New report shows more public spending cash going to smaller firms in Scotland

An increase in public sector contracts awarded to small and medium-sized firms has been welcomed by the Scottish Government.

Public finance minister Ivan McKee spoke out as new figures showed that Scotland’s public sector – including local government and the NHS – spent some £16.6 billion buying in goods and services in 2022-23

Of this, £8.9 billion was spent in Scotland alone, with the figures showing small or medium-size enterprises (SMEs) in Scotland benefited from more cash than the previous year.

According to data published by the Scottish Government, 61p in every pound spent in Scotland went to SMEs – which employ up to 250 staff – with this up from 55p in every pound the year before.

The 2022-23 figures showed 18,079 suppliers were awarded contracts, with Scottish-based suppliers receiving almost three quarters (72%) of these.

In total, spending by the public sector resulted in around £13.7 billion of economic activity, supporting some 120,000 full-time equivalent jobs.

Commenting on the figures, Mr McKee said: “Public procurement contributes billions to Scotland’s economy and supports thousands of jobs.”

He added: “The increase in contracts awarded to SMEs is particularly welcome. SMEs are critical to the economic lifeblood of Scotland and can often bring an agility and flexibility that allows them to introduce innovative solutions faster than larger organisations.

“Public procurement has a pivotal role to play in delivering a sustainable future for Scotland – and with a spend that is now in excess of £16 billion a year, we have an opportunity to make a real difference through using this in even more productive and innovative ways.”

The report however also detailed the impact of cost-of-living pressures on public spending – noting that public bodies encountered “specific difficulties around the highest inflation rate in 40 years, rising costs of raw materials, and an energy price shock”.

These all put “added pressures” on procurement spending, the report noted.