‘Gales of creative destruction’ as Scottish small businesses get 50% of public sector spend? In the ‘UK’, it’s only 19%.

gales+of+creative+destruction

(c) USQ Australia

As I read the Insider headline, today:

‘Almost 80% of Scots public sector contract awards go to SMEs’

I wondered, and you won’t be surprised to hear it, how this compared with the situation in UK/England. Scotland/UK comparisons are, of course, disapproved of as ‘whitabootery’ by some Unionists like Brian Monteith at the Scotsman, but popular when they suit, at BBC Scotland. Nearly always, my searches find that something is better here than there and it looks that way on this issue too.

I was only able to make a direct comparison on the spend as opposed to the number of firms getting the work.

From Insider today:

‘Nicola Sturgeon reveals eight out of ten public sector contracts go to SMEs as a result of Scottish Government legislation as she meets new Scots policy chair Andrew McRae at FSB’s spring reception. And she also told the gathering at the Fruitmarket Gallery how nearly eight out of ten public sector contracts in Scotland are now awarded to small and medium businesses as a result of Scottish Government legislation.’

https://www.insider.co.uk/news/andrew-mcrae-nicola-sturgeon-fsb-12583968

The situation in England, according to this FSB, August 2017, report (page 5), is:

‘Each year the UK public sector spends over £200 billion on procuring goods and services from third parties, but far too little of this is with small firms. Over the last 12 months, it is estimated that SMEs won just 19 per cent of directly awarded public sector contracts by value.’

https://www.fsb.org.uk/docs/default-source/fsb-org-uk/procurement-report-final-final.pdf?sfvrsn=0

Why does it matter that SMEs should be prominent in public-sector work? From the same report (page 5):

‘When small firms aren’t used effectively by Government, it is the economy as a whole which suffers. This is because small businesses are overwhelmingly the route by which people enter work from unemployment and because, as is widely recognised, small businesses are the challengers to incumbents and critical agents in the ‘gale of creative destruction’. Small businesses also create greater competition for public contracts, leading to better value for money and efficiencies for contracting authorities.’

I’ll leave readers to reflect on, and to comment on, gales of creative destruction. I guess we are more familiar with gales up here?

Footnote: When I search for a graphic relating to ‘gales of creative destruction’, one of the first featured Margaret Thatcher. I though about it, then destroyed the thought, with little creativity required.

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7 thoughts on “‘Gales of creative destruction’ as Scottish small businesses get 50% of public sector spend? In the ‘UK’, it’s only 19%.

  1. William Henderson May 24, 2018 / 9:31 am

    Hello, John,

    Yet another example of sane, common sense by the Scottish Government. What were we told as children about not putting all our eggs in one basket?

    By using smaller, and most probably local, suppliers of goods and services the dangers of a Carillion style fiasco can be minimised if not totally avoided.

    Another obvious benefit is that the smaller enterprises are less likely to consign their profits to wee tax-free island hidey-holes but rather keep them where they can ccontribute to the local common good..

    Like

  2. Alasdair Macdonald May 24, 2018 / 2:03 pm

    Continuing my approach of speculating on how the media will misrepresent this: it will be presented as part of ‘the dependency culture’ trope. The words ‘feather bedding’ might well figure.

    In your article about the ‘gales of creative destruction’ you indicated that your searches unearthed quotes by Mrs Thatcher and that is not surprising because all her privatisation rhetoric was about opening up services to the ‘bracing, chill winds of competition’, ‘survival of the fittest’. This was continually amplified via the media and continues to be so: ‘Private’ is still better than ‘public’, ‘civil servants cannot pick winnners’, ‘competition is always creative’, the market is the PERFECT (sic) mechanism for providing information’.

    In the days of Mrs Thatcher, Scotland was present as ‘whingeing’ and ‘demanding’ – SUBSIDY JUNKIES! The generous English were ‘pouring money down a black hole that was Scotland’.(The fact that all this money was the proceeds of Scotland’s oil never rated a mention. At that time, STV did a series about the amounts of public money being spent, and we had City types being scornful about the subsidy junkies in Scotland, Wales, Northern Ireland, the North East of England, the mining areas in Yorks, Derby, Notts and Leics, etc. But, when the sums were actually being done, the majority of the public expenditure was going into subsidising the City, with the construction of Canary Wharf and associated buildings, Docklands and the Docklands Light Railway and various other massive programmes. When this fact was pointed out to the City types that they were in receipt of public funds, this was declared to be ‘IMPORTANT’. And why was it important? – because it was going to them and their increasingly deregulated and unaccountable businesses. Like the 2012 investment in the Olympic Games “the whole country would – eventually – benefit. The most egregious example of this socialism of the rich was perpetrated by Bodger Broon and his Quisling Chancellor who transferred shedloads of public cash to the freebooters who had destroyed the banking system and thousands upon thousands of small but viable businesses, who were starved of loans.

    By favouring SMEs in its procurement spending the SG is adopting the right approach because the funding circulates, it goes into the pockets of employees and small business owners, who spend it and thus make more viable other small businesses. Unlike the major PFI contractors like Carillion who paid themselves and the leeches of the major accountancy firms wads of cash – even continuing when Carillion was down to its last few millions. They behaved as Philip Green did with BHS.

    It will be interesting to see tomorrow how the SNP’s ‘Growth Commission’ proposals are presented.

    I suspect that GMS will begin with a condemnation by Conservative and Labour spokespersons and, towards the end of the programme Derek Mackay or Keith Brown will be brought on and will be questioned aggressively from the perspective of the Tory and Labour press releases. I doubt if we will get a straightforward digest of what the key recommendations are.

    Liked by 1 person

    • Contrary May 25, 2018 / 7:31 am

      Much food for thought in your comment there Alasdair – my iPad thing has been playing up so I lost my reply to your last food-for-thought comment on Agincourt, technology eh, hopefully got all background rubbish cleared out with a re-set and with be rewarded with being allowed to post before a crash.

      As soon as you mentioned survival of the fittest, I started thinking about an analogy with the small number of scavenger species that are able to survive in the wake of human-destroyed environments, polluted and ravaged – imagine if the only birds left were gulls? If you create a hostile environment, as Thatcher started, only the biggest most aggressive predators survive, the rest of us are fodder. Privatisation, unregulated competition, only allow for the common masses to be destroyed and those already wealthy with no morals to gain power. Neither extreme of capitalism or communism works, cannot work, and it would seem to me a middle-ground balance would be the best to aim for. SMEs seem to achieve that with strong local economies – the current thinking that we need these huge global companies to get anything done is nonsense, they are unwieldy, made up of diverse smaller companies that have been absorbed & do not work well, or any better than separate smaller companies – the only thing they do have is enough money to cover insurance costs for large or risky projects, but that can be resolved by proper project management.

      So this growth commission report has still been published? Well, at least it has been getting a lot of publicity, even if it’s so that they can rubbish it. On GMS the first interview was with Alex Neil of the SNP, but then,,,

      Graeme Roy, Fraser of Allander institute, ‘crucially, what the risks are’ Gary: have they assessed all the risks? … Lack of growth in Scotland. Currency union: Never been tried with a country as small as Scotland. Oil: Scotland will have a challenging fiscal position. Greame was fairly circumspect to tell the truth, or is that subtle?

      Now it is being touted as a: Blue print for independence. Even though Alex Neil clearly stated that this was just one aspect – the economic one – to be debated as recomendations.

      Yay! Murdo! Superb, just the man to comment – I’ve watched him in committee meetings and he IS rather dense. And he is talking bollocks, I won’t relate the lies and nonsense. Heh, Gary gave him a bit of a battering over Brexit.

      They are incessantly bleating on about currency, as though that’s the most important aspect, so that will be their focus of rubbish-independence technique no doubt.

      I like the way the growth commission report has given a nice big number of ponds ( 🙂 ) that we ‘could be better off by’ – we are usually only ‘warned’ about how much we might be ‘worse off’ by. Now the debate is around ‘would we really be better off by that much?’ – so even if it’s being rubbished as a made up number, the nuance is still focused on ‘better off’ (=independence) rather than ‘worse off’ (=Brexit Britain Union) ,,, very clever.

      I’ve rambled too long, some of us still have work while everyone else is off basking in the sunshine!

      Like

    • Contrary May 25, 2018 / 8:10 am

      Hahaha, I just have to add, after the initial GMS radio reports on the growth commission report, the 9 o’clock radio news has morphed it into ‘Murdo says there is no appetite for an independence referendum’, haha – lets just blank out the tens of thousands marching, actually going out on the street, that say otherwise, let’s just blank out the fact that it democratically gives the people of Scotland a very good alternative to the economically detrimental Brexit, let’s just blank out Westminster trying to destroy devolution, let’s just blank out all evidence to the contrary and take Murdo’s word for it! Look, the sun is out,,,

      Like

    • Alasdair Macdonald May 25, 2018 / 2:39 pm

      And, at 6.00am on 25, May, GMS opened with a rant against the Growth Commission by THE COLONEL.

      I wish I could opick horses with such accuracy.

      Like

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