Shared Services in Local Government

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In a bid to reduce costs and duplication of effort, provide better value for money or a more robust service , many local authorities are considering entering – or have already entered – into joint working arrangements with other councils or the private sector.

Certain services are prime candidates for being funnelled into collaborative working arrangements, although, theoretically, a very wide range could be delivered 'in partnership'. The usual services for consideration are legal, HR, audit, accountancy and help-desk services but a much broader array could be pooled.

What Are The Options?

The term 'shared services' has a wide meaning and can even be used to include the centralisation of services that were previously delivered separately within the same authority. Models involving other parties can fall under several headings, including:

  • Contractual – where one authority simply provides a service to another under a contract for services. Kent County Council and Camden Council take an entrepreneurial approach and provide such a legal service to other authorities at a much lower rate than the private sector.
  • Merger / Separate body - where two or more authorities merge their services to operate as a hub within a host authority or as a separate external body, providing services back to all the authorities concerned under an appropriate agreement (and possibly to other parties as well on a more commercial basis, with the authorities splitting any surplus funds).
  • Delegation – where one authority delegates the responsibility for carrying out the service to another authority under a deed of delegation (again involving an appropriate agreement and payment).
  • Partnership working – where two or more authorities have a standing arrangement to call upon each other as and when required to provide cover and additional expertise.
  • Collaborative or joint working – where two or more authorities collaborate on specific projects, particularly tendering exercises, selecting the same contractor, possibly at discounted rates.
  • Pooling of resources – where authorities share facilities and assets such as books; IT; training; and office space.

The Private Sector

A shared services arrangement can also accommodate private sector counterparts who act as the contractor, partner or joint worker. This can be attractive in many ways but usually comes at a greater cost.

Some authorities are grouping together to enter into framework agreements with the private sector to provide services on a 'call down' basis, without having to tender for every contract, in return for discounted rates. Local authorities can also offer secondment opportunities to private sector professionals, paying them less than the market rate in return for valuable experience in a particular discipline.

What Needs To Be Considered?

The route to a shared services arrangement can, however, take months or years to finalise and, even if an authority finds a particular option attractive, it may be unable to find a suitable partner. The particular concerns that are likely to arise relate to:

  • Preferred style of delivery, location and proximity – an existing in-house support service is likely to be delivered in a particular fashion, with on-tap opportunities throughout the working day for officers and members to obtain friendly but professional ad hoc advice without a prior appointment. With a jointly provided service away from an authority's offices, new considerations would have to be tackled in terms of forward planning; monitoring and duty arrangements; controls and standards; and new professional relationships, to name but a few.
  • Expertise and experience – current in-house staff are likely to have a very good knowledge and understanding of their authority's culture, geography, history and circumstances which another authority, some distance away, might not readily be able to match.
  • Costs – the cost of a new arrangement may not be any less and may turn out to be more, although some councils may be prepared to swallow this for the promise of a more robust service. Authorities have to weigh up very carefully whether a benefit will materialise in terms of better value for money and should not forget that some in-house teams are not just a drain on resources but, these days, also earn an income for their authority – or have the potential to do so. Therefore, the business case must be tested and sound.
  • HR and legal issues – if the service is being provided by another body, existing staff may have to be transferred and the same types of issues arise on a smaller scale as those facing the new unitary authorities, where two tier councils are being replaced by a single authority. These include redundancies; terms and condition of service; morale of staff; and possible loss of experienced employees. Managers of the service, who may often feel keener about the ‘brave new world’ than their staff, face the challenge of change management and team building.
  • Political issues – if one authority is perceived as providing services to another, there may be a sense that one has been 'taken over' by another, resulting in concerns about control and conflicts of interest.

Options Analysis, Risk Assessment and Business Case

Some of the possibilities can be adopted more readily than others, without much risk, such as a joint framework agreement with the private sector. However, a 'make or buy' exercise would be recommended in most cases, considering all the options and evaluating the risks, analysing the business case and never underestimating the impact of a future in which an authority may lose the immediate availability of its in-house staff and from which is cannot easily exit.

In some instances, it may not be an 'all or nothing' option. It may be worthwhile for an authority to start by entering into a new arrangement to share part of a service with another Council and to retain the status quo for the rest, possibly viewing that exercise as a pilot, before going further.

In seeking a partner, it has to be said that physical proximity may often prove to be the key because of shared boundaries, common knowledge of the area, existing professional relationships and sheer convenience. Someone was once apparently heard to mention that the process should be treated as a dating exercise – well, perhaps there are similarities!

What the Future Holds

Of course, any new arrangement could actually prove to be a dazzling success, with a fresh, invigorated service emerging, offering better value, enhanced standards of performance, increased expertise, greater resilience and reduced duplication of effort. Time alone will tell how many authorities settle into long term partnerships with others while retaining their independence overall.

A collaborative article from Touchstone Renard's Local Government Team.

Touchstone Renard's Local Government Team

At Touchstone Renard, we can provide support to local authorities with a wide range of services. Our friendly — but experienced — consultants are able and delighted to work with staff at all levels in a variety of different ways.

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Our Local Government Team is headed by Richard Wood, our HR and Business Services Director. Before joining Touchstone Renard, Richard worked in local government for over thirty years and has extensive experience of working with members, top management teams, partner organisations and staff at all levels.

Richard understands how local government works and has direct experience of the challenges faced. He has developed strategies, policies and procedures and has been involved in bringing about major changes and re-organisations. His skills also include training, mentoring and facilitating.

Our team can tailor its support to suit your needs. We do not merely work in an advisory, arm’s length capacity. If you wish, our consultants can work side by side with local authority mangers or other staff to bring about or support an initiative.

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