Vulnerable citizens & public health accounts for 40% of Local Government 3rd party spend as a result of Covid reveals Oxygen Finance and EY Local Government Third Party Spend Almanac 2020/21
The 2020/21 Local Government Third Party Spend Almanac has shown overall expenditure by local authorities in England in 2020/21 reached £64bn, an increase of 6% with £25bn (40%) now being allocated to Vulnerable Citizens & Public Health.
In 2020/21 the pandemic led to exceptional swings in expenditure from a 262% increase in PPE related clothing costs to a 52% decrease in tourism budgets. This set the agenda for the year as authorities focused on measures to protect citizens (Civil Defence and Vulnerable Citizens & Public Health with a 26% and 12% increase, respectively) while expenditure on Professional Services and Culture & Leisure dropped dramatically (20% and 12% decrease, respectively).
Some of the changes in spending over the last 12 months which are fully or partly linked to COVID-19 include:
• Uniforms & Clothing +262% (+£33mn)
• Safety Equipment +68% (+£25mn)
• Homelessness Services +17.% (+£71mn)
• Cultural Services -23% (-£50mn)
Ben Jackson, Oxygen Finance Chief Executive, commented: “The local government response to Covid has been nothing less than heroic but the impact of the pandemic has been dramatic leading to a reallocation of expenditure to their suppliers. The Almanac is very revealing showing the regional and market changes, allowing local authorities, as they are currently tasked with doing, plan for post-pandemic service delivery.”
The only category to see a real-term increase in expenditure in 2019/2020 to 2020/2021 was Vulnerable Citizens and Public Health, with a rise of approximately £1.5bn. All other areas saw a fall in spend with Professional Services down by close to £1bn.
The research is based on information gathered from the Local Government Transparency Code 2015 which requires authorities to publish data for all invoices over £500. This data is collated and analysed using the Oxygen Finance Illuminator tool, to provide a detailed report on third party expenditure by local authorities in England.
“This is an extremely challenging time for local authorities as working practices and priorities are reset. Authorities have a significant impact on local businesses placing over £23.7bn in contracts with Small and Medium Enterprises, so any change in allocation directly affects millions of people.” added Mr Jackson.
Although local authorities deal with thousands of different firms the Almanac identified that £2bn was spent with the top five suppliers. As businesses look to recover from the pandemic there is increasing pressure on firms to pay their suppliers as quickly as possible to cascade liquidity through the supply chain.
“From contracts with care home providers through to road repairs, third party expenditure delivers vital services and the outcomes the population needs. It is through looking at the detail the Almanac provides we can find best practices or identify the reasons for higher spend levels. As we found in the first last survey the Greater London region has the highest per capita third party spend (£1,437) compared to the other regions, with London Boroughs spending 25% more per resident than Unitary and Metro authorities. However, it is only through looking at the specifics of the data we can understand why these differences occur.” concluded Mr Jackson.