ANEW report from think-tank New Local Government Network (NLGN) has revealed the tough challenge facing councils that are sharing services in order to fill the gap caused by the Government's spending cuts. It warns that councils must be more innovative and "boldly go beyond the back office" if sharing is to deliver significant efficiencies while protecting frontline services.
Councils are looking at grant cuts of 26 per cent in the period to 2014, with some expected to save as much as 8.8 per cent of total expenditure in the first year, and a median expectation of 5.8 per cent. The NLGN report, Shared Necessities: The Next Generation Of Shared Services, concludes, however, that even in a best-case scenario, sharing back office services will limit savings to 3.6 per cent of expenditure; with a more realistic expectation of 1.8 per cent.
The report recommends councils adopt a presumption in favour of sharing services, incorporating the concept within service redesigns and all transformations being used to manage the impact of cuts.
Tom Symons, a senior researcher at NLGN, says: "These are tough times for local authorities but a narrow focus on how best to make efficiency savings will be insufficient if they are to handle the lasting impact of spending cuts. Those councils that boldly go beyond the back office when considering shared service agreements will emerge in time as leaner and sharper organisations better able to deliver the services people need."
The report authors conclude: "New models of shared services, from sharing chief executives and senior management teams to virtual centres, are aimed at helping local authorities with the practicalities of sharing, as well as fitting them into much broader strategies for organisational change.
"There are implications for the nature of local authority workforces, and potential for reform of organisational structures to more generalist pools of employees, coupled with targeted incentives, to help combat the 'human' barrier to sharing.
"Sharing services also brings questions about the nature of local authority boundaries to the fore. We are keen to preserve existing democratic structures but there is a vital debate to be had about the potential for the majority of council services to be merged together across economic geographies. It is also apparent that the 'market' for shared services is underdeveloped."
The report is published just as three London authorities are seeking views on proposals to combine services with the intention of saving Pounds 35million a year by 2014/15.
Hammersmith & Fulham Council, the Royal Borough of Kensington & Chelsea and Westminster City councils believe that combining services is the best way to protect the frontline at a time when councils across the UK have to make significant savings.
Each of the three councils' cabinets have agreed in principle to support the proposals but have invited feedback from across their communities before they discuss the issue again in early May. The public consultation on the so-called "tri-borough" proposals will run until April 21.
The focus of the proposals is on four areas: children's services, adult care services, environmental services and corporate services. The intention is to cut senior management, overhead and other back office costs in half, with up to 500 jobs potentially going from the three authorities.
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