Council shared services are saving money, says LGA
By Richard Johnstone | 9 August 2012
Shared council services have demonstrated ‘clear financial benefits’, a Local Government Association report said today.
The analysis, carried out for the LGA by consultancy Drummond MacFarlane, found that local authorities had been able to quantify the benefits and feasibility of joining forces better than Whitehall shared service centres
In the five examples examined for the report, councils had saved £30m by March 2012 from reducing staff, better integrating IT, using property more effectively and improving procurement.
Set-up and integration costs for merging services between authorities had been modest, the report said, with costs recouped by savings in less than two years in all cases. Services shared: costs spared?also found that once the joint functions had been established, they could be expanded to provide services for other parts of the public sector.
In many cases, the shared services had also succeeded in providing the same or better levels of performance at less cost. In recommendations to town halls, Drummond MacFarlane concluded that baseline financial and performance information was ‘essential’ to make the case for change, and also to track the efficiency benefits.
Peter Fleming, the chair of the LGA's Improvement Board, said the majority of English local authorities were now sharing services. ‘Councils are the most innovative and efficient part of the public sector and this report demonstrates the kind of steps they are taking to save money and improve services.’
However, he added: ‘Efficiency savings aren't enough to make up the 28% cut in the money councils receive from central government, but measures like the shared service arrangements currently in operation at more than 200 local authorities do help to dampen the impact.
‘We hope the examples identified in this report encourage even more councils to use the LGA's new evaluation tool to examine whether or not a greater range of service sharing is appropriate in their local area.’
The five shared service projects examined in the report were: the Hoople initiative in Herefordshire; Local Government Shared Services in Cambridgeshire and Northamptonshire; Devon and Somerset Fire and Rescue Authority, Vale of White Horse and South Oxfordshire; and Procurement Lincolnshire.
The London tri-borough initiative, between Westminster City Council, the London Borough of Hammersmith & Fulham and the Royal Borough of Kensington & Chelsea, has also reported it is on course to save £40.3m by 2015/16.
This research follows last month’s Commons Public Accounts Committee report into central government shared services, which concluded it had ‘failed to deliver the savings it should have’ despite significant scope for reductions.