Local procurement can benefit economies

21 September 2008

22 September 2008 | Paul Snell

Spending public money locally can keep economies strong and create a "virtuous cycle", improving employment, encouraging local investment and promoting local business.

Research carried out by the Association for Public Service Excellence (APSE) with the Centre for Local Economic Strategies and the Institute of Local Government Studies, found that for every £1 spent locally, 64 pence was reinvested to the local economy. Councils in England spent around £141 billion in total in 2005-2006.

APSE is advising councils to "SPEAK UP" about their role in the local economy. Spending money locally can provide:

• Stability - confidence in local business in tough economic conditions

• Punch - it can address issues such as social and environmental problems

• Efficiency - it can provide greater savings

• Accountability - it allows local government to be seen to be providing good public investment.

• Key supply chains - it prevents leakage, where public money escapes the local economy through contracts and remote supply chains

• Undervalued - the public economy is poorly understood, decision making must be informed how local spending can boost local economies

• Power - local government has the power to control procurement, supply chains, employment and training

Paul O'Brien, chief executive of APSE, said: "Using council spending power to maximum effect means a positive cycle can be developed that provides high quality employment, promotes local businesses and social enterprises and encourages investment and innovation."

The study also provides guidance for buyers to undertake their own analysis that will allow them to calculate the impact of their local spending.

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