Local Housing Procurement Consortia

Procurement & Efficiency Gains for Social Housing - Background

In response to the recommendations of the July 2004 Gershon Review, the ODPM is committed to achieving total annual efficiency gains for social housing of £835million by 2007-08. The savings are to be made in four areas of work:

New supply

Capital works

Housing management and maintenance services

RSL procurement of commodity goods

The capital works initiative covers the procurement of capital repairs to local authority and Registered Social Landlord stock in England. It needs to realise £14million of savings in 2005-06, rising to £170million in 2006-07, and, then to £340million in 2007-08. Local authorities and RSLs will realise these gains through the development of long-term supply chain partnering contracts via housing consortia.

 

How will these consortia be funded?

These savings will be secured from the establishment of Local Housing Procurement Consortia, set up using an ODPM Efficiency Loan Fund. The initial funding for this Fund, £33million over four years has already been identified and secured.

 

It is expected that at least 30 Local Housing Procurement Consortia will be set up by March 2008.

 

The consortia, which will be based on the Fusion 21 model, are likely to crossover with the new supply and housing management and maintenance areas. It is anticipated that many of the consortia will develop arrangements for the collective purchasing of materials, not only for capital works, but also for planned maintenance and responsive repair activities. Savings made by RSLs can then be reinvested in building more homes.

 

The ODPM is confident that these efficiencies are achievable if the potential benefits of collective purchasing arrangements based on sustainable partnering best practice are fully exploited. In its discussions with existing and prospective consortia, net contract procurement savings of up to 10 per cent have been viewed as realistic. Assuming a spend of approximately £3.5billion a year on capital works procurement by social housing landlords this would suggest the achievement of £350million savings.

 

The capital works savings would work along the same lines as construction procurement, namely Egan.

 

Latest News

NIn March 2006, NCA Housing, the National Change Agent set up to manage the network of social housing procurement consortia, awarded a new East Anglian based social housing procurement consortium £100,000 from the ODPM’s Efficiency Challenge Fund to develop its business plan.  The Eastern Procurement Consortium represents the largest RSL business entity in the Eastern region with 31,000 dwellings and a capital works programme worth in excess of £111million over the next four to five years.

The government has also agreed to a request from David Langdon to replace the £1million loan scheme, offered to social housing procurement consortia to help pay for start up costs, with a grant.

In November 2006, NCA Housing appointed a number of accredited consultants to provide a range of services to RSLs that are developing Social Housing Procurement Consortia to improve the quality and reduce the costs of work needed to meet the Decent Homes Standard.  Four consultants have been accredited to provide the full range of services and a further nine to provide selected services.  The consultants will provide the skills needed to support consortia in delivering efficiency gains.

To date 7 consortia have been announced.