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Public bodies go local as over £1bn spent on digital services with SMEs

Local authorities and other public sector organisations have spent a whopping £1.2bn with SMEs on cloud and digital services since 2012, meaning almost half of digital spend is being invested in smaller companies.

In new figures published by the Cabinet Office, it was revealed that the public sector spend has continued to grow for services like cloud storage and IT support, hitting a total of £2.6bn in total.

Spend with SMEs in particular has made up almost half of this spend, or the equivalent of £1.39 in every £3 – just over the government’s promise of £1 in every £3.

This investment, made primarily by public bodies such as councils, the NHS and central government departments, has been made via the Digital Marketplace, which helps bodies drive down costs by getting the best possible deal.

One notable example of place-based thinking was Derby City Council, which saved thousands of pounds by switching suppliers from a large multinational to a Stafford-based SME.

Because of the switch, the authority has been able to invest saved money – equivalent to around 150 pothole repairs – back into its frontline services.

“Small businesses have an important role to play in helping government to spend taxpayers’ money wisely,” said Caroline Nokes, government resilience and efficiency minister. “That is why we continue to find ways of improving how the public sector, schools and hospitals, for example, puts money back into services for those they look after.

“The money saved in Derby is a good example of how smart procurement can make a real difference to people’s lives.”

Another English authority, Northamptonshire County Council, has also recently launched a scheme to help SMEs in its region develop effective business strategies and foster a culture of innovation via a ‘Growth Hub’.

In February, the Government Digital Service announced that it wanted to get a better understanding of how local government and the wider public sector are transforming services, including by expanding the Digital Marketplace’s supplier base diversity – 90% of which comprises SMEs.


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