The NLGN report, “Shared Necessities: the next generation of shared services”, argues that most likely efficiency savings on average a local authority would make by embracing shared services for back-office functions is a paltry 1.8%. That is much lower than the 5.8% average savings councils are expected to make, some councils are expected to save almost 9% in the very first year.
The think tank believes that shared services is the way forward but local authorities have to embrace shared services as a tool to implement wider organisational changes.
“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,” the report says. “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.”
The report also calls for a debate on whether it is better to merge the majority of council services “across economic geographies” without destabilising the existing democratic structures. The think tank also points out that “the market for shared services is underdeveloped” and urges creating 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.”
“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,” says Tom Symons, the lead author of the report.
“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.”
Limiting “shared services” options to the back office would only save 3.6% of expenditure and that too is the best case scenario, according to a NLGN report
