Local Authority Finance Directors agree: it's time to share services
Date : 03 October 2005
As Local Authorities work to meet Gershon targets, a Serco report shows overwhelming support for Shared Services
More than half of Local Government Financial Directors plan to implement a shared services strategy in the next year , according to a recent report into over a quarter of UK local authorities.
The report was commissioned by Serco Solutions to canvas opinion towards the Gershon Review and to ascertain what strategies are being implemented to achieve the savings set out in the review.
The report confirms that the majority of local authorities plan to help realise efficiency savings through sophisticated partnering arrangements. 51% plan to do this in the next twelve months and an overwhelming 86% of finance directors support the principles of sharing support services.
The three departments which FDs feel will benefit most from 'sharing' are: revenues and benefits (37%); transactional services (24%) and IT (21%). With only 13% of the vote, FD's appear less enthusiastic about sharing their procurement functions.
But it's not all plain sailing. 46% fear that sharing will mean too many decision makers could become involved, and linked to this, 36% worry that it might hamper their ability to agree on the approach that is right for them.
Serco's report categorises shared services into three different models; centralisation, collaboration and commercialisation. It suggests that adopters of shared service models concentrate first and foremost on services where Local Authority leaders a) see the greatest benefit b) the least loss of political and managerial control and c) the lowest transaction costs in negotiating a shared capability.
Gary Sturgess, Executive Director, The Serco Institute, comments:
The Gershon Review has prompted fresh thinking about the common strategies that can be taken to meet its specific targets and central reporting requirements. It is encouraging to see that shared service strategies are recognised as key way for local government authorities to enhance their potential to deliver efficiency savings."
Peter Holden, business development director at Serco Solutions continues: "For example, Lichfield & Staffordshire Moorlands District Councils, came together to form a collaborative partnership to procure an IT solution. Here the best approach was formulated and resulted in dramatic savings in excess of £700,000. Serco firmly believes that there are opportunities for similar and even greater savings to be made through the sharing of services. Local authorities that fail to even consider such an approach may struggle to deliver against Gershon."
[1]The survey was conducted in mid-2005 and based on telephone interviews with 106 chief financial officers and senior finance professionals in 102 local authorities across England. This represents 26% of all local authorities in England.
[2]The Gershon Review spelled out annual efficiency gains of more than £20 billion in 2007-08 and local government was expected to play a prominent role in delivering 30% of the total savings target. This represents additional savings in each of these three years of 2.5%, with a total annual savings of 7.5% (in real terms) by 2007-08