Local Authorities and Small Businesses

The Centre for Entrepreneurs, and the Spend Network, have been analysing the breakdown of spending for the 158 local authorities across the country. Their survey covered over 44 million transactions between April 2011 and March 2014. It found that, at a time when central government claims to be trying to do more business with small firms, most local authorities don’t seem to be following that trend.

The Survey Analysis

We have looked at Spend Small, the report on the work. It states that, in total, during the three years the local authorities spent £89 billion with companies. Only £11.1 billion of this went to small firms, while £9.9 billion went to just 20 of their largest suppliers. While none of the 78,128 small businesses concerned received more than £50,000 in a 12 month period, the average receipts per year of the top 20 suppliers to local government was £165 million.

Some councils have even lowered the amount they have been spending with small local firms, while a few have been increasing it. If you are based in the London boroughs of Wandsworth, Greenwich, Croydon or Newham, you might have more chance of persuading them to do business with you, as these are among those that have increased their spending with local small businesses the most.

Why Local Authorities Spend as They do

The analysis considered various environmental factors, such as financial size, location and political control, and it made like with like comparisons. It found no apparent links between these factors and whether the institutions used small local firms. Their work indicated that what makes the difference is a commitment to spending more with them. To quote the report, ‘Where an authority’s leadership commits to boosting small firm spend, they are able to do so – indicating that the key factor is having a Spend Small Policy and implementing it.’

How Change Might be Achieved

If you and other local entrepreneurs believe you have much to offer your local authority, we believe this is what you need to be lobbying for. That supporting small local businesses makes real economic sense could be good ammunition for this. Research has shown that, as they develop, small businesses are a key source of job creation and economic growth in local areas.

If you don’t have a local pressure group to run a campaign, you could use your networking contacts to set one up. Your bookkeepers can probably help and might be able to introduce you to other like-minded small companies.

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