THE Scottish Government must ensure local firms win more public contracts if it wants to achieve its ambitions for a green recovery, the Federation of Small Businesses (FSB) has said.

The organisation says reforms to the public procurement regime are needed to ensure small businesses get a fairer share of the huge value of contracts awarded and to support the drive to reduce carbon emissions.

Official figures show small firms get only around five per cent of the value of public contracts despite them accounting for the vast majority of businesses.

The federation reckons that by removing the barriers to smaller firms winning public work, ministers could boost the economic impact of spending and maximise the benefits for local communities.

“Too many small businesses in Scotland lose out to multinationals when it comes to winning public work,” said Andrew McRae, FSB’s Scotland policy chair.

He added: “With big plans on the horizon to make our buildings more energy efficient, there’s a risk that the design of contracts could exclude independent firms.”

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The FSB said stretching local spending targets should be set for public bodies under the plans for community wealth building that were included in the agreement struck between the SNP and Scottish Greens last week.

It also wants the Scottish Government to offer more encouragement to people to start businesses, for example by providing paternity and adoption social security support for self-employed parents.

Ministers should establish a new small business unit within the Scottish Government to help ensure policymakers don’t just think about big companies and the public sector when developing proposals.

The FSB noted that official figures show that in 2018-19 only five per cent of the Scottish public sector’s £14bn procurement budget was spent with firms with fewer than 10 employees, despite these firms accounting for 94% of businesses in Scotland.

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Some 53% went to firms with more than 250 employees.

The value of procurement contracts won by smaller firms has been in decline in Scotland since 2016 despite repeated calls for reform of the procurement regime.