4 minute read 18 Dec 2020
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How local authorities across England spent their money last year


Multidisciplinary professional services organisation

4 minute read 18 Dec 2020

Show resources

  • Local Government third party spend 2019-2020 Almanac Report

EY and Oxygen Finance explore how local authorities in England spent their money with third parties last year in this introductory spend Almanac

Local government across England collectively spends over £63 billion with suppliers to deliver vital services to residents. From contracts with care home providers through to IT companies, this expenditure is essential to delivering the outcomes and frontline services we all need our local authorities to deliver, but it is also important to ensure that value for money is achieved from this collective spend. 

This introductory Local Government Spend Almanac, produced by EY and Oxygen Finance, looks at the spending behaviours of Councils over the last three financial years, analysing categories of spend and regions. 

Councils are still facing real-term cuts to local government spending, whilst dealing with a significant rise in demand for local public services. This situation has been further exacerbated by the current pandemic and the resultant impacts on the wider economy. Whilst our analysis focuses on spend trends pre COVID-19 pandemic, it does still provide a rare insight into where Councils are focusing their financial resources.  

What our research has shown is that in 2019/20, 37% (£23.4 billion) of total spend on suppliers was on services to support vulnerable citizens — including care at home, mental health services, home-to-school transport and many more. As expected, given the scope of devolved responsibility, this is the biggest share of supplier spend across all English local authorities. The highest sub-category of this spend was Adult Social Care, attracting £15.1 billion. 

It is encouraging to note that there was an increase of 13.6% (note: not adjusted for inflation) in spend with small and medium-sized enterprises (SMEs) in 2019/20 compared to 2017/18. This will be welcome news to local businesses across the country because this SME spend is likely to be allocated locally, bolstering regional economies and supporting home-grown jobs. 

Spend on culture and leisure is the category of spend that has decreased the most over the last year as many councils are having to find alternative ways to support discretionary services.  

The analysis also revealed some significant regional variations in supplier expenditure, including:  

  • East of England had the highest growth with a three-year trend of spending up by 22%. This is more than double the level of inflation. 
  • The North West has seen supplier expenditure increase by 6% from 2017/2018; however, this is significantly below inflation over the past three years. 
  • Local authorities in the Greater London region have the highest per capita third-party spend compared to the other regions, spending £1,386 per capita, whereas the West Midlands region has the lowest third -party per capita spend at £985. 
  • Third -party expenditure on Culture and Leisure appears to be have had a large decline in East Midlands and the South West of England, seeing a decline almost double that of inflation in both regions. 

Given the amounts of money involved, it is important now more than ever for local authorities to scrutinise the value they are getting from this spend. This new analysis allows us to understand where Councils are seeing increases in their costs and greater demand for their services. This will hopefully encourage Councils to ask better questions around their spending and to work with suppliers to support the delivery of the outcomes that we all want for our residents. 

Show resources

  • Local Government third party spend 2019 - 2020 report


We hope that local authorities across England will use this analysis to compare and contrast their own spending trends. In the new year, we will be looking to follow up with an addendum, which will provide a comparison on how this has changed before and after the first lockdown in March 2020. We are hopeful this will provide an even more useful and relevant picture, particularly given the current context. 

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Multidisciplinary professional services organisation