Councils to save millions through shared services

21 March 2011

Sharing chief executives, merging back-offices and joining forces to procure goods and services will save councils hundreds of millions of pounds over the next ten years, analysis by the LGA can reveal.

A national investigation has revealed more than 200 projects either already up-and-running or under consideration, with some delivering savings to residents in excess of £3 million per year.

Faced with a 28 per cent cut to their budgets over the next four years, councils are examining different ways of saving money. However, with budget cuts heavily frontloaded many of the projects identified by the LG Group can not be implemented in time to help minimise the short-term impact on frontline services.

The predicted saving from the 200 shared services projects comes on top of various measures already introduced by councils which delivered £3 billion of savings between 2005 and 2008 and a further £1.7 billion in 2008-09. In 2009-10 councils made efficiency savings equivalent to more than £4.8 million every day.

The findings coincide with the launch tomorrow of the LG Group's Shared Services and Management Guide, which sets out how councils can approach this issue. The launch will take place at the LG Group's Annual improvement and innovation conference in Leeds.

Cllr David Parsons, LG Group Improvement Board Chairman, said: “Even though councils are widely acknowledged as the most efficient part of the public sector they are always looking at ways to deliver even better value for local residents. Sharing service delivery is not a silver bullet solution to the biggest cuts to local authority budgets in a generation but it is one way some town halls are able to save money to reduce the impact of cuts on services for residents.

“Major organisational changes like the introduction of shared services take time and money to implement. However, the savings can be long lasting and significant.

“Our analysis reveals a number of impressive and innovative ways that councils are sharing services and saving millions of pounds. The measures we have identified won't be appropriate in every local authority. Every council has a different structure and residents needs vary from location to location. However, the thinking behind them can be used across the sector to identify and evaluate opportunities.”

In creating the Shared Services and Management Guide the LG Group produced a number case studies examining existing projects. They include:

• Nottingham and Leicestershire County Councils – The councils will generate estimated savings of £2 million per year sharing HR, payroll and finance services.
• Bromsgrove and Redditch Councils – sharing management services and a chief executive has saved the councils an estimated £500,000 over the last 18 months.
• East Lindsey and South Holland District Councils – sharing services across five back-office functions is predicted to save just over £30.7m over the next ten years.
• East Kent District Councils – four councils have set up a joint management business to oversee the delivery of some back-office services and waste management. It aims to deliver 10 per cent savings on current costs.
• Huntingdonshire and Cambridgeshire District Councils – Since 2005 the councils have shared a call centre saving £71,000 per year.
• North and North East Lincolnshire – The councils have jointly saved more than £1.4m since 2006 by joining forces to procure items like telecommunications, heavy vehicles, wheelie bins and furniture.
• South Hams and West Devon District Councils – sharing management teams and a chief executive has saved the councils £350,000 since the measures were introduced in 2009.
• South London Waste Partnership – The London Boroughs of Sutton, Croydon, Kingston and Merton have saved £3.5 million by joining forces to procure waste management services, cutting landfill and boosting recycling rates and composting in the process.
• South Oxfordshire and Vale of the White Horse District Councils – A shared management structure to deal with household waste is predicted to save £3.5 million per year from 2011/12. The savings delivered since the scheme began three years ago have already covered start-up costs.
• Weymouth and Portland Borough Councils and West Dorset and Purbeck District Councils – The councils have streamlined how they manage benefits payments, saving £1 million since the launch of the project in 2004.

Notes:

For more information on the LG Group's annual improvement and innovation conference visit: http://www.lga.gov.uk/lga/events/display-event.do?id=15663222

To find out more about the LG Group's shared services work visit http://www.local.gov.uk/lgv2/core/page.do?pageId=824307

A copy of the LG Group's guide to sharing services is available from: http://www.local.gov.uk/lgv2/aio/1345994

A full list of the 207 local government shares services projects identified by the LG Group is available online from: http://geocommons.com/maps/46714

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