What councils can learn about procurement from social housing

2 April 2014 | Andrew Carlin

Andrew CarlinThe recent select committee report on local government procurement highlighted parallels with issues many of us are grappling with in the social housing sector.

MPs called on councils to get better value for money from their £45 billion a year spend. Hardly surprising, given the continued squeeze on public sector finances.

Of greater interest was their call for procurement skills to be embedded across local authorities. MP Clive Betts, chair committee, said procurement was “too important to be viewed as a niche function conducted in back offices… Without effective procurement local government will cease to operate”.

When my own organisation, Procurement for Housing (PfH), was set up 10 years ago it took a traditional purchasing consortia approach and used framework agreements to harness the collective spending power of social housing providers. But times have changed and the emphasis on demonstrating efficiency, value for money and social impact has grown in the affordable housing sector much the same way as in local authorities and other public bodies.

Frameworks still have their place and there’s clearly scope for greater aggregation in local government, but the challenge now is around ensuring the true potential of procurement is realised across every council department.

We work with social landlords to help them take procurement out of the back office and make it a strategic function that cuts across their organisation. But the lessons we’ve learnt are relevant to public sector procurement functions across the board. By equipping staff with the necessary skills – backed up with market intelligence – it ensures suppliers deliver better quality as well as greater value. Spend analysis tools have enabled our members to get a clearer view of where efficiency savings can be made and where procurement exercises can be improved – providing a springboard to a more commercially aware approach. Social housing organisations that have followed this path are now reaping the rewards both on their bottom line and in their ability to reinvest in vital services.

The same applies to local government – arguably even more so given the prevalence of outsourcing in recent years. As the select committee points out, when councils outsource a contract they are not outsourcing responsibility for the quality of local services. Staff need to be equipped to manage complex contracts and this again comes back to procurement not being viewed as a niche activity but, in the committee’s words, “the essential activity under-pinning service delivery”.

Organisations like PfH can play a role in helping local authorities to make the transition. But ultimately it requires leadership from the top and we need cabinet members and senior officers to champion the importance of procurement.

Andrew Carlin is commercial director at Procurement for Housing

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