18 December 2024

Local government spends £3.4bn with 39 ‘strategic suppliers’

Local government spends £3.4bn with 39 ‘strategic suppliers’ image
Image: A9 STUDIO / Shutterstock.com

Public procurement experts Tussell find that local government spending with the Government’s ‘strategic suppliers’ has remained flat for five years.

Local government is spending billions with the 39 ‘strategic suppliers’, new analysis finds.

The latest edition of Tussell’s annual strategic suppliers report analyses how much the UK public sector spends with the Government’s 39 designated key suppliers.

The strategic suppliers are a group of companies that the cabinet office takes a hands-on approach to managing the UK Government’s relationship with, often because of the critical services or contracts they deliver.

The group includes household names like Microsoft, Virgin Media and BT. Their specialities span several sectors, including consultancy, defence and telecoms. Just under half are headquartered in the UK.

Tussell’s new analysis finds that the UK public sector spent £222.1bn on procurement in the 2023-24 financial year - up 6% on the previous fiscal period.

Of this, £22.1bn (10%) went directly to the strategic suppliers.

Central government accounted for the biggest proportion of this sum, at £7.8bn (35%)

Local government, by contrast, spent £3.4bn (16% of the total) directly with the group.

This figure has remained largely flat for the past five fiscal years, and accounted for just 4% of total local government procurement spending in the 2023-24 financial year.

'Compared to central government, the strategic suppliers’ presence in local government is significantly smaller', says Lorna Ingwell, Tussell’s research manager.

'To put the group’s local government market share into context: 34% of local government procurement went directly to SMEs in the same period - a testament to local authorities’ continued efforts to boost social value in their supply chains.'

Since total local government procurement has consistently increased year-on-year, the strategic suppliers’ share of the local government market has gradually decreased.

'Across both central and local government, the strategic suppliers are losing market share', says Lorna. 'This could be reflective of public sector efforts to diversify supply chains, and disaggregate large contracts.'

Most of local government’s strategic supplier spending went to its construction & engineering specialist members - such as Bouygeus Group UK, Kier, Balfour Beatty and Amey.

By growth, Tilbury Douglas, Sodexo and PwC saw the highest growth in local government revenue across the last two fiscal periods; Sopra Steria, by contrast, saw the sharpest decline in revenue from local authorities.

Despite not accounting for a large share of the Strategic Suppliers’ public sector business, the group still deliver a number of important contracts for local authorities.

In the 2023-24 financial year, local authorities awarded 706 contracts to the strategic suppliers. The largest by value was a £603m ‘repairs and maintenance’ contract, awarded by Birmingham City Council to Equans (and a non-strategic supplier, Fortem Solutions).

Tussell’s analysis also found that the strategic suppliers are successfully capitalising on framework agreements to win new contracts, and that a handful of central government departments spend over a third of their procurement directly with the group.

SIGN UP
For your free daily news bulletin
Highways jobs

Deputy Communications and Engagement Manager

Royal Borough of Greenwich
PO5 - £52,194 to £55,323
Passionate about tackling fly-tipping? Greenwich, London (Greater)
Recuriter: Royal Borough of Greenwich

Plumber

Royal Borough of Greenwich
£47,416
Our Repairs and Investment Service is currently looking to recruit qualified, experienced Plumbers Greenwich, London (Greater)
Recuriter: Royal Borough of Greenwich

Respite Support Worker (CDC)

City Of Doncaster Council
Grade 5, £25,178 (Pro Rata) plus 8.5% all-inclusive allowance
As the respite support worker of this respite service, you will have the responsibility to provide a high-quality service Doncaster, South Yorkshire
Recuriter: City Of Doncaster Council

Family Engagement Officer

City Of Doncaster Council
Grade 6 NJC6- NJC11 (FTE £25,989 - £28,142 - Actual Salary £12,935 - £14,006)
We seek to develop a better tomorrow for all learners, through a holistic blend of quality first teaching experiences Doncaster, South Yorkshire
Recuriter: City Of Doncaster Council

Employment Manager (Mexborough Youth Hub) (CDC)

City Of Doncaster Council
Grade 9, £39,890 - £44,096
This post presents an exciting opportunity to support the continuation of the Youth Hub Initiative based at Mexborough Business Centre. Doncaster, South Yorkshire
Recuriter: City Of Doncaster Council
Linkedin Banner