Local authorities have been urged to prioritise working with small firms, following the publication of figures that show just a handful of the biggest companies earn almost as much from local government contracts as all small firms put together.
The Centre for Entrepreneurs has published the new Local Authority Spend Index, which calculates that £11.1 billion of LA contracts have been awarded to 78,128 small businesses in the past three years.
But over the same period, just 20 big suppliers have received £9.9 billion of local government money – equivalent to about 90% as much as their smaller counterparts.
This near-parity, despite the substantial difference between the number of companies involved, has led the Centre for Entrepreneurs to call for local government to ‘spend small’.
Chairman Luke Johnson said: “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.”
This lack of an explicit strategy is apparent in the different performance of LAs in different parts of the country, with Barnsley the worst performer, awarding just 4.2% of contracts by value to small firms.
At the other end of the scale, Monmouthshire County Council places 25.6% of its expenditure with small firms – showing that they are quite capable of delivering contracts if given the opportunity.