Scotland’s public sector should have a target of directing 10% of its spending power towards firms with fewer than 10 employees, said the Federation of Small Businesses (FSB).
The FSB said official figures show that micro businesses currently receive about 7% of the £11 billion that Scotland’s public sector spends on goods and services every year.
That’s despite the fact that the 340,000 Scottish micro businesses with up to nine employees account for 94% of all Scottish businesses.
The FSB argued that if the Scottish devolved public sector spent 0.5% more of its procurement budget with micro firms every year, they would reach the 10% target during the next Scottish Parliament.
By 2021, such a move would direct at least an extra £250 million a year to the Scotland’s smallest businesses.
Research conducted by the FSB and the Centre for Local Economic Strategies (CLES) shows that every £1 a council spends with a local, small business generates 63p of additional benefit to the wider local economy, compared to 40p worth of additional benefit when spent with a large local business.
Andy Willox, FSB’s Scottish Policy Convenor, said: “Despite some recent procurement improvements, micro firms still aren’t getting their fair share of valuable public contracts.
“The next Scottish Government must address this issue — forcing bodies to publish records of their spending while tackling the barriers to local firms bidding for public work.
“An ambition to increase the amount spent with micro firms by at least half a percentage point a year is a credible and realistic target.
“All of Scotland’s political parties must realise that a great way to develop our local economies is to use public spending to strengthen smaller firms. We’re looking for their support.”