Councils need to have a better understanding of their procurement spend with small companies for the benefit of local communities, says the Federation of Small Businesses.

Councils need to have a better understanding of their procurement spend with small companies for the benefit of local communities, says the Federation of Small Businesses (FSB).  

A survey by the lobbying group reveals that many councils indicate that more than half their procurement spend goes to small and medium-sized businesses (SMEs). However, of the 148 local authorities that responded, more than a third (38 per cent) of councils do not actively record the location of their spending and almost half (49 per cent) don't know the size of business they trade with.  

With the average annual spend per council which responded to the poll at a sizeable £185 million, the FSB believes that councils must be more aware of what they spend and how they spend it to maximise the benefits to the communities they work for.

As research shows that money spent with local businesses stays in the local economy, this is expected to have positive knock-on effects for those areas.

The research also shows the vast majority of councils claim to have initiatives in place to support small businesses with the procurement process. But if councils want these to be effective, they need to at least know what they are doing to meet their goals, argues the lobbying group.  

The FSB wants to see more accurate and public recording of spend so that it can properly inform strategy and decision making, which it believes will help to embed and understand the link between procurement and local economic development.

FSB national chairman John Walker says, ‘We are pleased that so many councils took part in the research. It has allowed us to build up a good picture of what is going on and identify some really good practice.  

‘However, we were surprised that so many councils aren't being more proactive in terms of the how they record their spending. Knowing where spend is going in the local area, as well as what type of businesses are getting contracts, would help councils focus on improving their procurement processes and ultimately boost local communities by helping councils ensure their local small businesses are getting a fair chance to compete for contracts.’

See also: FSB: Authorities should highlight SME tax savings