Keywords: shared services, public sector, government, local authority, Shared Services: Costs Spread, report, procurement

Shared services 'saving millions' for councils

Susie West | News | 10 August 2012

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Many local authorities across the UK are already enjoying large cost savings after switching to a shared services model, and now a new report has strengthened the argument for taking a collaborative approach.

Produced by Drummond MacFarlane for the Local Government Association (LGA), the Shared Services: Costs Spared? report looks into five high-profile shared service arrangements between councils across the country.

It concludes that together they have managed to save £30m across the lifetime of the agreements, which is a considerable sum at a time when many local authorities are contending with dramatically reduced budgets.

These savings have been made by reducing staff numbers, integrating IT systems, closing down unnecessary offices and improving procurement processes.

The report points out that this is nowhere near enough to make up the 28% cut in local government funding over the government's current spending review period, but points out that it's a very positive saving nonetheless.

"Measures like the shared service arrangements currently in operation at more than 200 local authorities do help to dampen the impact," said Peter Flemming, Chairman of the LGA's improvement board.

He added: "We hope the examples identified in this report encourage even more councils to use the LGA's new evaluation tool to examine whether or not a greater range of service sharing is appropriate in their local area."

The five shared services projects examined in the report Hoople Ltd in Herefordshire, Local Government Shared Services in Cambridgeshire and Northamptonshire, Devon and Somerset Fire and Rescue Authority, Vale of White Horse and South Oxfordshire, and Procurement Lincolnshire.

The cost of setting up shared services and concerns over service quality often put local authorities, and indeed private sector firms, off adopting a shared services model.

But the report showed that in most cases set up costs are modest and can be repaid within two years, while levels of performance are the same if not better within a shared services framework.