MPs say colleges' `culture of complacency' means too much cash that could be used for frontline services is being spent on everyday supplies
MPS HAVE told colleges to work faster at reducing waste, saying the target of saving pound;75 million a year may not be ambitious enough.
The House of Commons public accounts committee said some colleges had neglected getting the best deal for supplies and services to such an extent that they could make even bigger savings.
Edward Leigh, chairman of the Committee of Public Accounts, said: "Many further education colleges have been slow to modernise their processes for buying fuel, catering, stationery and other supplies.
"This is a serious point because money saved on procurement the target for the whole sector is an annual pound;75m but that might easily be improved upon could be redirected towards teaching and other frontline services.
"Most colleges don't even know the amount of business they do with particular suppliers. They need to catch up with modern procurement practice."
He said the "culture of complacency" was being broken down and progress had been made since the National Audit Office reported on wasted money in FE last year, but there was still a lot to do.
Nearly a third of colleges do not monitor how efficient their suppliers are, the auditors found. Three-quarters of colleges could not easily say how much they spent on basics such as water, energy and catering.
The auditors said the "maverick buying" and bad deals were costing each college an average of pound;200,000 a year and pointed to one college that had saved pound;14,500 a year by cutting spending on artificial pot plants.
MPs blamed the many competing pressures on college managers for the lack of effort put into making savings from better purchasing deals. But they said the measures to achieve these savings a total of about pound;75m were so simple that colleges should aim to do more.
Just by joining a consortium to buy stationery in bulk, Blackburn College saved pound;40,000 in its first six months.
MPs pointed out that 40 per cent of colleges were signing large contracts without putting them out to tender, potentially missing out on further big savings.
Mark Haysom, chief executive of the Learning and Skills Council, told the committee: "Certainly, my business experience before coming into this is that you would say that the level of saving and efficiency gain that we are targeting is not overly ambitious. But if you look from where we are starting, you would say that it is a sensible and stretching target at this stage."
The LSC should set a new, higher target for efficient spending when it reviews progress for the current target in March next year, the MPs said.
But some colleges disagree. In the NAO's earlier report, smaller colleges said they believed savings would be wiped out by the cost and time of achieving them.
The LSC has sent staff to help those in colleges to improve purchasing at about 250 of England's 384 FE institutions.
As well as making better procurement a higher priority, MPs said the Government and LSC should try to get more support into colleges and find ways in which colleges can help each other to make better deals.
"Historically, colleges have seen themselves in competition and have been unwilling to share information," the MPs' report said. "Colleges may also be reluctant to share such information because they fear that any savings will be removed when their funding is reviewed."
It said the LSC should reaffirm its commitment that savings will be kept by the college to spend on teaching to remove this fear.
Colleges also need better information systems to help them identify potential savings, the report said.