Local councils in the dark over spending and contracts

The Government must encourage local councils to monitor and assess their spending to maximise the benefit to local communities, the Federation of Small Businesses (FSB) has said.

The statement comes after the FSB questioned local councils to see how and where their money was spent. Of the 148 local authorities that responded, it found that more than a third (38 per cent) did not record the location of where public procurement contracts were awarded.

While councils claim that half of their procurement spend goes to small and medium sized businesses, and that they have initiatives in place to support SMEs with the process, the survey revealed almost half (49 per cent) were unaware of the size of businesses they have contracts with.

The FSB said that local authorities should implement an accurate and transparent recording of procurement spend so that it can properly inform strategy and decision making, creating new jobs, sustainable employment and new businesses.

It is also urging that public contracts be designed so they can be met by local supply. "As research shows that money spent with local businesses stays in the local economy, this will have positive knock-on effects for those areas," it said.

In particular, the FSB research highlighted that less than a third of money spent by local councils in Scotland goes to local businesses, compared to more than half (54 per cent) in Northern Ireland.

It is pressing for the measures to be included in the Scottish Government's sustainable procurement bill expected to be published this summer.

The FSB is calling for local councils across the UK to:

  • Record and analyse public procurement - how much money is spent, where, and with what sized businesses
  • Ensure initiatives are in place to support businesses with the procurement process
  • Provide feedback to unsuccessful contracts
  • Streamline the pre-qualification process for businesses
  • Break contracts into smaller lots where possible
  • Advertise procurement opportunities via online portals.

The Government awards £88 billion a year in public procurement contracts to the private sector, with an annual spend per council valued at £185 million.

John Walker, national chairman for the FSB said it was surprising that councils were not proactive in the recording of 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."