Pay extra, verify nothing: Councils purchase Microsoft however don’t take a look at
Newham Council wanted £32m of financial savings because it entered 2025-26. It utilized for distinctive monetary assist, and secured authorities permission to boost council tax above the authorized cap of 4.99% to eight.99%.
In the meantime, its Microsoft invoice elevated by 80.5% over three years, from £2.13m to £3.85m. Requested whether or not it has ever run a aggressive procurement through which Microsoft may have misplaced, the council had no course of to indicate.
Newham’s failure to run aggressive tendering between strategic cloud and software program suppliers hits starkly in opposition to a background of economic misery, however it’s not uncommon.
Pc Weekly analysed Freedom of Info (FoI) responses from 37 councils – offered by a supply that requested anonymity – and located 32 had by no means run a aggressive procurement through which an alternate platform may have received. Competitors solely came about between resellers of the an identical Microsoft product, not between Microsoft and a aggressive platform.
On this article, we define the character and extent of that sample throughout an entire tier of presidency, and discover that for as much as £400m of funds spent, Microsoft was the default reply.
That each one happens because the Competitors and Markets Authority (CMA) decides whether or not to designate Microsoft with strategic market standing (SMS) below the Digital Markets, Competitors and Shoppers Act.
SMS standing would convey powers to impose binding conduct necessities, mandate interoperability and restructure industrial preparations throughout a software program property that touches an estimated 20 to 30 million organisational customers within the UK.
The cash, and what sits alongside it
The 29 councils that disclosed a usable 2025-26 determine spent £62,399,176 between them on Microsoft merchandise – a median of £2.15m every. The largest disclosed spend within the pattern is Birmingham’s £4.32m, a determine it gave as a mixed complete with no year-by-year break up. The largest reported enhance belongs to Newham (+£1.72m) and Lancashire (+£1.25m), which collectively account for 69% of the pattern’s complete three-year rise.
Scaled in opposition to core spending energy – the federal government’s personal measure of the funding a council has for its companies – that extrapolates to a invoice for English councils of roughly £281m a 12 months, with a believable vary of £241m to £400m.
It’s tempting to see a relationship between that spending and the monetary misery that runs by way of the councils sampled. Nevertheless, throughout the 11 councils that revealed each a single-year funds hole and comparable three-year spending, there is no such thing as a relationship between the scale of the hole and the course of the Microsoft invoice.
The 2 councils with the very best tax rises within the pattern lower their Microsoft spending: Bradford 6.6% in opposition to a 9.99% rise, and Worcestershire 1.4% in opposition to 8.99%. What’s true, and provable, is narrower and more durable to dismiss. As many as 9 of these 11 elevated their Microsoft spending whereas carrying a broadcast hole, and 10 of the 11 have by no means examined the platform.
How the numbers have been produced
The proof base contains 37 responses to FoI requests that requested 16 questions. These coated 5 broad areas designed to scrutinise native authority expenditure and governance. They start by inspecting tendering historical past and procurement frameworks for productiveness software program earlier than diving into detailed present spending, Enterprise Settlement expiry dates, and adoption timelines for particular cloud and AI instruments like Microsoft Copilot.
The inquiry additional evaluates inside oversight by asking about value-for-money assessments, provider addition insurance policies, value benchmarking and contract publication. Lastly, it investigates high-level engagement between IT management and Microsoft, the specifics of secured social worth commitments, and broader IT budgets alongside cashable transformation financial savings.
A number of of the responses arrived as image-only scans, so Pc Weekly OCRed them to make them machine-readable.
Additionally, comparisons want a typical denominator, as a result of a £30m gap in a London borough just isn’t the identical factor as a £30m gap in Bolton. So, funds gaps have been calculated as a share of core spending energy, and the nationwide determine scaled on the identical foundation. The pattern skews in the direction of bigger, city authorities and comprises no shire districts, which is exactly why a mean-per-council extrapolation would overstate the nationwide quantity.
The machine that produces this
The rationale 32 councils can behave identically with out coordinating is that they share a shopping for mechanism. Specifically, 26 of the 37 purchase by way of a Crown Industrial Service framework, and 7 by way of KCS Procurement Companies, a buying and selling arm of the Kent County Council-owned Industrial Companies Group. Meaning 33 of 37 councils are funnelled by way of two shopping for our bodies. The only commonest route is CCS’s RM6098/Expertise Merchandise & Related Companies 2 (TePAS 2) Lot 3.
These frameworks compete on the degree of the reseller, not the platform. The product and its underlying value are an identical whichever reseller wins – a mechanism Crown Industrial Service has repeatedly reshaped with out altering. And the reseller market is itself concentrated: Phoenix Software program provides 12 of the 37 councils, whereas the previously separate – now merged – Trustmarque Group and Ultima Enterprise Options account for 21 of the 37 councils that responded.
The councils defined the end result in their very own phrases.
Salford wrote: “The council at all times go to market by way of Procurement and Crown Industrial Companies (CCS) for our Microsoft licensing. These are open tenders, permitting suppliers inside the related heaps to bid.” That’s reseller competitors described as open tendering.
West Northamptonshire defined why no one pushed additional. It stated changing “all or a part of the Microsoft ecosystem” would “require large funding in time and funds for re-platforming, re-training workers and re-architecting safety protocols”, in an utility surroundings that spans social care, revenues, advantages and housing repairs.
No person checks, and no one says why not
The tender query and the benchmarking query inform the identical story from totally different angles. Just one council in 37 – Worcestershire – benchmarked Microsoft’s licensing prices in opposition to an alternate prior to now 5 years, whereas 24 did no benchmarking in any respect. 5 had in contrast resellers, shopping for routes or peer councils, which isn’t the identical factor. Liverpool’s November 2025 train, for instance, in contrast two methods of buying the identical Microsoft merchandise.
Solutions to the value-for-money query have been revealing:
- Gateshead: “No, assessments are based mostly on technological advantage.”
- Worcestershire: “Sure, however not retained as information.”
- Hillingdon: “No – no VFM assessments held for Microsoft companies.”
- Newham and Camden: “Info not held.”
- Hammersmith & Fulham: “Sure – particulars instantly simply traceable; could take a disproportionate period of time to collate.”
Camden’s full reply to the tender query reveals it held no file of whether or not it ever examined its largest software program relationship, and no file of why not. It stated: “Info not held. The Council doesn’t maintain info confirming whether or not an open market tender of the sort described has beforehand been undertaken, nor recorded info setting out explanation why such a procurement has not been undertaken.”
Copilot on the nod
A key case is that of synthetic intelligence (AI) adoption, the place 31 of the 37 councils requested have adopted or are piloting Microsoft Copilot. That’s a conservative determine since three of the remaining six withheld the worth as commercially delicate, which suggests they maintain the product.
Some 20 disclosed a determine, totalling £1,185,308 a 12 months; Lancashire alone is £339,000 of that, practically 29% of the disclosed complete. Of the 31, just one – Hounslow – says it holds a value-for-money evaluation protecting Copilot. Merton is the one different council to say AI, and its “AI options train at present underway” is going on after adoption.
Of the councils that acknowledged a date, two adopted in 2023, 10 in 2024, six in 2025.
Respondents to the CMA’s investigation, revealed by Pc Weekly in June, defined the mechanism. That’s, that Copilot Chat is bundled free with most enterprise licences in a approach that presents Copilot because the default AI instrument at work, and channels prospects in the direction of full paid M365 Copilot licences.
One respondent stated then that bundling, “could seed utilization of Microsoft’s AI instruments earlier than enterprise prospects take into account competing enterprise AI options” whereas third-party AI suppliers face “inferior API, connector or add-on entry”.
Microsoft’s place, set out at size in its CMA submission, was that the market is vigorously aggressive and that “AI is dramatically reducing the boundaries to constructing high-performing enterprise software program”. It pointed to Google Workspace, macOS, Linux, PostgreSQL and Okta as proof that every layer of the stack is contestable. The councils’ responses to the FoI requests right here take a look at that declare from the customer’s facet, and don’t appear to substantiate it.
Nothing for the thousands and thousands
Requested what social worth they secured from Microsoft at their most up-to-date renewal, 11 councils recorded none in any respect, and 19 stated the dedication rested with their reseller or their framework moderately than with them. Doncaster’s reply was: “Zero – no social worth dedication to the council.”
Norfolk’s tender put it plainly: “The Council just isn’t searching for social worth from this procurement as a result of the primary requirement is for the availability of software program licenses on a pass-through foundation from a reseller.”
5 councils determine commitments of their very own. The perfect is Croydon’s: £7,500 of neighborhood donations, £271 of volunteering time, two apprenticeships a 12 months, abilities workshops and three refurbished laptops – £8,042 in complete, in opposition to the council’s personal £2.4m Microsoft invoice. That’s 0.335% of its spending.
The truthful studying, although, was not that no worth exists. Gateshead provided its reseller’s personal dedication doc – a Phoenix Software program assertion protecting the Microsoft Companion Pledge, Residing Wage accreditation, apprenticeships and modern-slavery measures – the one council to take action. Islington’s contract acknowledged the identical association: “The contract is with Phoenix so the SV commitments might be by them.”
Social worth commitments have been overwhelmingly offloaded to the reseller, which implies the discovering just isn’t that social worth is absent, however that councils can not present what their very own spending purchased. Given one reseller provides a 3rd of the pattern, that could be a vital hole between a council’s obligation and its means to proof it.
What testing appears to be like like when somebody does it
Hackney was the counter-example, and it was a telling one as a result of the council didn’t got down to show Google cheaper. It commissioned consultants to value a transfer to Microsoft.
The assessment modelled six Microsoft choices in opposition to Google Workspace’s £968,437 a 12 months for six,001 customers: from £2,023,537 (2.1× dearer) for core E3 productiveness to £5,242,474 (5.4×) for M5 with Copilot. Its personal seemingly choice, E3 plus a safety uplift at £2,556,426 (2.6×), would have wanted £1m to £1.6m a 12 months of recent income funds.
Hackney renewed Google competitively, having explicitly rejected a direct award as a result of it “lacks transparency and fails to make sure worth for cash”, and secured an apprentice for each £2m of contract worth.
It did transfer its authorized companies to Microsoft for court docket and police interoperability, whereas its assessment credited Microsoft with actual benefits that “come at a considerably elevated annual value”. The purpose just isn’t that Google is best. It’s that Hackney measured the trade-off, and 32 of the opposite 36 didn’t.
What wants to alter?
Spending on Microsoft elevated, the AI layer was simply bolted on, and checks didn’t occur. In the meantime, the councils that did do any comparisons have been those below the best strain: Hillingdon carried the biggest hole relative to its funding within the pattern and balanced it solely with £150m of outstanding assist; Worcestershire wanted assist to keep away from a Part 114 discover.
Three issues would change this example, and all are structural moderately than cultural. Frameworks may make platform-level testing a situation of use, moderately than a selection no council makes.
Councils may very well be required to file a price evaluation earlier than including a service from an incumbent provider – Camden’s reply reveals why recording issues, as a result of an undocumented resolution is an unknown one. And the CMA’s Strategic Market Standing work may attain into public sector licensing explicitly, moderately than leaving councils to find the query on their very own.
Till then, lots of of thousands and thousands of kilos a 12 months goes on being spent, and virtually no councils are asking whether or not it must be.
