The Centre for Entrepreneurs is calling on local authorities to invest more in small local businesses by buying from them or using their services. This comes after research released by the CFE revealed evidence that councils focussed much of their procurement spending on larger firms.

According to the figures featured in the ‘Spend Small: the Local Authority Spend Index’ report, English and Welsh councils paid out £11.1 billion for products and services from 78,128 small businesses over a three year period, while just 20 large companies received £9.9 billion.

This entrepreneur’s think tank argues that council procurement from SMEs is a fundamental step towards economic growth.

It is hoped that, through highlighting the best performing councils, this will encourage those further down the rankings to evaluate their performance and look for ways to work more with smaller firms.

Local councils should rely on small businesses more

Luke Johnson, Chairman of the CEF and a serial entrepreneur in his own right, thinks it is time for all areas of government to ‘spend small’.

He said: “One of the best ways that government can support small businesses is buying from them. Sadly, many entrepreneurs struggle to win business from government, finding the process to be complex, bureaucratic and tilted in favour of large incumbents.

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.

The CFE is also putting pressure on the government to take on this Index and create an annual league table to highlight the progress made by UK councils in procurement from small businesses.