Councils to save by buying online

Local authorities could save hundreds of millions of pounds through an online trading exchange due for launch in September.

Six councils have signed up to use electronic marketplace set up by local government advisory group the Improvement and Development Agency (IDeA). Fourteen other authorities are in negotiation and IDeA expects another 40 by the end of the year.

Local councils spend £25bn a year on procurement, and a further £2.5bn on administration.

Up to 70 per cent of goods could be catalogued and ordered electronically to streamline the process and cut costs, says IDeA director Andrew Larner.

'Local government spends £2500 every minute on small stuff like desks and toilet rolls - if you can save even 10 per cent of that you are doing well,' he said.

'The current cost of administrating purchases is £70, regardless of what you are buying, and we think we could bring it down to £20.

'We could be talking about saving hundreds of millions of pounds a year on local government costs, and with that we could fund another few local authorities or spend it on meeting modernisation targets.'

To use the service local authorities provide a list of their suppliers and products, which is uploaded into the marketplace system.

The application is hosted by eGovernment Solutions, so councils only need an internet connection to access it.

Future phases of the project will integrate the purchasing system into councils' back end finance systems.