Public sector procurement has long been a controversial issue, with SMEs often losing out to their larger rivals in the race to offer their services.
Now a report by the Federation of Small Businesses reveals how small firms offer local authorities greater value for money by reinvesting in the local area. The research finds that for every £1 of council spending on local small firms, 63p is re-spent locally, compared with just 40p of each £1 spent with local large firms. Overall, local SMEs’ re-spending generated £746m more for local economies than large firms did, even though they received £500m less from local authority contracts. John Allan, National Chairman of the FSB, says that as councils face budget cuts, they have realised that spending more locally will benefit the economy. “The evidence speaks for itself. Spending locally invests in jobs and growth for the area. We want to see more of this happening across the country,” he says. The report suggests that if councils had spent an additional five per cent of their budget locally, and three per cent more with SMEs, they could have generated an additional £788m for their local economies, with no increase in spending. Cllr Peter Fleming, Chair of the Local Government Association’s Improvement and Innovation Board, says that local authorities now award more than half of their contracts to SMEs, compared with just 13 per cent of central government contracts. “Councils are ensuring that they themselves are open for business, in particular working with SMEs and local suppliers to make it easier for them to bid successfully for public contracts on everything from building houses to caring for the elderly,” he explains. The research also found that 90 per cent of local authorities are taking steps to help local SMEs. Changes such as breaking big contracts down into lots and simplifying the procurement process can make public contracts more accessible. Local Government Minister Brandon Lewis MP says that councils should cut procurement red tape to make it easier for small firms to bid for contracts. “Small businesses are the heartbeat of our local economies,” he says. “I’d like to see every council increase what they are investing in their own communities so they help them grow and prosper.” Image source
We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept”, you consent to the use of ALL the cookies.
This website uses cookies to improve your experience while you navigate through the website. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may have an effect on your browsing experience.
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.