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Back office shared service LGSS set to be broken up but LGSS Law unaffected by move

The LGSS shared services enterprise is expected to be broken up although this will not affect the separate LGSS Law operation.

LGSS was set up in 2010 by Northamptonshire and Cambridgeshire county councils to provide back office services.

It was subsequently joined by Milton Keynes Council, and had some success in selling services such as finance, procurement, pensions and audit to others including Northampton Borough Council and Norwich City Council.

LGSS has though fallen victim to the side effects of the financial collapse in 2018 of Northamptonshire, which is due next year to be replaced by two new unitary councils, North Northamptonshire and West Northamptonshire.

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LGSS is expected to cease to operate as a stand alone organisation but will continue to provide shared transactional services where these add value, with the rest of its work reverting to parent councils.

Each remaining shared services will be hosted by a member council and no longer be part of a semi-independent entity.

Sharing had reached such heights that when Northamptonshire had to issue a section 114 notice as its troubles mounted its section 151 officer was the only finance officer employed directly by the council, the rest being with LGSS.

Max Caller, the inspector appointed by the government to probe what went wrong in Northamptonshire, criticised the way LGSS had been used and said in his rpeort: “There appears to be little strategic capacity for strategic thinking on support service within the council with the expectation that is it discharged by staff in LGSS. That could work if the council had strong commissioning, but that is not apparent.”

The government sent in commissioners to run Northamptonshire in the wake of Mr Caller’s damning findings about its finance and governance.

LGSS Law is though not part of these changes having parted from the original LGSS when it became an alternative business structure in 2015.

It is owned by Cambridgeshire, Northamptonshire and Central Bedfordshire Council.

A January report to the government by the two Northamptonshire commissioners, Tony McArdle and Brian Roberts, said LGSS Law had “seen an impressive turn around in performance”.

They added: “This organisation had previously been beset by significant transparency issues, confused business planning and pricing, poor performance and excess costs.”

LGSS Law lost £1.2m in 2018-19 but was “on course for a six figure profit within 2019-20”.

In March LGSS Law secured a £1.425m equity capital injection from the three shareholding authorities.

A report prepared by Central Bedfordshire’s head of governance, Jonathan Partridge said LGSS Law’s loss for 2018-19 had resulted from resources invested in an aborted merger with three London councils, employment of more interim staff than budgeted and problems with billing accuracy.

LGSS Law reported in January that it was now “on track to return to profit”

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