24 December 2008 | Paul Snell
Council finance chiefs are turning to procurement to counteract rising costs and help them weather the economic crisis.
According to a survey of 145 council heads of finance carried out by the Audit Commission, local authorities are coping with the downturn, with less than half reporting they need to take major measures to deal with current cost pressures.
Although inflation in key areas of spend such as food, fuel and utilities has caused problems for councils in the past year, the study found this often only accounts for around 2 per cent of total council spending.
Electricity, on which councils spent £570 million in 2007-2008, could cost and extra £97 million this year, the equivalent of an extra £250,000 for each council. But the total still only accounts for around 0.5 per cent entire spend.
"By and large councils knew this downturn was coming and have planned for it. The pressures are real but councils are coping with them well," said Steve Bundred, chief executive of the commission.
But the commission warned of the knock-on effect the recession would have on suppliers and contractors to authorities. It said the councils should be actively assessing the risk to services from vendors, and looking to take action such as paying more quickly.
The report added price increases could see a rise in the price of bids, but at the same time greater competition for work could mean better deals for councils.