Row over £10 million government cut to small firm contracts

Small firms in Scotland have lost out on more than £10 millionof Scottish Government contracts in recent years after spending cuts, official figures indicate.

But ministers rejected the claims and insist they are committed to the sector with total spending, on top of contract work, hitting almost £90m in 2016-17.

Labour will today launch its small business strategy, which includes a commitment to increasing the spending on procurement. Economy spokeswoman Jackie Baillie said smaller firms are the “lifeblood” of Scotland’s economy and should get more support from the government.

Official figures released through Freedom of Information indicate that £64.9m was spent by the Scottish Government on small and medium enterprises (SMES) in 201011. But subsequent years have failed to keep pace with this and the cumulative decreases to 2015-16 have totalled £10.6m.

The figures also show that the proportion of procurement spending on smaller firms north of the Border by the Scottish Government has fallen from 37 per cent to 32 per cent.

Ms Baillie said: “Small and medium-sized businesses are the life-blood of our economy and deserve more support from the government.

“That is why our new small business strategy will include a commitment that a Scottish Labour government would increase spending on procurement, growing the opportunities for SMES in the delivery of public sector contracts.

“Rather than denying SMES cash and opportunity, a Labour government will help them grow through investment, ensuring the economy works for the many, not the few.”

But a Scottish Government spokesman insisted that £241.1m was spent on suppliers in 2016-17, with £89.6m of this going to smaller firms. This is up from £68.8m in 2009-10. This is based on total spend as opposed to value of contracts.

He added: “These claims are wrong – SMES accounted for 80 per cent of all suppliers to the core Scottish Government in 2016-17, demonstrating our commitment to the sector.

“More widely, we continue to deliver the most competitive package of rates relief in the UK, including the Small Business Bonus, which to date has saved Scottish firms almost £1.5 billion.”