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Boost Glasgow City Deal spending power with local purchasing

In Scotland, there’s been a long running debate about the best ways to boost our local economies.

At FSB, we believe part of the answer lies in making better decisions about how, and from whom, the public sector purchases goods and services. Our research has consistently shown the economic benefits of buying from small, local firms. 

Take our research with the Centre for Local Economic Strategies (CLES). It shows thatinfographic-121 every £1 spent with local SMEs generated an additional 63p of benefit for local economy, compared to just 40p when it is spent with large local firms.

So, if you spend money with a local smaller firm, more money will stay in your local neighbourhood and that should create more jobs and opportunities.

When it comes to local spending, however, more could be done by Scotland’s councils. Our 32 local authorities spend over £6.1 billion a year procuring goods and services but the average Scottish council spent less than a fifth of their procurement budget (just 19.7%!) with smaller firms in their area in 2015/16.

In the Glasgow City Region, things could be a lot better. Out of eight local authorities in the area, six of them spend less than the Scottish average with local businesses. 

Be Open for Business - With TextWith the bulk of Glasgow City Region City Deal’s £1bn investment still in the pipeline, it is critical for these councils to step up their efforts and increase procurement spend with local firms. This is one of the reasons why we called for an independent Small Business Champion for the deal. While this might be difficult with large infrastructure projects, on other fronts there’s a real opportunity.

And it can be done. Manchester City Council, for example, currently spends 73.6% of its procurement budget with local firms and over half of that money is spent on SMEs. CLES argue that this results increases in more volunteering and community activities, apprenticeships, jobs and employment opportunities for ‘hard to reach’ individuals. So it’s clear – more local spending can deliver more economic bang for our buck.

Amidst the ongoing political uncertainty, City Deals could give local economies the shot in the arm they need, but we need to squeeze every drop of value from their spending power. We have to make sure that local firms get their fair share.

Hisashi Kuboyama is FSB's Development Manger for the West of Scotland