Local authorities throughout the UK were asked to take part in a survey undertaken by the Federation of Small Businesses (FSB) and the Centre for Local Economic Strategies, with the aim of determining how much local authorities spent on goods and services in their local area, and with whom.
For every £1 spent with a small or medium-sized enterprise, 63p is re-spent locally, compared to 40p in every £1 spent with a larger business. Despite the fact that large businesses received £500 million more in spending terms, small companies are believed to have generated an extra £746 million for the local economy.
The report revealed that last year, local businesses were paid £8.7 billion from local authorities for goods and services. The FSB says it would like authorities to use more local businesses, and believes that if each authority spent an extra 3% of their budget with local firms, an extra £788 million could have been raised for local economies.
John Allan, the National Chairman for the FSB, commented, 'The evidence speaks for itself. Spending locally invests in jobs and growth for the area. We want to see more of this happening across the country'.
However, Mr Allan acknowledged that 'a one-size-fits-all approach won't work', and the FSB is calling on local authorities to work with their local FSB, to 'create an environment in which small firms can grow and prosper the areas they work in'.
Meanwhile, the Business Secretary, Vince Cable, said: 'This report shows what I have known for a long time - more of our small and medium sized companies must get a fair share of public contracts'.
