Councils are facing tough challenges in making spending cuts but sharing back office services will not deliver the costs reductions required. A report from the localism think tank NLGN warns that they must be more innovative and ‘boldly go’ beyond just sharing what goes on in the back offices.
Councils are looking at grant cuts of 26% in the period to 2014, with some expected to save as much as 8.8% of total expenditure in the first year, and a median expectation of 5.8%. The NLGN report, Shared Necessities: the next generation of shared services, concludes however, that even in a best case scenario, sharing back office services will limit savings to 3.6% of expenditure; with a more realistic expectation of 1.8%.
The report argues that new models of shared services should be developed. These range from sharing chief executives and senior management teams to virtual centres. This will involve applying the principle of sharing in the development in much broader strategies for organisational change. There are implications for the nature of local authority workforces, and potential for reform of organisational structures to more generalist pools of employees, coupled with targeted incentives, to help combat the ‘human’ barrier to sharing.
Sharing services also brings questions about the nature of local authority boundaries to the fore. Although there is a wish to preserve existing democratic structures, there is a vital debate to be had about the potential for the majority of council services to be merged together across economic geographies. It is also apparent that the ‘market’ for shared services is underdeveloped.
The NLGN report also includes a toolkit for local authorities and their partner organisations looking to embark upon the shared services journey; and recommends the development of an ‘eHarmony-style’ market place for councils looking to share and trade services, as well as the piloting of ‘invest-to-save’ bonds to finance wide-scale transformation and service redesign.