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Opinion: Procurement lessons for housing providers from CLG select committee

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Opinion: Procurement lessons for housing providers from CLG select committee

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Published by Jon Land for 24dash.com in Housing and also in Local Government

Opinion: Procurement lessons for housing providers from CLG select committee Opinion: Procurement lessons for housing providers from CLG select committee

By Steve Malone, Procurement for Housing

Every day throws up new headlines about ways in which local government can cut costs and save money. Some are sustainable and can be done in a way that doesn’t sacrifice the quality of local services, while others have questionable merit.

So it was refreshing to see the communities and local government committee’s inquiry into council procurement deliver recommendations that get to the very heart of delivering greater efficiency and value for money without cutting staff or adding to the workload.

The key to this, it said, is about procurement being "seen not as a niche activity for specialists, rather as the essential activity under-pinning service delivery". MPs added: "Even at a time of financial constraint, investment in procurement skills is essential to enable effective management of the multi-billion procurement spend, and should be seen as a wise investment now to save costs in future."

There are many parallels between local government and the social housing sector in terms of funding constraints and the concerted drive for efficiency and value for money. But it’s this message about better procurement that needs to come across loud and clear to organisations on both sides. Indeed, my own organisation, Procurement for Housing (PfH) has been highlighting the importance of smarter procurement to its membership – including 119 local authorities – and helping them to implement the necessary changes.

The overall implication from the select committee’s report was that housing and other departments across local government simply aren’t getting enough value from their £45 billion annual spend. There were inevitable calls for councils to collaborate more on some of their biggest areas of spend. The committee’s advisor suggested that using collaborative agreements as a default could yield as much as £1.8bn in additional annual savings.

Local authorities were also criticised for failing to fully exploit procurement so that it delivers social value and supports small businesses – an area of particular importance to social housing providers and the communities they serve.

Concerns were also raised about the degree to which councils are able to effectively manage the increasing number of contracts that are outsourced. As committee chair Clive Betts explained: "In outsourcing a contract councils must ensure that they do not outsource responsibility for the quality of local services."

But all of the above is far easier to achieve if procurement is seen as a strategic activity that’s understood and valued across the organisation. We have seen the impact this has had in the social housing sector. Landlords who have embraced this agenda, such as Sanctuary, are reaping the rewards in terms of significant savings and better quality services from their suppliers.

This approach, being adopted by many other forward-thinking social landlords, has procurement lessons for the wider public sector. But for public bodies and council departments to follow this path they must develop a better understanding of where their procurement spend is going. Contract and pricing data can often be distributed across different financial systems that don’t always join up. At PfH we use spend analysis to help organisations scrutinise all their data. It’s about organisations turning their financial information into intelligence which can help them negotiate the best value from their supply chain.

But the path to smarter procurement requires buy-in right across the organisation to ensure those efficiency gains are sustained and maximised. For housing associations that means procurement having a voice at boardroom level.

For housing and other departments within local government, as the select committee report makes clear, it needs to be spearheaded by senior officers, cabinet members and frontline councillors.

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