William Eichler 21 April 2017

Scottish councils only spending a fifth of procurement budget on local SMEs

Campaigners have called on Scottish councils to spend more on local businesses as study reveals less than a fifth of their procurement budget goes on SMEs.

The Federation for Small Businesses (FSB) warned – quoting statistics collated by the Improvement Service - the average Scottish council spent only 19.7% of their procurement budget with small and medium sized enterprises (SMEs) in their area in 2015/16.

The data shows there’s variation across councils in relation to procurement spend. West Dunbartonshire council delivers just 5.8% of their budget with local firms, but Shetland Islands council uses more than half (53.6%) of its spending power boosting the local economy.

FSB said it understood why smaller councils were likely to have lower levels of local procurement. But it highlights that all of Scotland’s city councils, with the exception of Aberdeen, spent less than one pound in four with local SMEs.

‘Council budgets are under significant pressure. That’s why it is important that they squeeze every drop of value out of their spending power by targeting it on their local economies,’ Andy Willox, FSB’s Scottish policy convenor.

‘We’re calling on every Scottish council to increase their spending with local firms by two per cent per year, delivering a £600m boost to Scottish business by 2021.’

Scotland’s 32 local authorities spend over £6.1bn a year procuring goods and services. There are 348,000 SMEs operating in Scotland – accounting for 99.3% of all businesses and providing an estimated 1.2 million jobs.