Shared services have been getting a bad press recently, from the NAO and others. But Birmingham City Council is showing how sharing back-office functions really can make a difference for the public sector
Shared services have come in for some stick lately. The National Audit Office’s recent report on attempts by government to share back-office functions was highly critical. It concluded that shared service centres have actually increased costs and reduced flexibility for government departments rather than making any savings.
A pretty horrific assessment, but it’s not all bad news on the shared services front. The local authority I work for in Birmingham has set up an alternative model for shared back office support that has been working successfully across sectors for the past twelve months.
This is being done via a community interest company - Buy for Good - that awards locality based purchasing agreements. It is a completely independent business, unbound by the red tape of government and able to trade freely on behalf of its members.
So far those members include three local authorities, two housing associations, a social enterprise and a local SME support organisation. This cross-sector approach is key to BFG’s success. Establishing a community interest company also makes organisations from different parts of the public and third sectors much more willing to collaborate. They are seen as equal partners, combining demand through a non-charitable social enterprise that will use any surplus to enhance its social mission.
Public bodies that may otherwise see Birmingham City Council as a threat are now keen to collaborate. The BFG model is breaking down the inherent opposition that public sector organisations in the same area have to working together, especially when they come from different sectors.
Social mission is another factor behind the company's success. Achieving sustainable outcomes is one of the biggest challenges facing public procurement. How can we balance the need to use large-scale national frameworks to make big savings and at the same time support SMEs to deliver local jobs and skills? BFG members are keen to take on this challenge. Driving down prices and getting the best from the supply chain is vital but the Birmingham model also puts significant focus on boosting local employment and training opportunities through its contracts.
Each of the four current frameworks and the new ones in development are locality-based and they all have a strong environmental focus, ranging from the procurement of electric vehicle charging posts to document sharing and retrieval and micro-generation. Organisations know that when they purchase through us they are helping to reduce carbon emissions and support local economic regeneration in their region. The frameworks are designed to provide opportunities for local and regional suppliers, particularly when there is installation or labour involved.
We have to acknowledge that where there are national supply markets specific to a sector - for example for the purchase of retrofit products for social housing - then it makes sense to collaborate nationally. But where local markets exist, such as for the installation of certain products or grounds maintenance, then it makes economic, environmental and social sense to collaborate locally.
Another example of how the initiative delivers value is via its work with Birmingham City Council to provide a more comprehensive procurement service to schools, especially outside of the Birmingham area. It does this by identifying and recommending framework contracts for all school procurement requirements. Birmingham Council will then sell this service, resulting in increased income for the local authority.
Pressure is mounting on public services to find more efficient ways of delivering services and central government’s failed attempts mustn’t put public authorities off. At the same time, pressure to deliver deeper community outcomes is increasing now that the Public Services (Social Value) Bill has been made law. Buy For Good shows how these two aims can be achieved and how broader social benefits can be embedded into every day back office processes. It’s a simple model that has proved its success and we’re keen for it to be replicated elsewhere.
Jack Glonek is assistant director economic development at Birmingham City Council and a member of the Buy For Good board