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Procurement row

Ross’s SME plan facing internal market conflict

Mr Ross, right, during a visit to Norbord in Inverness

Scottish Tory leader Douglas Ross’s plan for a Scotland First procurement policy divided opinion as he put the economy at the forefront of his policies.

He won support from small firms for planning to give Scottish SMEs first choice of public sector contracts.

But the policy drew claims from the SNP that it is at odds with his own party’s plan for the internal market when Britain leaves the EU. It states a “requirement not to discriminate between individuals or businesses based on residence or origin in the UK.”

SNP Depute Leader, Keith Brown, said: “Douglas Ross’s plans have been shown to be utterly hollow in the middle and to fall foul of his own party’s so-called ‘UK internal market’ plans, which he supports.”

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The SNP has its own plan to help smaller firms secure public procurement work which is geared towards helping Scottish SMEs without specifically giving them priority.

In its response to the Higgins report on economic recovery the SNP said it would “make it easier for small businesses to access and compete for public sector contracts.” It did not specify how this would be achieved.

Its document states that over the next year, it will “maximise the economic impact of public procurement” by, among other things, “maximising the opportunities for local suppliers.”

It has noted that 79% of suppliers awarded contracts in 2019-20 were SMEs, and 63% were SMEs located in Scotland.

However, official figures also show that Scotland’s micro businesses (firms with fewer than 10 employees) receive only 7% of public contracts by value though they account for 93% of Scottish businesses, a figure that has remained stable over the last ten years. 

Mr Ross’s document Power Up Scotland also calls for action to tackle late payment; a hardship fund for businesses facing localised lockdowns; and a new drive to turn around local high streets and town centres.

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Andrew McRae, FSB’s Scotland policy chairman, said: “This new publication talks to many of the chronic problems that Scottish smaller firms face.

“And, we’re pleased to see policymakers taking these matters seriously, as issues like late payment cause thousands of Scottish businesses to fail every year.

“We would warn however that as a consequence of the coronavirus crisis, we’re facing an economic downturn without precedent. Even with the requisite political will, properly addressing some of these issues will take time that many firms unfortunately don’t look like they have.”

There’s refreshing political consensus that public procurement isn’t working for our local economies

– Andrew McRae, FSB

The FSB points out that the government also pledged action and that earlier this year, the leader of Scottish Labour Richard Leonard called for more local procurement.

Mr McRae said: “There’s refreshing political consensus that public procurement isn’t working for our local economies, communities or businesses.

“Now we just need decision-makers to get on with changing how the system actually operates rather than tinkering at the edges. It is a scandal that so few of our very smallest businesses win their fair share of taxpayer funded contracts.”

The devolved public sector spends around £12 billion a year on goods and services. The number of smaller firms which supply their local authority fell from 51,312 in 2008 to 29,910 in 2017.

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