Spending cuts will reshape the UK local authority shared services market
A survey sponsored by public sector BPO specialist Liberata has found that spending cuts will drive the shared services market more powerfully but they will also reshape it. 97% of local authority chief officers are planning for cuts in government funding. Over half are preparing for cuts of between 10% and 20%. 30% say that joint working will be a dominant outcome over the next five years, but most are planning to work more closely with other public bodies in their area. Jason Fahy, Regional Director of Liberata said “The issue is local jobs; some are willing to outsource but want to keep the jobs in their area, but most want to keep the jobs in the UK. The challenge for local authorities is how to balance achieving efficiencies with the impact their decisions have on the wider community. Losing local jobs has a big impact on local shops and the local economy. Councils also have to pay local unemployed people benefits, which increases public costs.”
The emphasis for sharing services, processes, senior officers and back-office costs is shifting from sharing between local authorities to sharing between public bodies in the same geography. While the former leaves the issue of control to be determined by the governance arrangements put in place, sharing between public bodies in the same geography automatically gives the lead to the local authority. However, some authorities are worried that sharing back-office staff will rob the authorities of their ability to think strategically. Over half of the councils questioned are prepared to take direct control over other locally delivered services. However, 74% of authorities are worried that financial pressures will thwart joint working. Structural change is costly to delivery and delays the search for positive outcomes until the change is in place. Not surprisingly therefore, 43% of authorities think that significant savings can be realised by restructuring services.
If you want to find out more about what are the key trends right now in shared services, why not read Susie West blog series '8 Key Trends in Finance Shared Services'?
