FSB: Scots firms miss out in £7bn council spending

The Federation of Small Businesses (FSB) said on Monday that the number of Scottish businesses winning work from Scottish local authorities — which spend £7 billion a year on goods and services — has almost halved over the last decade.

The FSB said new statistics — published by the Improvement Service — underlined the need for First Minister Nicola Sturgeon to set out “robust” new procurement measures when she unveils her Programme for Government in Holyrood on Tuesday.

The FSB said the new research shows that in 2008, Scotland’s councils had 51,312 local suppliers but by 2017 this figure had dropped to 29,910 – a drop of 42%.

The FSB said that in 2008, the average Scottish council spent 30% of its procurement budget with firms from its own geographic boundaries — but by 2017, this figure had dropped to 27%.

FSB’s Scotland policy chair Andrew McRae, said: “The Scottish public sector is a serious economic player.

“It spends around £11 billion buying goods and services every year – money that, if spent smartly, can generate added benefits for the local community.

“We know that money which is spent local stays local – and that buying from local small businesses has economic and social benefits way beyond the bottom line.

“But despite political intention to get more cash spent locally, today we see that far fewer local businesses are getting a fair share of our public sector’s spending power.”

The Improvement Service Report – published last week – reviewed councils’ spending figures over the last 10 years.

McRae added: “When the First Minister stands up in Holyrood tomorrow to unveil her Programme for Government, tough action on procurement needs to be in there.

“That means requirements for all of the public sector – from hospitals to schools – working together at a local level, to co-ordinate buying strategies and open up opportunities for firms in the area.

“It means ensuring that new procurement rules requiring contracts to be broken down into the smallest possible lots are actually enforced.”

“We need to mandate annual public sector reports on procurement to detail spending with micro and small businesses, setting targets and an action plan for improvement each year.”