The body has used the publication of research into local government shared services to warn that such efficiency savings “are not enough” to make up for the 28% funding cut councils are grappling with in the current spending review period.
The report, commissioned by the LGA to look into the financial and non-financial benefits of shared services, follows the publication of the body’s examination of the funding outlook for councils. This predicted almost all council expenditure would be on adult social care and waste services within a decade.
The new report examined five council shared service projects, concluding that total savings of £30m were available across the projects’ lifespans.
However, with more than £1.7bn to be cut from councils’ funding in this year alone, the LGA claimed the savings available from sharing services were “nothing like large enough” to compensate.
Ministers have repeatedly suggested local government can bridge funding gaps through greater efficiency and joint working. But the LGA has contested this and in June called for a review of what councils should be expected to provide.
Peter Fleming (Con), chair of the LGA’s improvement board, said the report showed shared services could do little more than “dampen the impact” of funding reductions
“Efficiency savings aren’t enough to make up the 28% cut in the money councils receive from central government,” he said.
“We have been making savings for probably the past 10 years and drove out lots of efficiencies early on. So when the government comes back and says ‘find another 10%’ we are already starting from a low base.”
However, Cllr Fleming said the sector still had “a job to do” in continuing to be “the most efficient part of the public sector”.
The LGA has launched an evaluation tool for councils considering shared services, after consultants from Drummond MacFarlane who authored the report raised questions about the quality of baseline financial and performance data.
The report found “it was hard to access extensive performance data” and said key performance indicators included “narrative and description and there was a limited use of quantitative indicators measuring year-on-year performance”.
A Department for Communities & Local Government spokesman said sharing services was just one of many ways to make savings, including “better procurement, more transparency and making sensible use of savings reserves”.
He added: “Councils account for a quarter of all public spending. It is vital they play their part in tackling the budget deficit.”
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Key findings from the research
- There are clear financial benefits from consolidating organisations in IT, property and procurement
- Early savings are made through staff reductions
- Employee savings happen quickly and through strong top-down leadership
- Mature shared services can benefit from wider business transformation
- The set-up and integration costs are modest with a payback period of less than two years
- Baseline financial and performance information is essential, but was a ‘difficulty’ in all five of the shared services studied
- Despite the lack of data, performance appeared to be at the same or a better level at less cost
- Shared services experienced high staff morale, low staff sickness and low staff turnover rates
- Rapid implementation of shared services builds momentum for change
- Shared services providing services to other public sector bodies can generate useful income
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Autor(en)/Author(s): Ruth Keeling
Quelle/Source: Local Government Chronicle, 09.08.2012
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