Councils spending locally just the job for smaller firms
New research by the Federation of Small Businesses (FSB) shows that 58 per cent more of the money spent by local authorities with small and medium businesses is re-spent in the local economy, compared to that spent with large businesses in the same area.
In an exclusive report, the FSB and the Centre for Local Economic Strategies surveyed local authorities across the UK and found that in the last year they spent a total of £8.7 billion buying goods and services in their local area.
The findings highlight how doing business locally is better value for money as small and medium local firms generated £746 million more for the local economy compared to large local businesses – even though more than £500 million less was spent with them.
The research shows that for every £1 spent with a small or medium-sized business (SME), 63p was re-spent in the local area compared to 40p in every £1 spent with a larger business.
The FSB wants to see more local authorities using businesses in their areas to help boost economic growth.
The report suggests that if each authority had spent an additional 5 per cent of their budget locally and committed just 3 per cent more of that to small local firms, an additional £788 million could have been generated for local economies.
The FSB's report is the second report on the power of local authorities and how they utilise local businesses in their areas for goods and services.
It shows good practice across many of responding local authorities, including 86 per cent of local authorities breaking contracts into smaller chunks to help SMEs win work.
Locally, the FSB is working closely with Procurement Lincolnshire – a shared service partnership between the county council and the seven district councils – with the aim of ensuring that SMEs can have the opportunity to apply for council contracts.
Procurement Lincolnshire processes utilise the excellent dynamic purchasing system which is also utilised to great effect by the local authority up in North Lincolnshire.
Business owners and managers wishing to find out more should visit www.sourcelincolnshire.com or telephone 01522 553649.
Doug Balderson, regional chairman of the FSB for Lincolnshire and Peterborough, said: "This report shows the power and strength of small firms to create jobs and growth in the local economy if they are given the help to do so. With budgets being cut, there seems to be an increasing realisation that spending more locally will benefit the local 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 our region.
"Engagement with small firms is essential. While our members do win contracts, many are still deterred by the process.."