Local authority spend with third parties has continued to increase significantly and has almost reached the £70bn mark, new research reveals.

New data released by Oxygen Finance shows that the increase in third-party spend in 2021 of £4.6bn (or 7% growth in spend) was almost double the increase in 2020 (£2.6bn, 4.3%).

Vulnerable Citizens and Public Health followed by Buildings were the two categories that benefited most from this increase, now accounting for 39% and 26% of total spend respectively.

The data appears in the 3rd Local Authority Third-Party Spend Almanac from Oxygen Finance, which brings together a view of expenditure across Local Government in England.

Reviewing the Almanac, Professor Martin Reeves, chief executive, Coventry City Council, and the Local Government Association’s (LGA) National Procurement Champion, said: ‘The increase in third-party spend and the obvious increased reliance on bought-in goods and services highlights once again the central, pivotal role of procurement and commissioning in local government. Procurement is also having to contend with inflation, global supply chain instability and the climate change emergency.

‘This Almanac provides crucial information that should help local authorities achieve optimal outcomes from procurement activities and highlights the CO2 that results from local authority supply chains, which will be a constant focus for the sector in the coming years.’

Vulnerable Citizens and Public Health spend increased by £3.3bn in 2021, which is a 14% increase since 2019. Of the £27bn invested in Vulnerable Citizens and Public Health, Adult Social Care continues to be the highest spending subcategory (£19.6bn).

The Buildings category saw the biggest absolute spend increase of an extra £1.8bn due to a total spend on Property & Construction of £15bn, driven by investment in Property Maintenance and Property Construction.

Buildings, Highways and Transport, and Waste and Environment category suppliers dominate the highest spend supplier list, with the top three highest-earning suppliers remaining unchanged from the previous year.

Approximately 10% of total third-party spend goes to just 20 suppliers. For the first time, the Almanac also provides insight into the estimated carbon emissions attributed to local authority supply chains. Supply chain emissions are up by almost 20% and are now responsible for 96% of all local authority emissions.

Ben Jackson, CEO of Oxygen Finance, commented: ‘Effective collaborative procurement, supplier management and contract management will be key to addressing some of the biggest challenges faced by public sector procurement. This annual publication is designed to raise awareness of how councils in England spend with third parties and open up discussions around how the sector can continue to collaborate to achieve the best possible value, whilst demonstrating the positive impact effective procurement has on communities.’