Councils could save £10bn by improving spending on goods and services

Research by procurement experts Opera Solutions has shown that councils could save £10bn every year by improving how they buy, source and pay for goods and services.

The report gives the highest estimate yet of potential savings that could be achieved if councils secure better value for the £50bn of public money they spend on procurement every year. The £10bn figure is equal to £452 per household every year.

Opera looked at spending on energy, mobile phone and legal services across three separate local authorities, which totalled £13.6m. By consolidating that spend, Opera estimated the three councils could shave a collective £1.44m off their bills.

The report argues that by adopting new processes and making better use of spending analysis, Local Government could replicate these kind of savings across a wide range of back office functions, with no impact on quality of service.

It also recommends that councils make better use of data, as greater transparency of council spending data has made it much easier to identify incorrect payments, eliminate duplicate spending and fraud, reduce multiple suppliers and spot where different prices are being paid for similar services.

The report argues that the next stage in driving out waste must be making more intelligent use of this information, compare spending within and across different councils to find opportunities to drive down costs.

Also, bulk buy, as joining forces with neighbouring authorities councils can drive down overheads and secure significantly better economies of scale, and shop around, to secure better prices, increase competition between suppliers, negotiate harder on contracts and end over-reliance on a small number of vendors to provide a large numbers of services.

This year, central government has reduced the spending power of local authorities by £2.6bn.

The research suggests that a lack of procurement expertise amongst council staff, lack of buy-in from senior executives and fears that joining forces with other councils to collectively buy goods and services will result in less control are stopping simple changes that could drive out waste and save money.

Further information:
Department for Communities and Local Government