Nearly half of local councils (49 per cent) are unaware of the size of the companies they trade with, according to a Federation of Small Businesses(FSB) survey.

The survey highlighted how SMEs may be losing out on getting their share of the estimated £88 billion spent annually by local councils. It also found more than a third (38 per cent) of local councils did not record the location of their suppliers, implying local businesses may be missing out on the £185 million average annual spend made by the 148 local councils surveyed. The research found although local authorities claimed more than half of procurement spend was with SMEs, there was no measurement of this.

The FSB recommended the implementation of a mechanism measuring the business size of winners of public sector tenders, and to make the data transparent and publicly available. It goes on to say that local councils should break contracts into smaller lots for smaller businesses. The FSB also made suggestions to improve tendering processes, including streamlining the pre-qualification process for low-value contracts, and providing feedback to unsuccessful bidders, helping them improve their chances of winning business in the future.

“We were surprised that so many councils aren’t being more proactive in terms of the how they record their spending. Knowing where spend is going in the local area, as well as what type of businesses are getting contracts, would help councils focus on improving their procurement processes and ultimately boost local communities by helping councils ensure their local small businesses are getting a fair chance to compete for contracts,” said John Walker, FSB national chairman.

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