Small firms have been dealt a blow following a government announcement that councils will be able to compete with businesses for lucrative work contracts.
The Office of the Deputy Prime Minister (ODPM) said that high performing local authorities across the UK will be allowed to bid for public sector contracts previously set aside for businesses.
The decision will be a disappointment to small firms that will now have to compete with councils as well as larger businesses to win contracts.
Entrepreneurs have long complained that the tendering process for public work is biased against small firms, with larger, better-funded rivals mostly chosen to undertake work such as cleaning and construction.
Small businesses were given hope last year with the announcement that contracts will be awarded on a local, rather than national, basis, but this latest decision will make it harder for startup companies to succeed.
Nick Raynsford, the local government minister, said that the decision will promote competition and boost profits.
“These powers should help create a dynamic and entrepreneurial public sector, which will increase diversity and choice in the delivery of public services.
“This shows the government is serious about giving local authorities the tools they need in order to build thriving, inclusive and sustainable communities.
“Trading will encourage local authorities to extend and improve the range of services they offer and will also provide business opportunities for the private sector,” he said.
