31 July 2023

Third of council procurement spending goes to SMEs

Third of council procurement spending goes to SMEs  image
Image: Panchenko Vladimir / Shutterstock.com.

Just over one-third of English local councils’ procurement spending went directly to SMEs in 2022, new analysis shows.

Tussell & LocalGov’s Local Government Procurement Index - an interactable database on local social value procurement, updated today - found that English local councils spent a combined total of £21.7bn with SMEs last year.

This represented 35% of the 303 analysed councils’ total procurement spending in 2022.

The Index also found that 46% of these councils’ procurement spending - or £28.8bn - went to locally-based businesses. Just 10% went to voluntary and community enterprises (VCSEs).

As local authorities look to drive social value through their supply chains, the Index shows that local councils continue to spend a healthy share of their procurement budgets with local and smaller businesses.

First released in December 2021, the Local Government Procurement Index uses data from procurement analysts Tussell to rank local council spending with SMEs, VCSEs and local businesses.

Today the Index’s underlying database was updated with fresh procurement data for the full-year 2022.

In this year’s Index, South Yorkshire Mayoral Combined Authority Group was found to have the highest spending proportion with SMEs, at 71%. The London Borough of Lewisham spent the most locally, with 83% of its procurement going directly to local businesses, while Staffordshire Moorlands District Council saw 51% of its procurement spending go to VCSEs.

Few councils performed well across more than one vertical. Cotswold District Council, for example, had the 2nd highest proportion of spend with local businesses - 81% - but exhibited quite low SME & VCSE spending, at just 14%.

Based on their proportion of spending with SMEs & VCSEs vs. locally-based businesses, the Index also segmented councils into 4 categories: ‘locally oriented’, ‘socially oriented’, ‘high performers’, or ‘room for improvement’.

The North West was found to have the most ‘high performing’ councils: those who spent more than 50% of their procurement with SMEs & VCSEs, and local businesses respectively.

Zooming out, however, shows that over half the authorities in six of the nine regions in England have ‘room for improvement’, meaning less than half their procurement spending went to those types of suppliers.

This year’s Index analyses the spending profile of 303 councils in England: an increase on the 259 authorities analysed last year. Only councils whose full spending for 2022 had been published in time were included.

Public sector professionals with a gov.uk email address can access the Index, for free, by clicking here.

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