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Social housing providers hope to save up to 拢400m a year by 2009 through joining bulk-buying groups.

Known as local housing procurement forums, there will be 40 groups in total. At least three will be set up by the end of 2004, in London and Manchester.

The idea was presented to the ODPM in the spring by efficiency body Procurement for Housing. It is intended to help meet the 拢1.5bn savings demanded by the Treasury as part of July鈥檚 comprehensive spending review (HT 16 July, page 8).

The Treasury gave the ODPM money in the spending review that will release about 拢20m to fund the start-up of the 40 groups, it is understood.

The ODPM was set to finalise details of the start-up fund with senior housing sector representatives yesterday. An ODPM spokesman said: 鈥淲e will be working up detailed implementation proposals with key stakeholders over the summer.

鈥淚n particular, we will set up an efficiency loan fund to support the development of local procurement consortia to increase efficiency in the procurement of capital repairs.鈥�

The fund will be administered by Procurement for Housing and be repaid once savings begin to be made.

The 40 new bodies will be based on the model of Merseyside-based Fusion 21 鈥� a consortium of one council and seven registered social landlords that expects to save its members 拢24.4m over seven years. Indeed, the bodies under discussion for London are tentatively being referred to as Fusion 21.

London鈥檚 seven arm鈥檚-length management organisations are understood to be interested in setting up a procurement forum.

The G15 group of the capital鈥檚 15 largest RSLs is also exploring the possibility of forming a bulk-buying consortium.

Anu Vedi, chief executive of Genesis Housing Group and G15鈥檚 leader on efficiency, said: 鈥淲e are going to be part of the roll-out of this. We are currently discussing how to do it.

鈥淭his is an issue of critical importance to us as the efficiency agenda stretches across all areas of our business, from commodities such as paper and electricity to housebuilding and financial management.鈥�

Julie Craig, director of Procurement for Housing, said: 鈥淭he sector spends more than 拢5bn a year on repairs and refurbishment.

鈥淭he potential for savings via local housing procurement forums is enormous.

鈥淭his fits perfectly with our strategy of national supply for repairs materials supported by local procurement forums.

鈥淚t is great news and will drive efficiency even further.鈥�