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Scottish councils urged to target local SMEs with procurement spend

Less than a fifth of council procurement budgets in Scotland are spent on small or medium sized enterprises (SME), the Federation of Small Businesses (FSB) has revealed.

This has led the organisation to call on Scottish councils to pledge an increase in spending for local firms, stating that Scotland’s 32 local authorities should aim to spend over £6.1bn a year procuring goods and services from SMEs.

The data – originally collated by the Improvement Service, a national body tasked with improving local government – revealed that the average Scottish council only spent 19.7% of its procurement budget on small businesses during 2015-16.

This is despite there being 348,000 SMEs operating in Scotland, who account for 99.3% of all businesses and provide the country with 1.2 million jobs.

FSB said that the data showed large variation across councils in relation to procurement spend, as West Dunbartonshire put just 5.8% of its budget into local firms compared to the Shetland Islands who put more than half (53.6%) of its spending into SMEs.

And though the FSB said it was understandable that smaller councils had lower levels of local procurement, figures showed that all the city councils with the exception of Aberdeen spent less than one pound in four on local SMEs last year.

“Council budgets are under significant pressure,” said Andy Willox, Scottish policy convenor for the FSB. “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.

“We’re calling on every Scottish council to increase their spending with local firms by 2% per year, delivering a £600m boost to Scottish business by 2021.”

Willox added that most smaller firms have far more contact with their local authority than central government, and that extra funding was key to future economic prosperity.

“Smaller firms are key to prosperous local economies. In these uncertain times, strong partnerships between councils and their business communities are more important than ever,” he concluded.

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