Back to front?

Much has been said about the scope of shared services. The real opportunity, writes Vincent King, lies in the reconfiguration of service delivery.

One local authority warned recently that up to 400 jobs will have to be cut as well as the closure of libraries and children's centres, in order to find £86m savings over the next four years. Part of the response from a spokesperson for the Department for Communities and Local Government was: "All councils should be making sensible savings and keeping council tax down by merging back office services or doing more joint working."

It is apparent that shared services remains a huge buzzword for both the public and private sectors at the moment and is still being touted as a saviour for councils’ purses by offering huge cost efficiencies by merging services. 

In addition to funding cuts, the increasingly complex requirements of an ageing population and the expectations of the public to receive services on demand through a range of technologies, mean that councils cannot simply do what they were doing before. We have all heard this before, but what is the reality?

What is the extent of the current activity and efficiency savings being generated?

The LGA’s national shared services compendium and map shows that at least 337 councils across the country are engaged in 383 shared service arrangements resulting in £357m of efficiency savings. At least 95% of all English councils are sharing services with other councils, and Weightmans’ clients also tell us that there are further opportunities to share services than has been seen to date.

The LGA tool identifies projects which are broken down across children and young people; culture, tourism and sport; housing; procurement and capital assets; shared management and CEX; back office; customer facing shared services and shared services with other public sector organisations.

Back office services or front line service delivery?

In our view there is a limit as to the savings that can be achieved by simply merging some back-office functions with another authority or indeed other public sector bodies, although that is not to say that this should be discounted, and this might be easier to achieve in the first instance.

However the real opportunity lies in reconfiguring service delivery. The key influencers in the choice of model are likely to remain the cost and quality of the services, which together go to value for money, as well as ensuring flexibility and meeting corporate priorities. Shared services should be considered as one of the options to achieve these objectives.

Shared services with other public sector organisations

Clearly there have been less shared services between councils and other public sector bodies than there has between councils. Although we are starting to see the integration of health and social care, this is not surprising, certainly as far as front line services are concerned.

However it is important to be bold. Greater opportunities must exist for sharing back office services. It is important for councils to engage with other locally based public sector or not for profit organisations (including any entities which are set up by and spun out by the council; central government or non-departmental public bodies; health; emergency services; social housing; education) to explore what possibilities exist in an open and transparent manner.

There must be some common services which these organisations require, including facilities management as just one example. Issues to consider and address at an early stage include legal powers, public procurement, state aid, TUPE/pensions (which will be more complicated if staff are pooled) and payment/tax, as well as the appropriate corporate, contractual and governance models.

Conclusions

Is it realistic to expect a council to be able to find £86m savings over the next four years by merging back office services or doing more joint working?

I would suggest not. However, engaging in shared services can play a part in helping to reduce costs and reshape service delivery and there must be more opportunities to do so going forward. It is likely we will see more shared service between authorities for front line service delivery, and more shared services with other public sector organisations for back office services. Those councils that are already sharing some services or functions undoubtedly also have scope to do more.

When preparing the business case it is important to be realistic about the extent of any anticipated trading and the selling of services to other authorities, as it seems that most authorities are keen to sell and less keen to buy!

The reasons for not engaging in shared services include cultural obstacles, a mismatch of objectives and loss of control. These issues are not insurmountable if they are recognised and addressed at the outset.

Some of the difficulties which have been encountered to date include sharing best practice and also obtaining the management information to ascertain whether the anticipated efficiency savings are in fact being realised. More can and should be done in these areas.

Vincent King is a partner at Weightmans. He can be contacted on 0161 214 0653 or This email address is being protected from spambots. You need JavaScript enabled to view it..