Shared services can help local NHS, councils and fire brigades to cut costs and improve IT, says Local Government Association
A report from the Local Government Association (LGA) says that five local shared services arrangements have saved a total of £30m through a range of measures, including integrating IT systems and better procurement.
The document is based on research into five shared agreements by Drummond MacFarlane on behalf of the LGA.
The five are Cambridgeshire and Northamptonshire county councils, set up in 2010; Devon and Somerset fire and rescue authority, set up in 2007; Herefordshire council, Herefordshire primary care trust and Wye Valley NHS trust, set up in 2011; Procurement Lincolnshire (all the councils in the county), set up in 2008; and Vale of White Horse and South Oxfordshire district council, which started the process in 2008.
Cambridgeshire and Northamptonshire, for example, delivered savings of £1.8m by renegotiating a contract with its IT supplier. In 2012-13 it expects to make savings of £3m from the re-procurement of the Cambridgeshire IT network.
In its first three years of operation, Procurement Lincolnshire saved £9m through better purchasing, from a total procurement budget of £194m per year before it was set up.
The research found that set up and integration costs for each shared service arrangement were “modest”, with all succeeding in delivering a payback period of less than two years.
The investment costs ranged from 18% to 59% of the savings in the first two years and were typically made up of redundancy payments, implementation team costs, rebranding and IT expenditure.
In addition, the report says that local government shared services are able to provide wider business transformation, such as better use of IT, improved processes and cultural change programmes.
Councillor Peter Fleming, chair of the LGA’s improvement board, said: “Councils are the most innovative and efficient part of the public sector and this report demonstrates the kind of steps they are taking to save money and improve services.
“Efficiency savings aren’t enough to make up the 28% cut in the money councils receive from central government, but measures like the shared service arrangements currently in operation at more than 200 local authorities do help to dampen the impact.”