Shared services must pick up steam
Widespread take-up of shared services is yet to happen. But could the credit crunch provide the push we need to get councils to work together? asks Richard Cuthbert
Many people think the credit crunch has been coming for quite a while. Easy credit and high levels of debt were always going to catch up on us.
The stock market and property prices have been riding too high for too long. It was only a matter of time. But what a long time it took. Some analysts were predicting a crash back in 2006.
And now it’s arrived – and how!
The speed of the downturn has taken many by surprise. And the rate at which the big financial institutions have failed has been eye-watering. It’s as though we reached a tipping point after a prolonged period of building pressure.
It seems years ago since we first heard central government banging the drum for local authorities to collaborate more in the delivery of local services. Yet in spite of some excellent examples – including the creation of centres of excellence, the sharing of senior posts between authorities, and some actual shared services – the widespread adoption of shared services is yet to happen.
Over the same period, we’ve seen Gershon follow on from CCT and VCT, and most recently, Mr Darling’s Comprehensive Spending Review, all of which have continued to squeeze local government budgets, reducing their room for manoeuvre as they face ever-rising public expectations of local services.
Yet in spite of the conflicting pressures, there have been tremendous strides made by local government as it has satisfied both of these demands. Sometimes, this has been achieved by local government acting alone, and sometimes in partnerships of various forms with the private sector.
So, the lack of a shared services model has perhaps been simply because councils have not felt the need. They’ve not appreciated that the benefits – principally of lower costs – outweigh the disadvantages – loss of autonomy, loss of ‘control’, leading to fears of service degradation and, in some cases, loss of jobs.
But things are about to change. The events of the last few months will create a new order in local government over coming years. Councils which have been relying on developer contributions, retail activity, property disposals and parking revenue to swell their coffers are finding that these sources of income are all in decline.
At the same time, pension schemes are increasingly in deficit – while this could result in action on several fronts, the most likely is a need for increased employer contributions, which will impact dramatically on councils’ cost bases.
One answer, without doubt, is a move to shared services. There will continue to be reluctance to embrace such new ways of working for a while. But as the more adventurous take the plunge – and reap the rewards – the rest will soon follow. Local politicians will begin to appreciate that this is not about surrendering sovereignty. Nor is it about a return to the bad old days – of the old authority boundaries or metropolitan councils. It’s not even just about good business sense.
It is right that councils should want to continue to hold the primary interface with their customers. But this does not mean they must continue also to own all the activities which lie behind these services.
Maximising the effectiveness of council tax collections, paying benefits to those who have a right to them, providing best-in-class IT services to staff, administering pension schemes efficiently, paying employees on time, and ensuring cost-effective procurement, as well as managing property estates and providing quality FM and catering services – these are all services which involve risk, require careful management and benefit from economies of scale. They are also, arguably, a distraction from the primary purpose of building safe and prosperous communities, safeguarding the environment and encouraging learning and development.
Just as the banks found the pressure irresistible in the end, local authorities, for very different reasons, might see a way to release some of the pressure that’s been building on them for some time. We have seen the first signs. There is gathering momentum. As far as shared services are concerned, we may have reached the tipping point.
Richard Cuthbert is chief executive of Mouchel
