Figures published by the Improvement Service show that Scotland’s councils had 51,312 local suppliers in 2008 but by 2017 this figure had fallen to 29,910 – a drop of 42%.

Local authorities are also spending less locally than it did ten years ago. In 2008, the average Scottish council spent 30% of its procurement budget with firms from within its geographic boundaries. By 2017, this figure had dropped to 27%.

The Federation of Small Businesses (FSB) said the statistics underlined the need for First Minister Nicola Sturgeon to set out robust new procurement measures when she unveils her Programme for Government in Holyrood later today.

FSB’s Scotland policy chair, Andrew McRae, said: “The Scottish public sector is a serious economic player. It spends around £11 billion buying goods and services every year – money that, if spent smartly, can generate added benefits for the local community.

“We know that money which is spent local stays local – and that buying from local small businesses has economic and social benefits way beyond the bottom line.

“But despite political intention to get more cash spent locally, today we see that far fewer local businesses are getting a fair share of our public sector’s spending power.”

He added: “When the First Minister stands up in Holyrood tomorrow to unveil her Programme for Government, tough action on procurement needs to be in there.

“That means requirements for all of the public sector – from hospitals to schools – working together at a local level, to co-ordinate buying strategies and open up opportunities for firms in the area. It means ensuring that new procurement rules requiring contracts to be broken down into the smallest possible lots are actually enforced.

“We need to mandate annual public sector reports on procurement to detail spending with micro and small businesses, setting targets and an action plan for improvement each year.”

The Improvement Service is the national improvement organisation for local government in Scotland. Published last week, the report reviewed councils’ spending figures over the last 10 years and was prepared for the Improvement Service’s Economic Outcomes Programme (EOP) which has been developed with input from Scotland’s 32 local authorities.