Keywords: utsourcing, shared services, finance shared services, North Tyneside Council, Local Government Association, LGA, local authority

North Tyneside Council chooses outsourcing over shared services

Anna Bowsher | News | 27 August 2012

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There have been so many examples of UK councils saving thousands of pounds through shared services agreements in recent months that moving to such a model should seem like an obvious step for those that haven't yet taken the plunge.

But it seems that not all local authorities are convinced of the financial benefits, as North Tyneside Council has just scrapped plans to adopt a shared services model and has instead decided to take an outsourcing approach.

Facing a 28% cut to its budget, it is hoping to save some £47m over the next four years by entrusting its customer services, HR, finance, procurement, revenues and benefits and IT services - all of which are provided in-house at present - to a third party.

It has chosen Balfour Beatty as its preferred bidder and, according to the Guardian, has confirmed that around 420 members of council staff will transfer over to the private services provider, preventing the council from having to make job cuts.

"Balfour Beatty agreed to take our staff, but the company can use those staff for other projects, and they may be working for other councils, or the health service, for example," a council spokeswoman told the newspaper.

A shared services option, whereby processes would be shared with neighbouring councils, was considered by the local authority, but the idea was dropped because council leaders did not believe it would deliver the savings they require.

It comes after the Local Government Association (LGA) published a report which showed that shared services agreements are helping UK councils save millions of pounds.

Shared Services: Costs Spared? looked into five high-profile arrangements between local authorities across the country and concluded that together they have realised savings of £30m.

And while the LGA acknowledged this is nowhere near about to make up the large cuts that have been made to local government budgets, it is helping to "dampen the impact".