Local authorities’ spending with small firms revealed

A MAJOR report into local authority procurement has found that big businesses are the overwhelming winners.

The Centre for Entrepreneurs tank conducted analysis of analysis of government spending data for more than over 44 million transactions drawn from 158 local authorities.

It found that in some cases as little as 4% some councils’ budgets going to small suppliers, defined as firms turning over less than £6.5m.

Over three years from 2011 to 2014 the research found that almost £10bn was spent with only 20 big companies, while 78,000 small companies shared just over £11b.

Luke Johnson, the businessman who chairs the Centre for Entrepreneurs said: “One of the best ways that government can support small businesses is buying from them. Sadly, many entrepreneurs are struggling to win business from government, finding its process to be complex, bureaucratic and tilted in favour of large incumbents.

“For too long, needless bureaucracy and limited transparency have protected cosy relationships between government and big businesses.”

Among the best performing North West councils were Salford City Council, Wigan Metropolitan Council and St Helens, all spending close to 20% with small suppliers.

The region’s biggest two authorities, Manchester and Liverpool were, by contrast much less willing to spend with small firms, with just over 8% and 6.5% respectively.

The average of 12.5 per cent of local government budgets that go to suppliers with fewer than 50 staff is half of central government’s SME procurement target.

The Centre for Entrepreneurs called for every authority to publish a pipeline of contracts becoming available in the coming year and for each to have a clear policy and outreach programme to engage with local business owners.

Mr Johnson added: “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.”

How the North West local authorities performed:

Salford: 21.28%
Wigan: 19.87%
St Helens Metropolitan Borough Council:    18.21%
Blackpool Borough Council: 17.72%
Bolton Metropolitan Borough Council: 16.83%
Cheshire East Unitary Authority: 16.68%
Wirral Metropolitan Borough Council: 16.24%
Halton Borough Council:  16.21%
Blackburn With Darwen Borough Council: 14.78%
Warrington Borough Council: 14.67%
Lancashire County Council: 13.23%
Trafford Metropolitan Borough Council: 11.26%
Knowsley Metropolitan Borough Council: 10.8%
Cheshire West And Chester Unitary Authority: 10.53%
Cumbria County Council: 9.49%
Stockport Metropolitan Borough Council: 9.37%
Oldham Metropolitan Borough Council: 8.33%
Liverpool City Council: 8.29%
Tameside Metropolitan Borough Council:    8.17%
Rochdale Borough Council: 7.69%
Manchester City Council: 6.53%