29 April 2005
Politicians have been doing battle over the need for public sector efficiency savings. But councils are already teaming up with their neighbours and other public bodies to make major economies of scale
Whichever political party wins the keys to Number 10 on May 5, local authorities can be certain that the next government will expect them to place a major focus on improving their procurement practices.
Each of the main parties has set out ambitious plans for billions of pounds in efficiency savings, to be achieved in the next Parliament, and local government is expected to deliver a significant proportion of these.
Labour's review of efficiency, conducted by Sir Peter Gershon, and the Conservatives' rival programme, drawn up by David James, both throw the spotlight on better procurement as a means of achieving the savings. Not surprising, when one considers that procurement accounts for £40bn of local government spending.
Against this background, the challenge facing local authorities is not just to deliver efficiency gains now, but to build capability and skills for tomorrow, and to offer the public a choice of services in a cost-effective manner.
The good news is that procurement is an area in which quick wins are achievable.
The 4ps supports authorities throughout the procurement lifecycle of major projects, including public-private partnerships and the Private Finance Initiative. We work with members, senior officers and project teams and we see daily evidence of the major progress that councils are making in delivering efficiency gains.
Sensibly, authorities are adopting a structured approach to what is a major challenge. First, relatively easily, they tackle the quick wins, involving revenue generation or cost minimisation programmes.
Secondly, come the restructuring and renegotiation of supply contracts. These are followed by projects designed to improve the performance of business units or services.
Finally, authorities tackle the large-scale organisational transformation programmes, which are by far the most complex projects to undertake but which offer the greatest potential impact on efficiency.
Although the efficiency agenda is still in its early days, one thing is already clear: collaboration between local authorities and other public sector bodies, particularly when one of them is a centre of expertise, is crucial.
Local Public Service Boards aim to foster joint working between key players in a locality, to provide clear incentives for more collaborative behaviour, and to strengthen capacity and leadership at the local level.
The Procurement Agency for Essex is a shining example of just how much can be achieved when public bodies in a particular area adopt an integrated approach to procurement.
It comprises 15 councils and public sector organisations in Essex — including the police authority as an associate member — and intends to bring in NHS bodies, the Prison Service and local higher education agencies to secure even bigger efficiency gains.
Starting with something as simple as stationery, where it achieved more than £1m in savings for participating councils, the procurement agency has gone on to deliver four collaborative contracts and develop the Essex Marketplace system, which now has 3,100 suppliers handling more than £20m of business.
But partnerships can be set up on an even grander scale. The South East Centre of Excellence is one of the nine regional centres set up by local and central government to provide expertise to councils as they work to improve efficiency and procurement at a regional level.
The South East region is huge, comprising 55 district councils, 12 unitary authorities, seven counties, five police authorities, eight fire authorities, four strategic health authorities and 49 primary care trusts.
Its centre of excellence has created an initial programme looking at the scope for member authorities to take a joint approach to procuring services, buildings, equipment and supplies, waste, social care and transport.
The centre already has under way: regional service contracts; the provision of back-office services to schools; cross-sector joint procurement; the collaborative procurement of waste collection services; and the joint maintenance of tunnels.
As these examples show, local government has already developed a wealth of efficiency practices that can be drawn on nationally.
The trick, as always, is to ensure that authorities share best practice, and these lessons are backed up by proven tools such as gateway reviews, effective benchmarking, intensive project management and the development of key skills.
4ps and its partners will ensure this work continues, whoever occupies Downing Street come May 6.
Chris Wilson is the executive director of the 4ps