New report highlights shared services potential
London's councils could save "hundreds of millions" by adopting a shared services approach to procurement, according to a new report by cost management consultancy Lowendalmasai.
The group analysed the expenditure of 29 local authorities in the capital and found that collectively they spent more than £8.2bn across more than 53,000 external suppliers.
Some £2.9bn of this went to the top 100 suppliers, while 15 were paid a total of £747m for their work with more than 20 councils. Two suppliers were found to serve all 29 authorities.
The report suggests that by clubbing together to buy goods and services the councils could make savings of at least £2.9bn. This is because, according to Lowendalmasai, discounts of at least 15% can be secured through effective supplier management.
"At a time when money is tight, there is no excuse to waste it," said the consultancy firm's managing director Assaf Lennon. "Councils in London, and indeed across England, could take immediate action today that will begin to save significant sums of money for hard-pressed taxpayers."
He added: "It is possible to retain local decision making with elected officials while councils save money by buying services across boundaries. Our research suggests that in some cases a contract could be introduced so all councils within a defined area bulk buy from one supplier."
Commenting on the report, local government and communities secretary Eric Pickles agreed that councils should be joining forces and bulk buying "as a matter of course" to bring down their overheads and create economies of scale.
He also pointed to the shared services agreement between Westminster, Hammersmith and Fulham and Kensington and Chelsea as example of how "sensible" savings can be made in a way that protects frontline public services.
A progress report from these three authorities issued in June this year revealed that they were on track to save £40m a year by 2015/16.