LGA highlights small scale of shared service savings

19 Feb 16

More than half of all council shared service initiatives are saving less than £100,000, the Local Government Association has noted.

Re-launching its 2015 shared services map, which found local authorities had accumulated a total of $462m over the year in efficiency savings thanks to shared service initiatives, the LGA reminded councils that “not all partnerships are created equal” and that size often matters.

The LGA said that while the map clearly demonstrated the huge savings sharing services can bring, with the biggest partnerships saving as much as £2.5m per year, more than half of all partnerships saved less than £100,000.

While back office functions, such as legal, audit and human resources, are the most popular services to share, the LGA said they tend to offer the smallest savings.

The biggest savings were made in sharing procurement and capital assets, and the LGA suggested councils with less developed shared initiatives could focus on these initially.

Sharing with other public bodies can have better results, the LGA continued. It highlighted a partnership between Hampshire County Council, Hampshire Police and Hampshire Fire and Rescue Services that aims to save £4m annually by sharing numerous services including finance, HR, procurement and printing.

“Results from councils have also shown a classic economy of scale effect,” the LGA noted. While partnerships comprised of two partners are the most common, those with four achieve the most savings per partner.

The LGA reminded councils to update their information for the 2016 shared services map, which it said will be closely scrutinised to see whether smaller partnerships have kick-started more shared working within their authorities.

The LGA’s 2014 shared services map recorded savings of £350m.

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