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Over half of large councils in the north of England spent none of their IT budget with SME suppliers despite a government for them to spend a third of budget with small suppliers.
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Freedom of Information requests made by Streamwire, which offers IT advisory services, researched the spending of 28 councils in the north of England.
It found that 15 of the councils spent nothing with SME IT services suppliers and over 85% have no plans to increase spending on IT services from SMEs. This is despite government targets for councils to increase spending with SMEs.
Anne Stokes, CEO of Streamwire, said this will hold back economic development in the region. “The key objective of the Northern Powerhouse was to establish the region as a beacon for doing things differently, strengthening the area as an economic hub and showcasing how other regions could adopt similar innovation and best practice in their communities.”
She added that councils can play a powerful role by using their budgets to procure more from SMEs, which are more than likely to be regional businesses. “Unless local councils take up this mantle, the government's goal of building an economic stronghold in the north is surely going to be very difficult to achieve sustainably.”
The research did find some success. Durham and Wakefield Metropolitan councils spend 48% and 42% of their IT budgets on small businesses, respectively.
The Northern Powerhouse councils are here defined as those in: Liverpool City Region Combined Authority, the Greater Manchester Combined Authority, the West Yorkshire Combined Authority, the Sheffield Combined Authority, the Humber Local Enterprise Partnership and the North East Combined Authority.
Read more about local government outsourcing
- IT outsourcing in the UK public sector accelerated in the second half of 2015, according to research.
- The number of staff directly employed by a fifth of local authorities will reduce 35% by 2020 as a result of outsourcing.
- Pioneering councils are moving to the public cloud and aiming to deliver "government as a platform".
While many councils weigh up their outsourcing options to meet tight cost-cutting targets, some are going the other way and looking at in-house alternatives to IT outsourcing.
There are a number of recent examples in the south of England. Bournemouth Council could soon bring outsourced IT services including back in-house, to gain better control over costs and increase its financial flexibility.
Cornwall Council and BT’s £160m outsourcing deal recently came to an end, with the council transferring 270 staff back in-house. This followed the High Court decision in December 2015 to allow the council to end the contract.