Preston City Council and its Spend Analysis Strategy
The City of Preston is based in North West England with its Functional Urban Area (FUA) having a population of 365,000 people. The FUA covers 3 local authority areas (Preston, Chorley and South Ribble) and is often referred to as Central Lancashire.
The FUA covers over 458km2, with the City of Preston having a core location within it. The City of Preston itself has a population of 140,000, with the City experiencing a growing population over the last decade. The greatest proportion of Preston residents are in the 15-24 age bracket, reflecting the presence of the University of Central Lancashire. Projections suggest a further growth in population in the coming years.
The wider region of Lancashire has one of the largest local economies in the North of England, valued at over £23 billion, is home to over 40,000 businesses employing in excess of 600,000 people. A large area with a diverse geography, the county boasts a rich industrial tradition, set within a network of densely populated urban centres which are themselves surrounded by outstanding countryside and coastal fringes.
The UK government has demonstrated commitment to small and medium sized enterprises (SMEs) by endorsing and adopting European Directives designed to increase SME participation. These include the prohibition of the use of pre-qualification stages in sub threshold procurements, and also increased visibility of advertised opportunities.
Additionally, most public sector organisations will have mandatory processes and procedures to maintain principles such as non-discrimination, equal treatment, transparency, proportionality and that of providing the best value for the organisation.
In this context Preston City Council has combined in a collective effort, to understand where its existing spend goes with an initiative called ‘Community Wealth Building’ started in 2011. Drucker said “what gets measured gets improved” and the project seeks to ensure that Preston residents and the Preston economy reaps maximum benefit from the investment which comes into the City.
A secondary aim of the spend analysis exercise was to measure the effects of how behaviours of procurement officers within anchor institutions can be focused, and importantly how the impact of anchor institution spend can be maximised.
A number of activities have been undertaken over the last two years, assisted by the Centre for Local Economic Strategies (CLES).
Work was undertaken by the 6 anchor institutions to understand where spend leakage out of the Lancashire economy goes. The result was that £458million was slipping out of Lancashire economy, and the associated sectors were identified.
Spend analysis helped the local anchor institutions change their procurement strategy.
Subsequently, some of Preston’s anchor institutions developed a database of Preston based businesses has been developed of organisations which could potentially bid for and deliver those services in the future
These activities have been shown to be having a positive local effect with increased spend in the local economy, as measured from the 2013 baseline position, over the top 300 suppliers.
For example, Preston City Council with a spend of £16.7m for top 300 suppliers:
- £2.8m was spent in Preston boundary (17%) – up from 14% in 12/13
- £5.5m was spent in in Lancashire (33.5%) – up from 29% in 12/13
Further work with CLES has started collect data about the respend within the economy. That is to say, where, by who and on what, is the Preston pound respent.
It is not simple, but as Matt Jackson from CLES wrote
“Places need to continuously monitor the impact and behaviour change that community wealth building activities lead to and amend accordingly. Anchor institution activities are long term in their nature and take patience. It cannot be assumed that engagement, cooperation and outcomes will happen quickly and in the short term.”
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