The government currently spends around £187 million on goods and services from SMEs each year, but this figure could be set to rise as Whitehall has set a new 25 per cent target for public sector spending on SMEs next year.
This latest proposal comes as the Government prepares to release its latest report on spending among local authorities in England and Wales.
The report has revealed that 78,128 SMEs are doing business with councils, accounting for over £11.1bn of spending in the past three years.
Data from this report has been analysed by the Centre for Entrepreneurs think tank and open data company, Spend Network in a new report entitled, pend Small: the Local Authority Spend Index.
Their research has revealed which councils spend the most on SMEs and which ones have reduced their spending in the last three years.
The best spender is Monmouthshire County Council, with 25.6 per cent of spending going directly to small firms, while Barnsley Metropolitan Council is the lowest performing with just 4.2 per cent going to small firms.
Wandsworth Council had the largest increase in small firm spending between 2011 and 2014 (+30.5 per cent), while Nottingham City Council had the largest decrease in small firm spending (-36.4 per cent).
However, the index has also highlighted a general shortfall in spending on SMEs, that sees a large part of funding (9.9bn) still being handed over to just twenty large companies.
The Centre for Entrepreneurs’ chairman, Luke Johnson said: “One of the best ways that government can support small businesses is buying from them.
“Sadly, many entrepreneurs struggle to win business from government, finding the process to be complex, bureaucratic and tilted in favour of large incumbents.”
“Although central government has an explicit strategy to do more business with small firms, the same cannot be said for local authorities, so performance varies widely.”
The Centre for Entrepreneurs has called upon the government to use the Index to create an annual league table, to highlight the progress made by UK councils in procurement from small businesses.
Matt Smith, director of the Centre for Entrepreneurs, added: “While the performance of some councils should be celebrated, there is much more to do to ensure small, entrepreneur-led firms can win business from local government”.
