Three London councils that have been sharing services for the past year have announced that they hope to save an extra £3 million from shared IT systems.
In October 2010, Hammersmith & Fulham Council, Westminster City Council and the Royal Borough of Kensington & Chelsea announced plans to share “every major service” to help them reduce costs over three to five years.
In a progress report published today, ‘Tri-borough one year on: Delivering our promise to improve lives and make public funds go further’, the councils said that they expect to save £7.7 million across all three boroughs in this financial year (2012/13).
By sharing the £300 million worth of services, they also expect to hit the overall savings target of £3.4 million by 2014/15, and to save an additional £7 million by 2015/16.
Much of the savings achieved was due to the reduction in the number of senior and middle managers (by 45 percent).
However, in a breakdown of the additional £7 million savings, the councils revealed that £3 million would be from IT systems – the largest single chunk of savings. This was followed by facilities management (£2 million), property (£1 million) and finance (£300,000).
Secretary of state for Communities and Local Government, Eric Pickles, has described the shared services scheme as ‘innovative’ and ‘forward-thinking’ and encouraged other councils to merge their services.
He said: “No council should even contemplate cutting services before they have considered following this example of how to join forces with neighbours to share back office services, procure better, slash in-house management and cut overhead costs.
“Potentially £2 billion of taxpayers’ money could be saved if other councils were able to copy such sensible savings across the country.”
The £2 billion figure is based on the predicted £40 million savings shared between the three London councils representing around 7.3 percent of Hammersmith & Fulham Council’s total net budget expenditure.
“If other councils across the UK saved half that amount by sharing services with neighbours it would produce national savings of £2 billion,” Hammersmith & Fulham said.
The councils set out their merger proposals in February 2011 in a publication entitled ‘Bold Ideas for Challenging Times’, where it outlined plans to share services, combine back office and management costs.
These proposals included “rationalising” IT teams – resulting in a reduction of 500 jobs – around the areas of systems development, networks management, direct service delivery and strategy.
The councils estimated that their IT proposals, from streamlining IT workers, to rationalising data centres, to moving to cloud-based managed services, would help them achieve savings over three years of £3.3 million, which would overlap with each individual council’s plans to realise savings of more than £3 million during the same period.