Local Government and Taxpayer Money – How Do They Spend It?

We are delighted to publish this post from James Jeffrey, Business Writer, at Applegate – the B2B marketplace for buyers and sellers.

In the financial year of 2016 to 2017, £172.8 billion of taxpayers’ money will be spent by local government authorities across the UK, yet the public are rarely informed of the strategies in place that dictate the way this money is used.

This is why, in September, I was inspired to create two separate Freedom of Information requests with the aim of finding out exactly what strategies and systems are in place to allocate and monitor the use of taxpayer’s money by local government – with a specific focus on ‘maverick’ spend.

The impact of procurement within an organisation and how these professionals control the level of maverick spend - defined as any transaction outside the remit of procurement - is not well understood outside each individual authority.

Cited by The Guardian as the defining moment of the open data revolution, councils have been required to comply with a call from Sir Eric Pickles to publish financial transactions over £500, since January 2011, in the interest of transparency.

Yet there seems to be a clear disparity between the level of reporting on the allocation of budgets and the procurement practices that dictate the way councils spend taxpayer’s money.

It fascinates me that there seems to be more interest and coverage in the allocation of budgets to departments in central and local government than the way they spend this money, despite the fact it is arguably just as important.

When the Labour government came into power in 1997, it brought with it a 23-year-old manifesto commitment -- The Freedom of Information Act -- to give people a legal ‘right to know’. Since the Act came into effect in 2005, it has been heavily utilised by journalists who have produced many stories relating to government and publicly owned bodies.

The Act is seldom used to uncover information on a national scale however, for two reasons. Firstly, the respondent can claim various exemptions and refuse to respond, and secondly it can involve a huge amount of work for the questioner. Data gathered for our white paper titled: Preventing Maverick Spend - a local government case study, for example, involved submitting two separate requests to 434 councils.

The research uncovered the following:

  • The councils with the most and least maverick spend.
  • The percentage of maverick spend undertaken in councils from each financial year from 2012 to the present day.
  • The top three councils that reduced levels of maverick spend between the financial years of 2012 and 2016 – and the three whose maverick spend increased the most.
  • The sanction systems in place for non-compliance to procurement practices.
  • The percentages of transactions that require a purchase order.
  • The number of procurement professionals that have a CIPS or other professional procurement qualification and how many are currently undergoing procurement training

As is expected, this process was not without a number of obstacles. We experienced notable delays which included the requirement for clarification of a number of definitions specific to procurement, such as maverick spend, eProcurement and eTendering.

That raises another point - when I spoke to Peter Smith of Spend Matters about this work, we discussed how procurement struggles to gain credibility because we cannot even agree on definitions for our core professional tasks. The definitions of maverick spend and off-contract spend were a particular stumbling block in this project.

It would be like one surgeon saying to another: “I’d like you to take out the heart” in an operation theatre, and after the second doctor has taken out the lungs, they’d respond: “Well that’s what we call the heart!”

In addition to this, many councils cited the fact that they either didn’t hold the information, don’t classify any spend as ‘maverick’ or said that it would be too costly to gather the data (as collating would take the request above the designated time threshold).

Although we think the findings are interesting, it is more important to consider how matters might be improved. This is why, in the coming weeks, I will be contacting those councils with the most efficient prevention of maverick spend to create a case study showcasing these frameworks. I hope other councils around the country will then be able to learn from these ‘best practice’ models and, if practical, look to implement them in their constituencies.

Peter and I will also be delving further into the results of my research, looking at the details of eProcurement and the number of procurement professionals in local government. This will include how many of them have formal CIPS qualifications or are in training to obtain them and perhaps even the correlations between the levels of training, prevention of maverick spend and council efficiency ratings.

Finally, if you have any questions about this project or have any ideas about how to further this research, please email me on: james.jeffrey@applegate.co.uk. And do take a look at the paper here.

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