17 October 2008 | Andy Allen
The proportion of local authority spending on functions including procurement has fallen "in some cases dramatically" over the past eight years.
According to an Audit Commission report, efficiencies in back office functions have strongly contributed to savings of £4.3 billion called for in the Gershon Review on public sector spending.
The report said increasing the efficiency of procurement was the technique most commonly used by councils to achieve back office savings. The amount district councils spend on these functions has fallen from 35 per cent to 23 per cent between 1999-2000 and 2007-2008.
The amount spent by unitary authorities and county councils has fallen from 6 per cent to 3 per cent during the same period. Larger authorities such as county councils enjoy economies of scale which allow them to spend proportionally less on corporate services than smaller councils.
Local authorities are required to make further savings of £4.9 billion by 2010-2011 under the 2007 Comprehensive Spending Review. However the Audit Commission's 2007 Healthy Competition report found many councils still lack the skills to gain savings through better procurement practices.