Councillors willing to forgo savings to spend cash locally

SAVINGS from the way Hull's biggest employer buys goods and services are set to be balanced against the need to boost the city's economy.

The move was underlined this week as councillors on Hull City Council's cabinet approved a revised procurement strategy for the authority.

It follows a review of the council's commissioning policies.

The review looked at how the council could continue to meet its legal requirements when letting contracts and what level of price-related savings could be achieved.

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The council has set itself a target of saving £2.5m a year through smarter procurement.

But councillors admitted savings targets might not be met if it meant opting to award contracts to Hull firms, instead of companies outside of the city.

Deputy leader Councillor Daren Hale said: "There should always be the potential for large savings to be achieved through procurement but the issue of making the most of the Hull pound is one we do need to consider.

"Research has shown that every £1 spent locally delivers £1.76 of benefit to a local area, compared with just 38p if the £1 is spent outside the area.

"Keeping that money in Hull is a kind of social capital and it might be that we might have to forgo some of the savings we might be able to achieve by keeping that money in the local economy.

"There is always going to be a balance to strike but we probably need to stop automatically looking at procurement as purely a way of making savings."

The council is part of a regional consortium of local authorities using a shared tendering system for certain services.

Councillor Martin Mancey, cabinet member for transport, said: "I don't think there should be anything wrong in us buying from a local supplier at a price equal to or perhaps even higher than someone in Leeds because the Hull pound should be tantamount."

Last year, the council used case law to award a ten-year housing maintenance contact to its wholly-owned building firm KWL instead of putting the work out to competitive tender.

The new strategy suggests a "shared approach" to procurement with KWL and its part-owned property management firm NPS.

Town clerk Ian Anderson said similar contracting opportunities would be likely once public health responsibilities transferred to the council in April from the soon-to-be-abolished primary care trust.

He said: "The procurement strategy has the potential to support this objective as creating jobs in the local economy and taking people off long-term benefits is recognised as having a direct correlation with health."