IT lessor ECS is expecting its UK business in
the public sector to jump from 15% of its total activity in 2009 to
50% in 2011.
Kevin Flowerday, ECS regional sales manager,
said the cost of borrowing from local authorities had risen so
dramatically that public sector organisations were now looking to
commercial lenders.
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“Although the Public Works Loan Board (PWLB)
is still generally in line with LIBOR, funding directly from the
authority is about 250 basis points above LIBOR. Organisations are
now coming to companies like us themselves to see if there’s better
value for money within the commercial market,” he said.
Local authorities can borrow funds from the
PWLB and will then lend it to bodies under their control at a
higher rate.
Such upward pressure on costs has contributed
to an increase in ECS’s business volumes with UK public sector
customers, rising from £4m (€4.6m) in April 2009, to an expected
£25m to £30m by the end of 2010.
ECS expects a delay in the increase in public
sector activity as UK organisations continue to defer financial
decisions before the government’s spending review.
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By GlobalDataSchools, for example, have deferred large
refresh programmes, which would otherwise have been delivered over
the summer holiday.
“All schools’ summer acquisitions could be
pushed back to Easter 2011,” Flowerday said.
ECS in the UK works with public sector bodies
including schools and the health service. It also deals with
affinity providers and bodies such as the Crescent Purchasing
Consortium, which facilitates better
procurement in further education institutions.
In September, it was
confirmed that ECS had been purchased by IT and telecoms funder
Econocom.
