Council procurement estimates prove optimistic

19 September 2006
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20 September 2006 | Paul Snell

Procurement departments in local government have failed to reach predicted efficiency savings.

According to figures released by the government yesterday, procurement savings for 2005-06 were £6.4 million shy of expectations. This is despite overall efficiency gains being more than forecast.

Councils had estimated that they would make £113.1 million of procurement savings last year, of which £92.7 million would be cashable. But the actual figure saved was £106.7 million, with £87.3 million cashable.

A Department for Communities and Local Government (DCLG) spokesman told supplymanagement.com that savings from procurement could have been claimed by other departments, reducing the amount that purchasing could declare.

In total local authorities made £1.2 billion of efficiency savings. This surpassed their estimate of £1.1 billion.

Despite not meeting expectations, savings in procurement were still the third highest sector, behind adult social services, which saved £202.7 million, and corporate services, which saved £183.5 million.

The DCLG said that councils should have used internal audit processes to check their figures were correct. The Audit Commission will now review the statements and request councils rewrite any that it finds unsatisfactory.

According to "forward look" figures for 2006-07, procurement is set to make £137.8 million savings this year, of which £121.9 million will be cashable. Local authorities have set an overall target of £1.3 billion savings by March 2007.



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