Expected cuts in government funding for UK local government increase the need for better contract management

Government spending cutsThe writing is on the wall for UK Local Government organisations:  public spending will fall over the next three years regardless of whether Labour remains in power, or whether the Conservative party wins the next general election.  This will have huge strategic implications on how Local Government organisations provide services to the public and must surely now be the primary issue on the minds of local government Chief Executives.

The UK now has record levels of public debt, which is set to increase to £175 billion ($289 billion) in the current financial year.  Gordon Brown has recently been forced to modify his planned public spending efficiency gains, which aimed to save £35 billion ($58 billion) to extract even greater cost savings; while the Conservatives, under David Cameron, have already made clear that they intend to reduce the onus on the public purse to support services provided to the public.

Some local authorities have already acted in anticipation of wide-ranging spending cuts and lower tax revenues that have resulted from the current recession.

Norfolk County Council has recently announced plans to review the roles of 600 of its most well paid employees in an attempt to find additional cost savings; while Barnet Council announced plans last week to embark on a radical overhaul of it public service provision by reducing the services that it provides to a core, and charging fees for enhanced services – something akin to the low-cost airline industry.

In all likelihood, this will result in a much greater emphasis on the outsourcing of core services to external providers.  The need to manage these contractor contracts and agreements will be more important than ever.  A point not missed by Liberal Democrat MP, Paul Morse, who states:

“I have no problem with the vision, but what I can’t see is how it’s going to be delivered.  It seems like we are going to have further contracting out and if they are going to do that, they’ve got to improve their contract management”.

The UK National Audit Office earlier this year issued a damning report on Central Government mis-management of supplier contracts that has led to over £290 million being wasted on IT Services contracts alone, caused primarily through poor management of contract terms and obligations.

If more public services are going to be provided by external parties, then it is clearly critical to be able to manage and control those supplier contracts effectively to ensure the quality of service provided and to control contract-related costs.

Contract Management software solutions, like those provided by Dolphin Software, have the potential to help local government organisations to streamline and control their contract management processes by providing managers with the right management information to manage contract milestones and obligations, and to allow contracts to be managed in the way in which they were negotiated.


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