Local authority third-party spending almost doubled in 2021

Local authority third-party spending has increased significantly, almost doubling in 2021 according to new data by Oxygen Finance.

Third-party spending increased by £4.6bn in 2021, a 7% growth and almost double the increase of £2.6bn in 2020.

This money was mostly allocated to vulnerable citizens and public health, accounting for 39% of total spend, followed by buildings which makes up 26%.

Findings were published in Oxygen Finance’s Local Authority Third-Party Spend Almanac, providing a view of local government expenditure and advice on how to achieve positive procurement outcomes.

Reviewing the Almanac, Professor Martin Reeves, Chief Executive at Coventry City Council, and the Local Government Association’s National Procurement Champion, said: ‘The increase in third-party spend and the obvious increased reliance on bought-in goods and services highlights once again the central, pivotal role of procurement and commissioning in local government. Procurement is also having to contend with inflation, global supply chain instability and the climate change emergency.

‘This Almanac provides crucial information that should help local authorities achieve optimal outcomes from procurement activities and highlights the CO2 that results from local authority supply chains, which will be a constant focus for the sector in the coming years.’

Spending within the vulnerable citizens and public health category has consistently increased year on year, rising by £3.3bn in 2021, a 14% increase when compared to 2019.

The money has largely gone to adult social care services, with £19.6bn of the £27bn invested going towards this.

The buildings category saw the biggest spend increase of £1.8bn, while buildings, highways and transport and waste and environment categories topped the highest spend supplier list.

Oxygen Finance’s Almanac also identifies the estimated carbon emissions of local authority supply chains which have a considerable impact on local authority climate ambitions.

It’s been found that supply chain emissions are responsible for 96% of all local authority emissions, with the main contributors being in construction, waste, transport and social care providers.

While 300 councils have declared a climate emergency, local authorities are still responsible for 43.7 million tons of carbon dioxide a year. 

Ben Jackson, CEO of Oxygen Finance, commented: ‘Effective collaborative procurement, supplier management and contract management will be key to addressing some of the biggest challenges faced by public sector procurement.’

Photo by Hansjörg Keller