Radical Supply Cost Reduction Andrew Smith OBE Chief Executive, Hampshire County Council Lead for Procurement, Capital and Shared Assets Workstream 3 February 2011

Starting Point Be confident of (some or many) councils’ proven ability to deliver efficiencies Recognise, exploit and adopt Manage “Efficiency vs Democracy” Learn from the private sector group model Become a more ‘intelligent’ client

The productivity challenge… Cultural not technical – who can afford sovereignty?

The productivity challenge… Designing for tomorrow today

The productivity challenge… Driving adoption

The productivity challenge… Embracing localism

Guiding principles for the future Creating organic leadership – National / Clusters / Councils Compelling not prescribing Closer to the private sector group model Raising collective leverage Improving and sharing skills Maximising the opportunity to raise our game

Workstream Board Chair: Cllr Paul Bettison Champion: Andrew Smith PM: Michael Lee RIEP Support: Andrew Larner Property Highways WasteSocial Care Corporate Services Procurement, Capital and Shared Assets Productivity Workstream

Leadership Central procurement team –Local government hosted –Private sector to raise commercial acumen –Leadership role –Interface with central government, private sector and health

Leadership Clusters –Ex IEPs / Lead councils to host –Geography may change – Consolidation –Matrix – Each Cluster to lead a category nationally? –Risk share approach –Adaption and adoption role –Skills capacity local ownership –Account management style with key spenders

Leadership Councils –Local decisions and control –Tactical local procurement –Strategic cluster / national procurement –Client feedback on continuous improvement

Workstream plan Short term – Quick Wins Strategy Medium term – Big Wins Strategy and new service models Longer term – Remove barriers to adoption = Optimum Leverage

50% of spend is through third party suppliers External spend for public sector in England is £221bn… Of which £50bn is local government 96% of our external spend is in 4 areas Waste Construction Asset Management Corporate services Social care Big Wins Strategy… Follow the money

Construction and Asset Management Build using a managed framework approach Helping localism through increased leverage Offering a core framework design for local adaption Offering a Collaborative Education Partnership service model A local government led best practice alternative approach Easy access, low cost and flexible; based on developing programmes Sharing assets Shape and improve service outcomes through sharing assets Learn from CLG Capital and Asset Pathfinders Highways National efficiency programme Joint DfT and local government leadership

Corporate services Facilitating successful outsourcing Designing and providing “make vs buy” guidance and practical help Developing new contracts with flexibility and incentives to reduce costs Delivering a framework for shared services with industry Looking at open source software and shared processes Standardising and reducing the cost of commodity procurement A national online best deals service to compare prices – including central government deals Joining up business portals to standardise processes and help SMEs. Reducing the cost of energy Developing proposals on optimum energy procurement Reviewing local energy production and local government’s role in this

Social Care Shared approaches to procurement Geographic frameworks to shape the markets for key types of care Regional or sub-regional community equipment services Opening ‘best deals’ to supply chain, reducing costs of service Reduce unit costs Across the WM, EM, London and SE the Care Funding Calculator continues to offer a method for delivering savings on residential care and supported living – Savings since 2008 to date of £13m Developing this online and extending to children‘s services Reduce purchasing costs Developing a proof of concept to help authorities to expand their Shared Lives schemes to deliver wider support - reducing spend by up to 60%

Waste Transformation Support Service A service for all councils pursuing early stage and advanced waste partnerships, access to a national waste partnership forum National and regional procurement delivering frameworks representing significant procurement savings; reducing the costs of existing contracts, and; providing access to reduction and recycling incentive schemes Knowledge Transfer Waste Information portal with over 95% of LA’s registered Self Assessment an online service, allowing local authorities to self-assess their service against a blueprint of best practice. 70 authorities already using this.

Driving adoption … an example

Collaboration → Leverage (local choice) (aggregation benefits) Product shift – but less risk More adoption of what works – challenge for LGA Supply chain management Scale Standardisation? Compliance Acumen and local authority management The Future

Sharing capacity / skills / people (is sovereignty dead?) Redesign → aggregate → procure → deliver Elected member leadership Is the private sector prepared? Procurement models based on: Joint ventures Asset backed borrowing vehicles Geography or place based Market development Leverage → Business requirements → Business relationships

Thank you