Today I want to talk about:
- The Government's current policy context for improved and efficient local government.
- Why the National Procurement Strategy is important for local government and how it will benefit councils throughout the country. As I am sure you are aware, we are obliged to comply with EU procurement law. I will therefore also touch on the Government's current position on lobbying for EC reform as referred to in the Strategy.
It was only 3 months ago that I launched the National Procurement Strategy for Local Government and we have been very pleased with the positive response to it from the local government community, private sector partners and a wide range of other partners. The Strategy also attracted a high level of central Government attention and commitment.
Procurement continues to feature as one of the Government's top policy priorities for raising the standards of public services in local government and throughout the public sector. This is because our citizens deserve access to world-class services from their councils, ranging from excellent education to efficient street maintenance and up-to-date leisure facilities. Many councils are already doing much to achieve this but our objective must be to bring all up to the standard of the best.
To do this, government and local authorities need to ensure that procurement is high on the agenda. By developing and implementing procurement strategies we can deliver better and more efficient procurement and, as a result, better public service delivery. Efficient procurement results in better quality, cost effective services for citizens who can exercise more choice in consuming them.
We know that local government is big business, providing a very large range of services everyday to citizens and working hard to raise the quality of life for all. This creates a competitive climate, where councils are under constant pressure to raise standards to meet the needs of increasingly challenging customers that want innovative, high quality services on time everyday.
Through the National Strategy, we have identified that together local authorities spend around £40bn each year "externally". This represents about half of local government's overall expenditure. It is vital that this money is spent wisely and that Best Value is obtained. ODPM is underpinning the National Strategy with a range of new freedoms and flexibilities, including freedom to borrow within prudential limits, freedom to charge and to trade and freedom to set up Business Improvement Districts.
This means more opportunities for those on the front line to shape the services to meet the needs and preferences of communities but with the assurance that services are delivered everywhere to high and improving standards. These freedoms and flexibilities take forward the Government's commitment to work in partnership with local authorities to improve public services for the benefit of all citizens.
Government funding
For the second year running, every local authority will now receive at least an above inflation grant increase with many receiving substantially more. Education and social services authorities will get at least 4%, compared to 3.5% last year. In total we have increased grant to councils by 30% in real terms since 1997.
The extra £340 million announced in the Pre Budget Report comes on top of extra £420 million announced in the provisional local government settlement in November. In total, an extra £760 million beyond what was provided in Spending Review 2002. We have also un-ringfenced £750 million of specific grants.
We are investing an extra £3.6 billion in grant next year - an increase of 5.5% on a like for like basis. Given this significant extra investment and the scope for efficiency improvements, our view is that next year local authorities can and should deliver council tax increases in low single figures. But we remain prepared to use our capping powers if that proves necessary.
The need to obtain efficiency savings and value for money There is a continuing need to ensure that the spending in the public sector is targeted at where it is needed most - at the frontline.
Her Majesty's Treasury Efficiency Review: Releasing Resources to the Front line is now well underway. By 2005/06 Government will be spending £320 billion on public services much of which will be targeted through some form of procurement - so it really is vital that we rethink how we use procurement as a way of managing resources effectively and wisely.
Local government has a key part to play in this - not only as a direct provider and procurer, but as a model of best practice in partnership and procurement for other public service providers in local areas.
The Review will generate savings and increasingly difficult targets will be set as the three years go by. ODPM's role in this with yourselves and the LGA is to help generate and facilitate ideas and produce practical examples of where and how resources can be refocused to the customer, the citizen. We need to consider how local government can use procurement and indeed other initiatives, such as e-Government and partnering to change the way local government thinks and operates - to generate large scale savings that can then be retargeted to the frontline.
Use today to think about the realities of larger scale national contracts, for example. Think outside of your own council area, because that is where the economies of scale come to a real fruition.
There may not be many more days of each individual council procuring its own personnel and payroll systems, so let's be prepared with ideas about how to do things differently.
That is what today is all about and partnering has provided significant steps forward and you will hear more about the outcomes of effective partnering from other speakers today. For now, I would like to share with you some key messages arising out of our discussions on the Strategy.
Why do we need a national strategy?
A key part of developing the National Procurement Strategy has been about relationships. Building an understanding of the nature of procurement in the context of local pressures at the frontline has been really the most important feature of the recent progress on procurement.
At ODPM we work across a range of diverse Government departments whose policies have a direct bearing on procurement in local authorities. From DFES through to DEFRA: key policies influencing education and procurement by schools; through to sustainability policies for all.
The National Procurement Forum has 80 members from a range of public; private and voluntary sector partners and is a vibrant Forum that has been proactive in developing the National Strategy. A question early on for that Forum was whether a national strategy was needed at all. A resounding yes indicated that there was, and still is, a need to ensure that the policies from a range of Government departments provide a co-ordinated and seamless policy agenda for local government procurement.
It is the role of ODPM and LGA through the National Strategy, to make continuous efforts to ensure that the voice of local government is heard loud and clear. We need to do all we can to provide assistance, advice and a co-ordinated policy direction for public procurement, both here in the UK and in Europe.
EU reform
On the subject of Europe, most public procurers will have come across the European Union (EU) procurement rules and may, in some instances, have found them overly bureaucratic and not flexible enough to meet their particular needs. While I understand these concerns, it is worth remembering that public procurement accounts for around 15% of the EU's GDP. The Government believes that the procurement rules make this market more open and competitive and improve value for money for the taxpayer in what we buy.
Of course, it is vital that the rules are understood and effective. The existing rules, which were last significantly changed as part of the Single Market programme in the early 1990s, have been in need of improvement for some time. The UK has been pressing for many years for the rules to be simplified, clarified and updated to reflect modern procurement methods and best practice.
The Government is very pleased, therefore, that the proposed new public sector procurement directive very much meets these objectives. In particular, it brings together the three existing public sector directives - covering supplies, services and works, in a single text. It also explains how approaches such as e-auctions, framework agreements and the incorporation of environmental and social issues can be taken forward under the rules. There is also a completely new procedure - known as competitive dialogue - which should provide more flexibility for large complex projects, such as PFI and PPP arrangements.
The new directive, which has been agreed by Member States and considered twice by the European Parliament, still needs to be ratified and adopted - hopefully this will be achieved early this year. The UK, along with other Member States, will then have 21 months to implement the directive. In addition to this new directive, the Commission is having a fresh look at the remedies or compliance regime, which accompanies the procurement directives.
Member States are being asked about their experience under the existing regime and about possible improvements to it. The Chancellor has also announced a review of procurement so that British manufacturers and workers do not lose out from European and international rules applied unfairly to British firms. In all of these activities, the Government will continue to work to ensure that UK interests - both in terms of procurers and suppliers are taken fully into account.
What we have to gain by implementing the national strategy
By developing an effective procurement strategy councils will be actively reviewing their procurement activities whilst taking on board key messages outlined in the Strategy and adopting best practice. They will achieve best value, improve service standards, and make significant savings.
By promoting excellence we hope to achieve greater freedom and flexibility in operations at local level. If local authorities can meet this challenge they will have more opportunities to generate income, develop partnering models and enjoy scope for operating outside of their boundaries. The possibilities are exciting for local government and procurement must be a part of this challenging agenda.
Regional centres of excellence
We are pressing ahead with plans to provide support for the development of partnerships and collaborative working in local government by the establishment of regional centres of excellence in procurement. Supported by the ODPM and our partners, these centres will be based on local authorities who are able to effectively contribute towards promulgating and leading excellence in procurement.
Yesterday, ODPM convened a meeting to explain, among other things, the purpose, structuring and funding for these centres and we are considering proposals from authorities who have expressed an interest to become centres of excellence. I will make an announcement in February with regard to which authorities in partnerships with others have been successful in representing their regions in this exciting programme. This programme is a key driver for implementing the Strategy over the next few years.
Examples of best practice
There are many good examples of local authorities taking up best practice in procurement. For instance, Babergh District Council has demonstrated the benefits of forward planning, partnership working and effective implementation. Through its work, Babergh has done extremely well to dismiss the notion that best value procurement can be successfully delivered by only larger councils. Alongside other district councils in Suffolk, Babergh initiated and led a consortium to address major challenges in waste recycling services. These councils have achieved best value in procurement not least by working in partnership - and this includes developing a strategy and action plan for their recycling services in consultation with their community.
Elsewhere, 5 London Boroughs and the GLA created the London Marketplace (an e-Procurement pathfinder in our e-Government programme) to develop e-Procurement, such as e-Catalogue purchasing and more innovative solutions including electronic invoicing. Data shows that these boroughs are generating savings of between 40 and 74% on the cost of routine items bought through the marketplace, compared to traditional methods. Direct benefits resulting from these savings are passed on to citizens in the form of better public services.
We know that local authorities can deliver the high standards of public services required by service users. The Strategy is about providing information and support for local authorities. It is about enabling councils and facilitating a 'mixed economy' with councils working together in partnerships with the public, private and voluntary sectors. This will result in innovative and cost-effective service delivery.
Islington's pioneering procurement of a new grounds maintenance contract for parks and open spaces suitably demonstrates this. Notably, Islington's new contract procured through direct negotiation with existing contractors has saved the Council £50,000 a year and improved performance by 15%. Islington is deliberately continuing to run a mixed economy with one-third of the sites managed in-house and the creation of an element of internal competition.
The tender evaluation process is based around key corporate objectives, with a very high emphasis on sustainability and regeneration. All this has resulted in a considerable saving to the Council, much of it developed by harnessing combined roles, for example playground supervision combined with wider park management duties outside of key times.
Local government procurement forum: governance structure
Looking to this year, we are setting up a new Governance structure for 2004 to implement the National Procurement Strategy.
A new National Strategy communications group will ensure that we communicate with local authorities about how to implement the strategy. It is in the process of setting up a website to provide information, case studies, feedback and a notice board so that local authorities can communicate with other authorities and us easily.
A sectoral issues group will develop pathfinder ideas to demonstrate effective procurement in a range of different settings including education, equalities, ethical trading and others.
A supplier forum has been set up to understand the supplier perspective and gain an insight into selling into the public sector, how we are perceived by suppliers and how a more streamlined market approach might be achieved. This group is made up of both suppliers and local authority and government representatives to ensure that this information is taken on board and implemented in a practical way.
We have also set up a group to deal with implementation of the Strategy, particularly meeting the milestones that are outlined throughout the Strategy. This group is currently working on Regional Centres of Excellence, and will go on to ensure that local authorities are meeting the milestones and making the savings that we have outlined.
Strategic procurement is regarded as being at the centre of better local government, and at the forefront of change. Procurement is a key driver for improving local services. It covers all stages of managing service delivery, from identification of needs to measuring the impact on service users. By developing a corporate procurement strategy we can challenge existing practice, including service delivery models. A corporate approach identifies the Best Value way of delivering high quality services efficiently.
In conclusion
I should like to thank the LGC for arranging today's conference, which I am sure will give you the opportunity to address many of the issues that have been raised by the publication of the Strategy. You have had the opportunity, since its publication in October last year, to familiarise yourselves with the document.
Now it is time to implement the Strategy and realise higher standards of service delivery, through whatever procurement vehicle you choose.
We have much to achieve over the next three years, but I know that it can be done. I hope that you find the rest of the day productive and leave here ready for the challenge of the new procurement agenda."
Quelle: PublicTechnology, 29.01.2004
