Committee of Public Accounts Press Notice

IMPROVING PROCUREMENT IN FURTHER EDUCATION COLLEGES IN ENGLAND

Publication of 41st Report of Session 2006-07

Edward Leigh MP, Chairman of the Committee of Public Accounts, today said:

“Many further education colleges have been slow to modernise their processes for buying fuel, catering, stationery and other supplies. This is a serious point because money saved on procurement - the target for the whole sector is an annual £75 million but that might easily be improved upon - could be redirected towards teaching and other front-line services.

“Both the Department and the Learning and Skills Council have done some good work in providing advice to colleges. Many colleges now use procurement cards to reduce transaction costs. And the culture of complacency and reluctance to share good practice and financial information is being broken down.

“But there is a lot of room for improvements in information sharing and indeed, even more fundamentally, for developing the systems within colleges for generating the right kind of management information in the first place. Most colleges don’t even know the amount of business they do with particular suppliers. They need to catch up with modern procurement practice.”

Mr Leigh was speaking as the Committee published its 41st report of this Session which, on the basis of evidence from the then Department for Education and Skills and the Learning and Skills Council , examined how colleges are developing their capacity to manage procurement more effectively and improve processes so that they can make savings.

The 2004 Gershon Efficiency Review proposed procurement as one of the main sources of efficiency savings in the public sector. The Learning and Skills Council, which funds England’s 384 further education colleges, estimates that from an annual procurement expenditure of £1.6 billion, colleges could make savings of £75 million by March 2008.

The savings made by colleges would be available to be redeployed into front-line services for learners. Until recently, many colleges have tended to treat procurement as a low priority and have not taken advantage of modern procurement methods such as purchasing consortia and procurement cards. They now need to modernise their systems so as to maximise the resources available for learning.

Colleges increasingly have staff who are capable of managing procurement, but they are too often let down by the low quality of the systems and the management information available to them. For example, some college systems cannot easily generate simple analyses that would allow staff to identify inefficient expenditure or the potential for better deals with suppliers.

The Department for Education and the Learning and Skills Council have built up the support they provide to colleges wanting to modernise their procurement methods. There have been recent successes in persuading colleges of the benefits of joining purchasing consortia and using procurement cards. Indeed the savings target of £75 million may prove unambitious in light of the low starting point of many colleges. March 2008, when colleges make their first reports on savings to the Learning and Skills Council, will be a good time to consider whether greater savings can be made to be re-invested into services for learners