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Shared services reborn?

15 October 2010

With the looming prospect of the biggest ever cuts to public sector budgets you dont need us to tell you that your services will need to become more transparent, more effective and more efficiently delivered. The shared services agenda is not new but it is worth considering its role in helping you meet the financial challenges ahead, whether the financial climate will reinvigorate the shared services agenda and provide new impetus for innovative and collaborative approaches to the delivery of our public services. The need to make public sector spending cuts already appears to be driving a new wave of radically different shared services schemes; we are seeing new projects announced on a weekly basis. For example, earlier this month members at Babergh DC and Mid Suffolk DC approved ground-breaking plans to merge their local authorities into a single district by 2013.

In April 2008 we published the findings of our shared services survey, reporting on the views of over 150 senior managers drawn from right across the public sector. Whilst our survey identified that an overwhelming majority of organisations (97 of respondents) were taking part in some form of shared services, it did suggest that there were many untapped opportunities. The majority of activity appeared to relate to back-office rather than front-line services.

It is interesting to re-consider the barriers to implementation that were identified. Our survey found that shared services were often dismissed as time consuming, expensive and difficult to implement.

Intuitively, shared services make a great deal of good sense but history tells us that there is significant scepticism across the public sector about the ability to implement an effective shared services project.

We consider below two examples of local authorities coming together to deliver better front-line services more efficiently than the predecessor service. Importantly, these authorities were able to overcome the barriers to implementation and demonstrate that it is possible to deliver service improvement and efficiencies at the same time during a recession.

Waste Collection Partnership

Tamworth BC and Lichfield DC have come together using an administrative arrangement under Section 101 Local Government Act 1972 to deliver a joint waste collection service. Andrew Barratt of Tamworth Borough Council commented:

"Having clear priority and commitment at the highest Political and Management level from both Authorities was a critical part of delivering the joint service project and this support enabled all elements identified in the proof of concept study be delivered, both within a very tight timescale and achieving the anticipated efficiencies.

Furthermore, being absolutely clear on the end result from the start was vital in driving the project, especially as the route to achieving some elements was not always apparent, having this clear view ensured that both Authorities were able to remain focussed on the end result"

Enhancing Partnership Philosophy

Derbyshire CC agreed to provide facility management and property services to two other local authorities. Again, the arrangement was delivered quickly utilising an administrative arrangement under Section 101 Local Government Act 1972.

Clive Rhodes, Head of Property at Staffordshire Moorlands and High Peak Borough Councils comments on the success of the arrangement:

"Derbyshire provide a property management service which has enabled us to secure on-going efficiency savings. I have been delighted with the service we have received and the commitment shown in the delivery of a diverse range of services".

Steve Gerrard, Deputy Director of Property at Derbyshire County Council, puts this success down to the culture of the partners and explains:

"… a successful partnership alliance depends on shared commitment from Officers at the highest level with the same desire and objective to deliver the highest quality value for money service. Getting past the barrier of "turkeys voting for Christmas" and building trust was a challenge. Transparency from both parties has resulted in significant benefits for both Authorities and we look forward to building on the success of this alliance by continuing to add value during the lifetime of the contract."

The key features common to these examples include:

  • the discharge of various functions delegated under Section 101 - in the case of Tamworth and Lichfield the functions are delegated to a joint committee
  • employees TUPE transfer to host authority
  • the authorities provide services to each other under the Local Authorities Goods and Services Act 1970
  • day to day operations managed by designated officers
  • no separate legal entity created - the authorities remained responsible for the discharge of their functions to their residents
  • future flexibility in terms of range of services to be provided by enlarged teams

Both of these projects were delivered without significant legal and other consultancy costs and resulted in the efficient delivery of front-line services and real savings to the authorities.

Keith Gordon, Assistant Director Efficiency & Delivery at Improvement & Efficiency West Midlands, commented on the challenges facing authorities:

"As the financial pressures will inevitably increase following the outcome of the Governments spending review, the challenge will be for Councils to face the shared service and collaboration opportunities enthusiastically and positively at far more pace and radical transformation than seen to date. The days where control lay within one Council and the risks with the private sector have long since gone. If Councils wish to flourish and continue to respond to customers needs in this new challenging financial environment, they will need to develop partnerships and new operating models both with other public sector organisations and equally importantly with the private sector that put customers at the forefront of the agenda. This can only be achieved through new ways of service design, the reduction of unnecessary waste and duplication, managing risk more effectively and commissioning expert legal advice to ensure any new shared service can be delivered legally and effectively which meets the needs and aspirations of all key stakeholders."

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