THE Confederation of British Industry has called for a major review of public sector procurement as part of action to revitalise the supply chain and create 500,000 jobs.

In a new industrial strategy document Strengthening the Supply Chains, the employers' organisation for the first time backs the idea that "public procurement decisions cannot be based purely on narrow definitions of value for money, but must take into account their wider impact, on society, communities and the economy".

The procurement issue and its effect on small businesses has been at the heart of The Herald's SME-SOS campaign this year.

The CBI says targeted action to help UK-based companies could inject £30 billion into the economy by 2025.

It calls for the setting of a long-term target for spending on research and development (R&D), a widening of the R&D tax credit, a doubling of the budget for Innovate UK, a national materials strategy to protect critical sub-sectors, and financial incentives for students to choose science, technology, engineering and mathematics degrees.

Katja Hall, the CBI's deputy director-general, said: "We need to see a bold strategy that breathes new life into our supply chains.

"The scale of the challenge is sizeable - our competitors are powering ahead, with France outstripping our research & development investment by 40 per cent.

"At the same time, only 3 per cent of our graduates end up in engineering or technology jobs."