Remember this is local government doing the spending...
Licensing is money leaving the area, even leaving the country.
Money spent on training and developers can and should stay in the local area, which creates jobs and some of it returns in the form of tax. So long as the total cost isn't massively higher (which it isn't, their published figures show that it's overall lower) then it's preferable.
Training and custom development also creates longer term value, the software licenses you buy will become worthless in a few years when that software reaches end of life and has to be replaced.
Similarly custom development scales - the costs are the same regardless of how many users are running your custom software, making it highly beneficial for a large organization.