Mark Conrad 17 June 2011

Pickles: councils should join forces to save £10bn

Councils could save £10bn a year if they improve the way they source and buy goods and services, a Whitehall-endorsed report has suggested.

A study by analytics experts Opera Solutions, released by the Department for Communities and Local Government on 17 June, suggests there is still a long way to go before local authorities could claim they have maximised their collective spending power.

Councils collectively procure around £50bn worth of services annually, and ministers claim the potential savings identified by Opera Solutions amount to around £452 annually for every household.

Using data recently published by councils under the CLG’s spending transparency initiative, Opera Solutions suggest that neighbouring councils could join forces to procure local goods and services more efficiently.

In one example, Opera looked at spending on energy, mobile phones and legal services across three neighbouring councils. The total bill for the three services was £13.6m.

But Opera estimated that by consolidating their spending to boost their buying power, the councils could have saved £1.4m – or 10% of their spending.

By replicating these savings across a range of administrative and procurement functions councils could save up to £10bn of their procurement bill – a 20% reduction – with little impact on frontline services.

Local government secretary Eric Pickles said: ‘Let there be no doubt whatsoever – today’s figures show that there is significant scope for councils to make taxpayers’ money work even harder.’

Ray Eitel-Porter, executive director of Opera Solutions, said the report identifies ways to deliver ‘ongoing savings’ that ‘can be redirected to critical programmes and services’.

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