Local authorities are being urged to stop buying exclusively from big businesses and instead to help support local economies by buying from smaller firms.

The Centre for Entrepreneurs have launched the campaign, saying that local government should follow Whitehall’s lead and start investing in more businesses with a turnover less than £6.5m.

Its campaign partners, the Centre by Spend Network, collected data from 158 local authorities and have developed a unique index, which shows that just 20 suppliers currently dominate local authority purchasing.

Local authorities spent £9.9 billion over the past three years with these 20 firms, with the remaining £11.1 billion budget being shared between 78,000 smaller businesses.

Luke Johnson, chairman of the Centre for Entrepreneurs, told The Telegraph that the process of winning contracts from local governments is too “complex, bureaucratic and tilted in favour of large incumbents.”

He added:

“For too long needless bureaucracy and limited transparency have protected cosy relationships between government and big business.”

Whilst London Boroughs generally spent more with smaller firms, Monmouthshire City Council came out on top, placing a quarter of its budget directly with SMEs. Barnsley finished bottom, with a spend of just 4.2% of its budget.

In terms of sector, residential care was the biggest earner for small businesses, with £448.7m spent, followed by construction (£313m) and business support (£220.6mn).

Image by Trey Ratcliff