Big Increase in Council Spend with Public Sector-Owned Companies

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Although it’s public sector spend with the private sector that tends to attract the headlines, spend by councils in England with organisations owned by the public sector is actually increasing at a far greater rate, leaping by almost 19% during the previous financial year. Here, we use Porge’s Illuminator system to take a closer look at 2018/19’s highest earning publicly owned council suppliers across five major markets:

Highways - Cormac Solutions Ltd

Cormac is part of the Cornwall Council-owned Corserv Group and was formed in 2012 as a highways, engineering and construction specialist. The company has since adopted a wider range of services - even being paid over £5M by Cornwall Council in 18/19 for the provision of home care services – however highways related spend (maintenance/civils and consultancy) still accounted for around 85% of local authority spend with the company.

Health & Social Care - Birmingham Children's Trust

Birmingham City Council announced its intention to move towards a Children’s Trust model in May 2016 and, in April 2018, Birmingham Children’s Trust became operationally independent of the Council (although still wholly owned by it). The Council spent over £230M with the Trust in 18/19.

Buildings - Norse Group

Norse Group, which is wholly owned by Norfolk County Council, is made up of property consultancy firm NPS Group, care provider NorseCare and FM organisation Norse Commercial Services. Councils in England spent over £166M with Norse on buildings-related services in 18/19 and this figure looks set to increase in 19/20.

Waste & Environment - Norse Group

Norse was also the top publicly owned provider of waste and environment-related services to councils in England in 18/19. The £61.4M spent with Norse on these types of services meant the company was leading the chasing pack behind the market’s “big name” private sector players.

ICT & Business Process Outsourcing - Publica Group

Publica was established by Cotswold, West Oxfordshire, Forest of Dean and Cheltenham Councils in 2017 and delivers shared services to the four authorities as well as to the Cheltenham Trust, Cheltenham Borough Homes and Ubico (a local authority-owned environmental services company). In 18/19, Publica’s owner authorities spent £27.9M with it.

Spend with public sector owned suppliers made up just under 9% of all spend on goods and services by councils in England in 2018/19. However, as mentioned above, the amount spent with these suppliers increased by 19% during 18/19 - compared with an increase in spend with the private sector of just under 6% - and early indications from Illuminator are that the end of the current financial year will show another large increase in council spend with these types of companies.

Illuminator adds up and categorises the invoice data disclosed by over 1100 public sector organisations and offers the most accurate and up-to-date source of public sector spend data. To find out more about how Illuminator could help your organisation, book a demo today.

by Martin Holmes

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