More than half of Northern Powerhouse councils are missing the government’s pledge to spend £1 in every £3 with small businesses, especially when it comes to their IT outsourcing activities. Furthermore, 86 per cent have no plans to increase their IT services allocation to SME suppliers. This is according to research from IT services aggregator Streamwire, under Freedom of Information requests.
A Freedom of Information (FOI) request was sent to all 34 councils who make up the UK’s Northern Powerhouse, to ascertain the proportion of the IT services spend allocated to small and medium sized enterprises.
The results seemingly highlighted a disconnection between government policies to encourage local spend with SMEs, and the actual spending habits of local councils.
Anne Stokes, CEO of Streamwire, urges Northern Powerhouse councils to take a more concerted view to spend with SMEs:
“The key objective of the Northern Powerhouse was to establish the region as a beacon for ‘doing things differently’, strengthening the area as an economic hub and showcasing how other regions could adopt similar innovation and best practice in their communities. Councils can play a powerful role by using their budgets to procure more from SMEs, which are more than likely to be regional businesses. Unless local councils take up this mantle, the government’s goal of building an economic stronghold in the North is surely going to be very difficult to achieve sustainably.”
Stokes commented: “The results from our FOI survey show a worrying disconnect between what is encouraged at central level and what is happening on the ground. It is sad to see some authorities such as Bury Metropolitan, Kingston upon Hull and Sunderland are not positioning any of their services with SMEs when there are some fantastic organisations on their doorsteps. These businesses can add real value to the objectives and plans of the local communities they work in.
“It would be unfair to say that all of the Northern Powerhouse councils are failing SME IT providers here, with some clearly taking the initiative by the horns and striving to work with local SMEs. Durham and Wakefield Metropolitan councils each spend 48 per cent and 41.9 per cent of their IT budgets on small businesses respectively, rather than being locked into established old-school contracts with large suppliers. However the examples set by Oldham Metropolitan and Sefton Metropolitan councils, both of which are locked into over ten year long contacts with large suppliers, are worrying. Indeed, these findings could be seen as indicative of a wider issue in local government procurement nationwide. With large suppliers generally being unable to offer the agile and cost-effective approaches that SMEs can provide, councils are likely over-spending on inflexible services. This is not only going to do harm to local small businesses across the UK, but also to British taxpayers.”
Stokes concluded: “For local councils to match government promises to nurture the UK’s small business environment, there needs to be a drastic change in local IT outsourcing policies. SMEs can offer agile and cost-effective services to provide a broad range of IT applications. A disaggregated strategy, employing multiple small IT providers instead of one large supplier, can enable the public sector to save both time and costs with easy migration to different providers for optimum efficiency and service.”
