Shared Services: An option, but not 'the answer'

Increasingly, it looks like Shared Services may be the default move most authorities will now have to make. In fact, they may already be down this path in the majority of cases. And indeed this is also what Westminster wants us to do, too. Grant Shapps, minister for communities and local government, this week said on Channel 4 News that "Local authorities need to get on with sharing services," a move he says should be take place before any sort of takedown of front line staff numbers.

 

A recent survey from Cipfa, the Chartered Institute of Public Finance and Accountancy, no less than 96% of councils responding (166 replied) say they are already doing so – while 45% of local government authorities said they would outsource services with a commercial partner.

 

When you see what councils think they have to do to, you can see why. Up to 73,000 job losses are calculated by Cipfa to be under consideration in England alone, as councils prepare their 2010/11 budgets. Of these, only 30% are likely to be front-line non-managerial posts, with the balance managerial and back office roles.

 

At the same time, investment in capital projects such as new schools and leisure facilities may now fall precipitously, with all areas of council spending are likely to be affected: services such as highways, economic development, environmental health, planning, street cleaning, waste and recycling all face possible cuts, in the order of 10-20% in many cases, says the group.

 

So, yes, Shared Services. Bring it on – problem solved. Crisis abated.

 

But here's the problem; one man's Shared Service is not the same, it seems, as the next one's. “Councils have known for some time they had to do something like this, but the response has been very slow and patchy,” a Cipfa spokesperson told PublicTechnology.net. “So some may be doing things like sharing a chief executive or their HR department while only a very few are doing anything more substantial, like sharing ICT back office systems.”

 

And at the same time, at least some in local government doubt Shared Services are in fact the panacea to all our ills here. "The level of spending reduction that councils are going to have to make goes way beyond anything that conventional efficiency drives, such as shared services, can achieve,” warns Baroness Margaret Eaton, chairman of the Local Government Association – before declaring that her body believes councils face a total funding shortfall of £6.5 billion over the next year.

 

Councils, she says, now face “incredibly tough choices” about the services they continue to provide and those they will have to cut – in a context of already well advanced efficiency programmes in any case: “Councils knew the cuts were coming and did all they could to prepare; we already cut more than £1 billion from our budgets in the middle of this year.”

 

Yes, LGA is confident civilisation hasn't ended - “We will now pull out all the stops to minimise the impact of these cuts and build on our record of delivering new and better ways of doing things.” But things are going to get very, very tough, certainly for a year and possibly for the next four.

 

In fact, if the government has its way, things will never get back to where we are now, with a radically smaller local government presence going forward and more and more services being delivered by Big Society partners.

 

In that context, clearly any lessons learned from shared service work that's delivered is invaluable. PublicTechnology.net has of course been tracking the development of this for some time and has been clear to applaud success. Thus we have only this week reported how two Lincolnshire councils say forming a joint venture to handle among other things ICT may deliver up to £30 million in savings over the next few years, and of course there is the 'poster boy' for the whole shared service at local level case study, that of the new London 'super council' of Hammersmith and Fulham, Kensington and Chelsea, and Westminster, which may save between £50 million and £100 million.

 

But in Shared Services, as in life, cooking and project management, not everything turns out the way we'd like it to have done – and we have also, this week alone, seen cases of Shared Services that won't quite deliver all that was expected, like Southwest One, which admits it will fall short of target (though not as much as the sceptics charge).

 

The message is clear. Councils know that they can save money by sharing services and looking to stop duplicating things needlessly (why do we all have different but equal payroll systems, for example). 

 

The problem is they've been slow to adopt the measure and the risk is that now it's going to be pressed by worried chief execs as 'The Answer' – when all it may do is provide modest savings, not keep the status quo somehow magically stable.

 

We also genuinely worry it will be rushed into now with too high expectations and we may see a rash of more Southwest Ones than London super council stories on this site in the next few months.

 

Yes, redesign services. Yes, share what you can with your neighbour. Yes, look to more delivery by e-channel.

 

But don't think Shared Services will help you deal with that 8.9% cut on its own.

 

The reality is that staff cost remain the biggest expense and people will have to go as a result of what the Coalition has decided this week – and pretending otherwise is intellectually and morally dishonest.

 

Tough times almost never have simple answers – and Shared Services isn't that simple an answer in the best of times.