By David Williams
8 January 2010
Councils have hit back at calls for a law to force them to share back-office operations.
The Local Government Association reacted angrily to Stop, start, save, a report published on January 7 by consultancy firm Deloitte, which said councils had been ‘incapable’ of generating the level of savings from sharing seen in the private sector.
The report said only a small number of authorities had reduced overheads by combining legal, payroll or finance functions, and the practice had not yet been adopted on a large scale.
But Mark Luntley, programme director for finance at the LGA, said councils had saved £3.8bn between 2005 and 2008, and a further £1.7bn in 2008/09.
‘There are many examples of authorities sharing services to improve outcomes for their citizens,’ he told Public Finance, criticising the Deloitte report for focusing on processes rather than outcomes.
Deloitte argued that the career interests of certain individuals, and the possibility of redundancies within an authority, have stood in the way of progress.
The authors said councils had been reluctant to act because of upfront costs, and that their desire to maintain their independence was conflicting with the need to make the most out of resources.
However, fiscal tightening would make this stance unsustainable, the report concluded, calling for a new law obliging councils to share back-office functions, sidestepping the need to build political consensus.
Mark Lawrie, local government partner at Deloitte, said: ‘There is a compelling case for legislation that would require local government to share back-office functions. It would move the debate from a question of whether shared services are right to how and when could they be taken forward.’
