By Lucy Phillips
21 January 2011
A leading public sector human resources director has called for more help from the government to enable councils to save money through shared services and pooled budgets.
Dean Shoesmith, president of the Public Sector People Managers’ Association, told Public Finance that current legislation prevented organisations from making an easy transition to shared services and place-based budgeting.
He said an ‘enabling framework’ was needed to facilitate the integration of resources and employment terms and conditions.
A suitable model would be Section 75 of the Health Act, which gave powers to the NHS and local authority partners to pool funds, delegate functions to each other and join together their staff and management structures.
Shoesmith, who is HR director for the London boroughs of Merton and Sutton, was drawing on his own experience of leading the integration of a full HR shared service arrangement between his two local authorities.
He said it had been ‘extremely legally difficult’, with complex consultations around the Transfer of Undertakings (Tupe) regulations and anti-competitive behaviour to overcome.
Sharing HR services at Merton and Sutton is estimated to save £1.3m out of a total combined departmental budget of £4m. The first phase of structural change and removal of duplicate roles, which took place over the past two years, saved half a million pounds. The second phase, joining up procurement to make economies of scale, is expected to save £800,000.
Shoesmith said the model could be duplicated across a range of local authority functions as long as the business case was right. ‘High’ costs of Tupe protection, if employment conditions were very different between potential partners, could make it unviable, he said. There might also currently be difficulties around equal pay.
He criticised the government for ‘not really doing anything’ to help, despite its programme to cut costs. As a result, only those prepared to take some risk would go ahead. This was ‘hardly an ideal backdrop for achieving efficiency savings’, he said.
But he warned against ‘crude’ blanket legislation that would force all councils to share services.
Shoesmith added that place-based budgeting, which could also achieve big efficiencies, would be even more complex under current legislation than sharing services because it crossed the whole public sector. ‘Without an enabling framework, it’s going to be tricky,’ he said.
