Extensive new research from the Federation of Small Businesses (FSB) shows that 58 per cent more of the money spent by local authorities with small firms is re-spent in the local economy compared to that spent with large businesses in the same area.
In an exclusive report the FSB and the Centre for Local Economic Strategies surveyed local authorities across the UK and found that in the last year they spent a total of £8.7 billion buying goods and services in their local area.
The findings highlight how doing business locally is better value for money as small local firms generated £746 million more for the local economy compared to large local businesses – even though more than £500 million less was spent with them.
The research shows that for every £1 spent with a small or medium-sized business (SME) 63p was re-spent in the local area compared to 40p in every £1 spent with a larger business.
The FSB’s report, Local Procurement, making the most of small businesses, one year on, is the second report on the power of local authorities and how they utilise local businesses in their areas for goods and services. It shows good practice across many of responding local authorities, including 86 per cent of local authorities breaking contracts into smaller chunks to help SMEs win work.
Businesses can submit tenders to councils by registering and accessing The Chest – www.the-chest.org.uk – which is the North West’s Local Authority Procurement Portal. The Chest has been created with funding from the North West Centre of Excellence to bring together buyers and suppliers.