An approach to making the required 25% cut in local government expenditure AND improving services

1. Getting more with less by
using smarter procurement
Dr Andrew Larner
Managing Director
Improvement and Efficiency South East
Improvement and
Efficiency
South East

2. The challenge of 25% cuts
• 25% of central funding varies between 5% and 20%
• Over the last 5 years councils have experimented
with new ways of working. Nationally there have
been over 1000 efficiency projects.
• To cut costs by 25% the logic is clear:
– do the basics to reduce third party costs
– re-engineer your business to be leaner and fitter and
release assets
– share services between councils and between the
public sector and release more assets
– stop doing things and where possible get the customer
to do them for themselves or the community on their
behalf.
• We have to do this whilst at the same time delivering:
– apprenticeships; reductions in CO2 emissions; support
for SME’s and the local economy; transparency
• Procurement is a key means to these ends uhE
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3. Doing the basics
• On average third of external spend is on
commodities
• In simple terms we need to know:
– Have we got the best price
– Are we using the prices we agreed
– Are we managing demand
• Finding the best deal
– Don’t buy if you don’t have to
– More access to knowledge
– Use of public sector buying organisations
• Making sure we use the agreed prices
– Still common to find only 25% spend on contract
– Tailoring finance systems to keep spend on contract
– Using web based procure to pay solutions
• Are we managing demand
– Monitoring external spend uhE t ast
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4. Help reduce audit and inspection
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5. Reshaping markets
• External spend for public sector in England is £221Bn
…
• of which £50Bn is local government
• 96% of our external spend is in 4 areas
Construction Corporate Social care Waste
services
• A reduction in commodity spend is essential but …
• 10% reduction in commodity spend is only 1.5% of
total spend uhE t ast
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• So we need to address these markets ci dncy i
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6. Collaborating on construction
• Public sector across the
south east has
collaborated on
construction
• The programme is
popular with the public
bodies using it and
contractors alike
• We have a programme in
excess of £1 billion
• Costs and time are down
through early contractor
involvement
• Quality is up through
leveraging our combined
spend
uhE t ast
• A further £300m this year S Et s
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7. … and tackling CO2 emissions
Collaborative procurement
• Design team hand-picked using
existing framework arrangements
and OJEU competitive tender.
• HCC/MACE/Bennetts undertaking
HCC HQ programme and change
• 75% more staff accommodated management, FF&E design, move
• 30% more space efficient management and facilities
(staff per floor area) management in-house.
• 4500m2 reduction in the • Early engagement with the main
council’s use of office space contractor on completion of the
feasibility stage.
• £200,000 per annum on
running costs Staff Benefits
• 50% reduction in energy costs • 100% staff satisfaction
• Improved productivity and uhE t ast
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8. … and applying the lessons
• We can repeat the success in construction for
Corporate Services and Waste Management
• But whilst we can drive down unit costs total cost is
rising:
– Waste from the move from landfill to incineration
– Social care from an ageing population
• So whilst we can do the basics, reshape markets this
wont be enough …
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9. ... so we need to stop doing
things the same way …
Sharing learning online
Collecting rubbish without collection
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10. … and just stop doing some
things …
• So the customer needs to make
the best deal
• The Care Funding Calculator
– Better specification of need
– On average cost reduction
• Enabling the customer to do the
calculation
– Customers who hold budget
– Self funders
• “Care bay”
– Enabling exchange of service in
the community
– Reducing dependence of formal
care
– Bringing transparency to the
market
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11. ... and start doing others
East Sussex Coast
• a large retired population
• Fire regulations changed
• Large costs
• Reducing residents savings
• Closer to need for support
Not our problem?
• We do rate traders
• Why not procure commodities?
• 2 pilots showed 40% and 60% savings
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12. So what are the barriers?
• Council sovereignty
• ‘not invented here’
• Local capacity
• Supply chain management behaviour
• Collaborative arrangements do not exist
The obstacles are not technical. Local
Government can now define, procure
and deliver some of the most
complicated projects in government.
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13. Debate
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