IT suppliers 'overcharge' public sector clients

Research by online business service PeoplePerHour claims public sector firms are charged up to 10 times more than private companies for the same goods and services

Hit in the pocket: PeoplePerHour claims suppliers take advantage of council budgets

IT firms are billing public sector clients almost 10 times as much as their private sector equivalents, according to online business service PeoplePerHour.com.

The organisation issued a Freedom of Information request to every local council in the UK to determine their spend on third-party web service providers, following the new chancellor George Osborne’s recent announcement of £95m in IT spending cuts.

According to the findings, local councils spend about £40,917 on external web services, compared to the private sector average of £4,373.

Xenios Thrasyvoulou, founder of PeoplePerHour.com, said the spend on external web contractors has wider implications for the public sector procurement process.

“This report is really just the tip of the iceberg,” he said. “The main thing to draw from it is that the public sector is charged 10 times what the private sector is for the same work. If you apply this to the entire public sector IT budget, the potential saving on IT would dwarf Osborne’s £95m.”

Matthew Elliott, chief executive of the TaxPayers’ Alliance, is keen to see parity in the cost of IT services to the public and private sectors.

“This is a huge amount of money to spend on web services, much more than the private sector is shelling out,” he said. “While it is important to maintain a useful and informative web site so locals can access information and services, it is not necessary for such high sums to be spent.

"Firms in the private sector spending their own money seem to pay less and get better value for money from IT services and council officials should be looking to get the same good value for taxpayers,” he added.