Scottish councils should buy more goods and services from local firms, in order to deliver a £140m annual boost to their economies, according to the Federation of Small Businesses (FSB).
Launching its manifesto for May’s local authority elections, the small business campaign group highlighted that Scottish councils have a combined procurement budget of around £7bn. However, the average Scottish local authority spends less than a third (29.1%) of this with businesses from within its boundaries.
It stated that if all councils gave local firms an additional 2% of their total procurement budgets per year, this would deliver a £140m annual boost to local economies across Scotland.
Andrew McRae, FSB’s Scotland policy chair, said: “Modest procurement spending targets could deliver massive compound benefits - with councils facing their own budget pressures, this move would squeeze additional value from taxpayers’ cash.”
The manifesto also urged councils to support new businesses, with a focus on boosting new-starts led by traditionally under-represented groups, including women and migrants.
This new help could be delivered through the council-run Business Gateway service, the FSB argued.
Statistics show that immigrant-led small and medium-sized businesses contribute £13bn a year to the Scottish economy. But FSB research found that this group of entrepreneurs were likely to be unaware of state-funded sources of enterprise support and business advice.
A study FSB conducted with Women’s Enterprise Scotland also shows that women-owned businesses created almost 80,000 jobs between 2012 and 2015. However, just one in five businesses in Scotland are majority owned by women - and women continue to start-up in business at a lower rate than men.
Scottish Government figures show that Scotland lost around 20,000 small businesses in a single year of the pandemic.
McRae said: “The pandemic forced thousands of Scottish businesses to shut up shop for good - our research shows that while migrant and female entrepreneurs are increasingly important to Scotland’s economy, too few tap into state-funded support.
“If we’re serious about rebuilding our local business community, then we need to make sure that every budding entrepreneur is given the best chance to succeed, that’s why we’re urging councils to continue to fund support for new-start businesses, adapting the help on offer to make it work for everyone.”
As of March 2021, there were 342,125 small and medium-sized enterprises (SMEs) operating in Scotland, providing an estimated 1.2 million jobs.
SMEs account for 99% of all private sector businesses and 55% of private sector jobs.
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