21 October 2010 | Angeline Albert
Buyers’ skills will be crucial to extract value from what is left of council funding following the Comprehensive Spending Review, the CEO of the Society of Procurement Officers in Local Government (SOPO) has said.
Following Chancellor George Osborne's announcement that UK local authority funding from central government will fall by 28 per cent over the next four years, CEO of SOPO Peter Howarth, said: “Ouch! This is going to bite into local government.”
Buyers must get better at contract management and supplier relationship management to tackle the challenge, he said. He emphasised the importance of using the best suppliers, understanding the market based on good data and getting the best out of contracts and suppliers.
“Osborne’s 7.1 per cent cut a year follows local authorities’ stiff target of 3 per cent savings per year for three years. In the past two and a half years, councils have had to demonstrate what real cash savings they make. These stiff targets follow a review by Sir Peter Gershon about five years ago.
“Purchasing must deliver the right advice based on data that can help them make better informed decisions to drive efficiency and not drive down price.”
Skills could also be a problem. Howarth estimated 25 per cent of councils (100) have no qualified procurement professional on their staff. The remaining 75 per cent have at least one trained buyer. “A lot of buying in the public sector is carried out by those not trained in procurement. Job losses will come but this is not the time for local authorities to slash away at the procurement skills base. Now is the time to build on it.”
The government also announced a “massive devolution of financial control”. Ring-fencing of all local government revenue grants will end from April 2011, except ‘simple’ schools grants and public health grants.
Howarth added: “The best thing that can come out of these cuts is that the profile of procurement is raised, waste from the public sector is removed and there is a better managed society, which is the purpose of government.”