north east sets out to realise public benefit of buying local

A bid to spread the benefits of local procurement across a whole UKregion has been launched today in the North East, following the publication of a groundbreaking new guide from nef (the new economics foundation)

A new guide to public procurement, Public spending for public benefit, released today, Monday 1 August 2005, by nef (the new economics foundation) draws on five years engagement with policy makers and practitioners to show how local authorities and other public bodies can use their purchasing power to promote local economic development.

Now, the North East Centre of Excellence (the regional body charged with encouraging effective, collaborative public procurement) has announced that it will draw on the lessons and approaches described in the guide, to increase the local economic impact of £1 billion of local authority spending in the region.

The North East Centre of Excellence decision comes after a years collaboration between nef and the Regeneration Division of Northumberland County Council, described in the guide, which found that as well as the initial contracts, local suppliers in Northumberland re-spent on average 76 per cent of their income from contracts with local people and businesses, while suppliers from outside Northumberland spent only 36 per cent in the area. This means that every £1 spent with a local supplier was worth £1.76 to the local economy, and only 36 pence if it was spent out of the area.

Since the Gershon review of Whitehall and local government efficiency, managers have been under intense pressure to consolidate suppliers, buy at larger scale and cut administration when it comes to procuring goods and services. But this may not be the way to achieve best value, or even meet efficiency targets. The nef guide shows that it makes sense economically, socially and environmentally to find local sources of expertise and goods wherever possible.

According to government figures, the UK public sector spends £125 billion delivering goods and services each year, yet to date, their has been no systematic approach to ensuring that this public spending also delivers public benefits. nef's guide shows that:

• If just 10 per cent more of everyday public sector spending was steered locally in the country's most disadvantaged areas, this would amount to £12.5 billion income injected into those areas in just a single year - almost 15 times more than the £835 million currently spent on regeneration in the UK.
• UK public bodies - including local authorities, hospitals and schools - can deliver regeneration by developing solutions to local problems that promote local economic linkages
• The process of developing local solutions raises capacity and expertise of local people and enterprises, turning money spent locally into a vehicle for regeneration.

The guide argues that the potential for public spending, particularly procurement to achieve multiple objectives has been systematically overlooked, and that opportunities to promote regeneration through targeted public spending have been missed. It uses 13 case studies to explore how some public sector providers have already adopted a new approach to procurement while adhering to legal requirements. 

Public spending for public benefit demonstrates what the UK could look like if public spending was used to meet multiple objectives in a range of service areas including food, construction, waste minimisation, youth services and back office services. The guide cites evidence from a number of public bodies who are already directing procurement spending to reduce poverty, promote social inclusion, and ultimately also save money for the public purse;

• Cornwall Food Programme has generated £47,000 more per year for the regional economy by sourcing higher quality ice cream locally for the same price as national alternatives with lower nutritional content
• Riverside Housing Association has saved £46,000 on central heating supplies by working with a regional supply chain
• Liverpool City Council has responded to 70 per cent more bulky waste removal calls for less money, by using a locally based company

"Public spending should maintain happy, healthy communities, yet all too often the focus is on short term cost cutting rather than real best value. This guide cuts through the myths surrounding public spending, to reveal not only the potential of local sourcing, but also exactly how to do it," says Justin Sacks, report author and manager of LM3 at nef

To ensure that the potential of public spending to really create public good is realised, the guide calls for Local Authorities and public bodies to take action to:

• Question, measure and improve the local economic impact of public spending
• Actively promote collaborations within and across public bodies, and with local suppliers
• Change contracting procedure to open the playing field to as many suppliers as possible

"The North East Centre of Excellence has recognised  that there are real opportunities to promote long term regeneration within a regionby sourcing more goods and services locally, and made a real commitment to increasing their local economic impact. And, in areas where budgetary constraints are an acknowledged issue, such as the quality of school meals for instance, the implications for local government overall are huge. This guide is the first step towards ensuring that public spending across the UK is really used for public benefit," says Justin Sacks

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	related
	Publications public spending for public benefit The Money Trail: Measuring your impact on the local economy using LM3

	contacts
	Justin Sacks