The Entrepreneur’s Think Tank Centre for Entrepreneurs is urging local government to “spend small” following the release of an index ranking councils on their procurement with small companies.
According to the Local Authority Spend Index, just 20 suppliers dominate local authority spending, earning £9.9bn over a three-year period.
Meanwhile 78,128 SMEs shared £11.1bn during the same timeframe.
The Spend Small publication by Centre for Entrepreneurs aims to highlight this shortfall and promote the idea that by using smaller firms, councils can take a fundamental step towards achieving local economic growth.
“One of the best ways that government can support small businesses is by buying from them. Sadly, many entrepreneurs struggle to win business from government, finding the process to be complex, bureaucratic and tilted in favour of large incumbents,” claimed the group’s chairman Luke Johnson.
“Although central government has an explicit strategy to do more business with small firms, the same cannot be said for local authorities, so performance varies widely.
“Given the opportunity, small, entrepreneurial firms are proving they can cut costs and drive innovation in the public sector, while boosting their local economies,” he added.
The Index reveals Monmouthshire County Council as the best performing with 25.6% of spend going to small firms.
On the other hand, Barnsley Metropolitan Council is ranked as the lowest, spending only 4.2% of total funds with small firms.
According to the research, financial size, location, local earnings, political control or rural/urban status do not affect whether a council chooses to do more business with SMEs or not.
Instead, it claims that an authority’s set of priorities that ultimately influences the decision.