A consortium of councils in South Worcestershire has achieved guaranteed cost savings of £600,000 a year and improved job security for staff through an innovative strategic partnership with Civica.
The district councils of Malvern Hills, Worcester City and Wychavon have been sharing Revenues and Benefits services since 2007, a move that enabled the councils to cut costs by £1 million a year by taking advantage of economies of scale. However, in 2012 the councils identified potential risks to councils, which meant that they had to find more areas in which they could make savings.
Consequently, the councils brought in Civica as a strategic partner with a five-year contract that could guarantee more savings and also bring in more work - such as benefit processing - for the councils to do, on behalf of other local authorities. The framework agreement is open to all English and Welsh local authorities, and offers services including revenues and benefits, financial transactions, ICT and customer services.
“In the latter part of 2012, we saw risks on the horizon. Although sharing services had saved £1 million a year for the three partners, we wanted more. We looked at all our services, and we wanted more savings from Revenues and Benefits,” Vic Allison, deputy managing director of Wychavon District Council told ComputerworldUK at the Civica Annual Conference in Manchester.
One of the risks came in the form of the government’s major welfare reform project, the controversial Universal Credit (UC). Allison said that the advent of UC “could potentially break down the economies of scale we’d built” because, for example, housing benefit processing work, currently done by 40 local council staff, would be lost to the Department for Work and Pensions (DWP).
This would have been “bad for economies of scale, bad for the staff, bad for the economy [because of the job losses],” he said.
Civica was brought in on 1 October 2013, and under the contract with the councils, the company “guarantees a level of savings” each year, as well as brings in benefit processing work from other Civica customers.
“Plus they give us a share of profits for new business. So we get £600,000-a-year [equal to 17 percent] guaranteed savings,” said Allison.
He added: “Our contract with Civica talks about protecting local jobs. We’ve created 15 extra jobs locally. Four people are TUPE transferred in, a difference of 11 new jobs.”
The three district councils share “pretty much everything”, Allison said, including IT, HR, land drainage services and building control. Across Worcestershire, other services such as regulatory services including environmental health, licensing and trading standards, are also shared.
The revenues and benefits system that they share is Capita Academy, which was initially used by Worcester City, while Wychavon and Malvern Hills were on a Northgate system. While it may have been easier to migrate Worcester onto the system used by the majority, they decided to migrate to the Capita system because the deal offered was “innovative”, Allison said.
Having shared nearly all services, the councils are now looking to make their shared services “work better”, since outsourcing and shared services make up most of the councils’ expenditure. The councils spend £10 million a year, £6 million of which is outsourced to a contractor and £3 million is spent on sharing services.
“Strategic partnering is one of the ways of getting more out of these areas,” said Allison, adding that he is looking at more commercial activity, increasing the amount of work the councils can do for other councils and selling services, such as licenses to shops.