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Scottish councils urged to use electronic payment systems

Scottish councils made procurement savings of £71m in 2012-13, but they can achieve further benefits and savings, according to a new report from the Accounts Commission. 

The new study – Procurement in councils – revealed that every year Scotland’s local authorities spend £5.4bn on procuring goods and services, ranging from construction materials to IT and social care. 

It also outlined that since 2006, when the Scottish government launched new initiatives and councils established Scotland Excel, which pools purchasing powers to buy more services collaboratively, savings have been made. For instance, the use of collaborative contracts by councils has increased by 80% over the last three years with annual spending on such contracts totalling £503m. 

However, despite the progress being made, more can be done to improve the procurement process, increase savings, while maintaining service quality. Douglas Sinclair, chair of the Accounts Commission, said: “Councils need to secure maximum value for the money they spend as budgets continue to tighten. Better use of procurement can improve quality and bring benefits to their local communities. 

“Last year there were reported savings of £71m. But we think there is potential to do more. For example, £9m could be saved just through councils moving from paper-based to electronic payment systems.” 

He added that and progress has been mixed across councils with the better performers investing in qualified staff and systems to improve service quality and achieve savings. But Sinclair believes there is a lot each local authority can learn from one another. 

The report has recommended that councils and Scotland Excel should review and formalise arrangements to fund procurement reform activity beyond 2016. It has also been suggested that council staff involved in procurement should aim to achieve the superior performance level in the Procurement Capability Assessments, particularly in relation to  spend covered by agreed commodity/project strategies; participation in Scotland Excel contracts; automation of procurement and payment processes; and spend captured in the council’s contract register. 

The Accounts Commission has also recommended developing a systematic approach to collecting information on non-financial benefits, including economic, community and environmental benefits, and report these to the relevant council committee on a regular basis. 

Additionally, the corporate management teams of councils should examine the benefits of joint working or joint procurement teams as a way of securing economies of scale and creating collaborative contracts, and the phase out of paper purchasing systems should be considered. 

Sinclair said: “Some councils have done well by looking at all the options, investing in the right skills and systems and learning from each other. But there is scope to do a lot more and the pace of improvement needs to increase." 

“The key point is that there are real benefits from better procurement and that is all the more important in these times when budgets continue to tighten. Good procurement is quite simply what people expect their councils to do.” 

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