Are shared services the councils' answer to the government cuts?

Finding new ways to improve cost efficiencies in this day and age can seem a little like looking for a needle in a haystack for cash-strapped local authorities. Indeed, at the NOA’s 8th Sourcing Summit conference recently a number of...

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Finding new ways to improve cost efficiencies in this day and age can seem a little like looking for a needle in a haystack for cash-strapped local authorities.

Indeed, at the NOA’s 8th Sourcing Summit conference recently a number of Public Sector speakers explained how the recent squeeze on public sector spending has only served to put more pressure on councils to justify their spending and find new ways of making significant cut backs.

Councils across the country have been asked to make £780 million in savings to support and strengthen local services and help them to become more responsive and cost effective, following the government’s spending review.

As a result, local authorities have been taking a number of different approaches to try to meet these targets, with services such as IT seen as soft targets for councils looking for departments where they can make cuts.

For all councils, the spending review will be a test of their ability to meet the needs of their communities, whilst juggling a reduced budget and efficiency savings. To achieve these revised financial targets, it has been increasingly necessary for each council to identify its key competencies across their services using this as a framework to identify where services can be dropped, outsourced or even invested in.

The cuts will lead to a major drive by councils as they look to strip back to essentials. They will look to extend privatisation and outsourcing into every area with the creation of new contracts and jobs.

Many of our speakers asked if perhaps shared services is the solution? Often referred to as “Outsourcing without a contract” shared services could offer the first steps towards hitting Public Sector targets.

A good example of where this has been put into practice has been the emergence of a new ‘super council’ formed between Hammersmith and Fulham, Kensington and Chelsea and Westminster councils.

By merging a number of services together, and by working in collaboration and sharing information, the councils are predicting savings of between £50 million and £100 million per year. Of course, the other benefit of this is that it will result in operations streamlining whilst still protecting their most important front line services.

It’s important, however, to understand that just as an effective and carefully planned strategy will be the difference between outsourcing success and failure so such strategic planning needs to be carried out with shared services as well. (Perhaps without the contractual rigor, but more likely for Councils, with a political rigor).


They do need to recognise they are providers and understand what their citizens need when working out how to outsource or use shared services.

Communication between residents and councils is vital, along with working together collaboratively in order to pinpoint where cut backs and efficiencies can be made, whilst not compromising the services they are responsible for providing.

Shared service platforms can promote common BPO and technology platforms, enabling councils to secure greater cost efficiencies. These common platforms, which will ultimately become part of wider Public Sector Network and ICT facilities, will also help drive simpler ICT procurement and service innovation processes too.

There is huge potential for the recent cuts to help councils to become more unified, resourceful and efficient, and shared service platforms will enable councils to progress wider partnerships with the public sector, by pooling resources or advancing initiatives where multiple funding streams are directed towards larger scale and less bureaucratic projects.

Hopefully this will make the needle in the haystack that little bit easier to find!

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