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A new report from localism think tank NLGN has this week revealed the tough challenge facing councils that are sharing services in order to fill the gap caused by the government’s spending cuts. But the report also warns that councils must be more innovative and ‘boldly go beyond the back office’ if sharing is to deliver significant efficiencies while protecting frontline services.
Councils are looking at grant cuts of 26% in the period to 2014, with some expected to save as much as 8.8% of total expenditure in the first year, and a median expectation of 5.8%. The NLGN report, Shared Necessities: the next generation of shared services, concludes however, that even in a best case scenario, sharing back office services will limit savings to 3.6% of expenditure; with a more realistic expectation of 1.8%.
The report, carried out by the think tank’s research unit, recommends councils adopt a presumption in favour of sharing services, incorporating the concept within service redesigns and all transformations being used to manage the impact of cuts.
Launching the report, NLGN’s Tom Symons said:
“These are tough times for local authorities but a narrow focus on how best to make efficiency savings will be insufficient if they are to handle the lasting impact of spending cuts. Those councils that boldly go beyond the back office when considering shared service agreements will emerge in time as leaner and sharper organisations better able to deliver the services people need.”
The report authors conclude:
“New models of shared services, from sharing chief executives and senior management teams to virtual centres, are aimed at helping local authorities with the practicalities of sharing, as well as fitting them into much broader strategies for organisational change. There are implications for the nature of local authority workforces, and potential for reform of organisational structures to more generalist pools of employees, coupled with targeted incentives, to help combat the ‘human’ barrier to sharing.”
“Sharing services also brings questions about the nature of local authority boundaries to the fore. We are keen to preserve existing democratic structures but there is a vital debate to be had about the potential for the majority of council services to be merged together across economic geographies. It is also apparent that the ‘market’ for shared services is underdeveloped.”
The NLGN report also includes a toolkit for local authorities and their partner organisations looking to embark upon the shared services journey; and recommends the development of an ‘eHarmony-style’ market place for councils looking to share and trade services, as well as the piloting of ‘invest-to-save’ bonds to finance wide-scale transformation and service redesign.
The NLGN shared services survey results can be downloaded HERE
This report was kindly supported by Bevan Brittan, Capgemini and SAP.