businesses, to compete for public sector 

“More Scottish-based businesses than ever before are winning business with the Scottish public sector through Public Contracts Scotland [PCS]. In 2012, 82 per cent of suppliers awarded contracts through PCS were SMEs.”

COSLA (Convention of Local Authorities) 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.

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.