By Keith Aitken in Edinburgh | 23 July 2012
Small business leaders today urged Holyrood to legislate to encourage councils to spend more of their budgets with local firms. The call came after a survey showed Scottish authorities were lagging behind the rest of the UK in municipal local spending.
The survey, carried out by the Federation of Small Businesses and the Centre for Local Economic Strategies, covered 148 UK local authorities. It found that Scots councils spent on average just 31% of their procurement budgets with businesses based in their own areas. This compared with 35% for unitary councils in England, 39% in Wales and 54% in Northern Ireland.
Only in London, where borough councils’ local spend accounted for just 20% of their budgets, was the figure lower than in Scotland.
But the study commended some local Scottish initiatives, notably the Public Contracts Scotland website – a single portal for public tenders – and Angus Council’s policy of seeking local and non-local quotes for smaller contracts. This has increased spending with smaller local firms by 12% in four years.
The study also found that Scottish councils were better at collecting relevant data than other UK authorities. But the federation wants all Scottish councils to be required by law to publish accounts of how much of their £4bn annual spend is benefiting their local economies.
On average, the report says, UK councils have £185m of annual procurement spend, yet many do not systematically record the size or location of firms that benefit. ‘Cost savings are overwhelmingly the biggest driver of procurement policy, outweighing other factors such as quality of goods and services, and economic development,’ it said.
Andy Willox, the FSB’s Scottish policy convener, said there was ‘a real opportunity’ to take fresh stock of the objectives public procurement can serve, via the Scottish Government’s Sustainable Procurement Bill. The Bill, due out for consultation soon, will aim to ensure an environmental and social dimension to procurement policy.
‘Over and above any other priorities associated with this legislation, we believe that Scotland needs to use its public spending power to advance our economic ambitions,’ Willox said, though he acknowledged that legislation alone could not solve all the systemic problems of procurement policy.
‘Alongside the Bill, we need to see a real push to connect taxpayers’ spend with the communities it came from,’ he said. ‘We’ve recently seen some enormous public contracts go spectacularly wrong. The idea that going with the multinational is the safer option has been proven wrong time and time again.’
The FSB wants the system to designate some contracts for local supply, to break up existing contracts into smaller lots, to operate a future presumption against aggregation of contracts, to make bidder qualifications more proportional to the size of contracts, and to make greater use of the Public Contracts Scotland web portal.
Scottish Conservatives backed the FSB proposals. Finance spokesman Gavin Brown said: ‘Local economies across Scotland are not benefiting from public investment to the level they should be or deserve to be.’
