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
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
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.”