Town halls waste £1.8bn on purchasing despite huge cuts

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TOWN halls are wasting nearly £2bn a year at a time of cuts in services by failing to work together when buying in goods and services.

A report published this morning by the Commons local government committee said it was time for councils to “step up to the mark” and get better value for the taxpayer from the £45bn they spend each year on procurement.

The cross-party committee also urged local authorities to cut the cost to companies that want to bid for council business, after finding that in some cases it can cost an “eye-watering” £50,000 for firms simply to tender for a contract.

Part of the burden on private-sector bidders comes from “an over-zealous application of EU procurement guidelines” which makes the tendering process more expensive than in most other European Union countries, the committee found. It called on the Local Government Association and Ministers to provide clear guidance on how the bidding process can be streamlined without breaching EU rules.

Committee chair Clive Betts, the MP for Sheffield South East, said: “Procurement is too important to be viewed as a niche function conducted in back offices.

“It is central to delivering and managing the services that people rely on every day, from having their bins emptied to receiving social care. Without effective procurement local government will cease to operate.

“We need investment now so that staff right across councils gain the skills needed for effective procurement. At times staff, unsure of the needs of local residents and business – especially small local businesses – fall back on wasteful bureaucracy. This has to stop.”

Yorkshire’s 22 local councils have cut spending by well over £1bn since 2010 following a series of swingeing cuts to their budgets as part of the Government’s austerity drive.

Dozens of libraries, swimming pools, leisure centres and care homes have closed in the region since the last election, along with the scaling back of rural bus routes and other key services.

The report makes clear councils have been “too slow” to realise the potential savings from working together to buy in their goods and services.

“Many local authorities are working to improve their procurement operations,” the MPs found. “However, progress has been too slow, as well as patchy across the country.

“The sector needs to step up to the mark and drive improvement. Aggregating spend can deliver economies of scale by driving down supplier prices and cutting process cost. However, opportunities to collaborate are not being fully taken.”