Councils joint venture falls short of savings target

14 December 2010

14 December 2010 | Lindsay Clark

Flagship joint purchasing venture Southwest One has so far only made cashable savings of £3.3 million for Somerset County Council, the Audit Commission has found.

In its report for Somerset CountyCouncil, which formed the joint venture in 2007 with IT service provider IBM, Taunton Deane Borough Council and Avon and Somerset Police, the Commission found that: “Actual savings are below those originally forecast and currently stand at £3.3 million ‘cashed’”.

The Southwest One deal is worth £400 million – a figure which covers spend across the authorities as well as operating costs – and is expected to make £192 million savings for all authorities over its 10-year lifetime. The largest chunk of that, £172 million, is expected to be made for Somerset County Council.

The Audit Commission report on progress at Somerset added: “Potential savings of £45.5 million (£22 million implemented and £23.5 million awaiting implementation) have been identified and agreed.”

The report, published last week, said it was essential that changes necessary to realise the identified savings are carried out. “This will only be achieved through effective contract management arrangements resulting in cost reductions, increased efficiency or improved delivery of services.”

All these measures will need to be taken to achieve cuts outlined by the government, which yesterday announced average spending reduction across all councils of 4.4 per cent in 2011-12. Authorities most hit could see budgets cut by 8.9 per cent in spending power in 2011-12 or 2012-13.

The government has suggested collaboration in procurement is a way of managing the cuts. Communities secretary Eric Pickles said on BBC Radio 4’s Today programme that it is no longer viable for councils “to have their own legal departments, their own education departments, their own planning departments”.

In a statement, Somerset County Council said it had so far realised £4 million of procurement savings, with projects under way that deliver a further £18 million. This includes work that has been done since the Audit Commission carried out its study.

The council added: “A total pipeline of £123 million savings opportunities have already been identified against a target of approximately £170 million over the lifetime of the contract. It would be inappropriate to comment on the potential impact of reduced council budgets or council spending plans.”

Calderbridge, Seascale
£52,518 - £64,233
Aylesbury, Buckinghamshire
£25k-£30k + benefits
GPA Procurement
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