Council indecision over shared services wastes chance to save millions

Too many councils ‘faff around’ without making decisions on shared services or other money-saving schemes – preventing authorities from saving millions, a former HR chief has warned.

Alan Warner, ex-Hertfordshire HR director and lead on communications at the Public Sector People Managers Association (PPMA), claimed councils spend too much time considering how to reduce overheads without making decisions.

The warning comes just days after Deloitte called for a new law forcing councils to share back-office operations, which could save £100m a year.

A report by the consultancy said just a small number of councils had reduced overheads by combining legal, payroll or finance functions, and said a legal obligation would switch the debate from whether to implement shared services, to how and when to do it.

Warner told Personnel Today he was against introducing a new law for shared services. However, he said: “Options for saving money [within councils] should be evaluated more quickly. For me there’s too much discussion, too much time taken – the councils need to get off the scent. They need to get in there, set out what they’re going to do, and do it.”

Warner added councils were being expected to introduce significant changes in the way services were run when staff had little or no experience – possibly why authorities were “slower” than the private sector in making efficiency savings.

He called on the government to provide extra funding for councils to train managers to improve project management skills or hire consultants to help bosses work out the best way of saving money.

A report by former Logica boss Martin Read, endorsed by the government last spring, recommended shared services were sped up across the entire public sector.

The government is unlikely to mandate shared services. However, if two-thirds of districts shared financial services alone, annual savings could exceed £20m, according to Department for Communities and Local Government figures released last month.

Leading council HR chiefs slammed the proposal to create a new law to introduce shared back-office functions, claiming councils were already doing what they could.

George Bishop, director of personnel and general services at The Royal Borough of Kensington and Chelsea, said: “It’s a misrepresentation to think that it’s taking too long to implement shared services.

“In west London, seven councils looked at sharing payroll and some HR services. The problem was that across the seven councils, there were four different HR systems and for some, the cost of changing to a common system was prohibitive.”

Somerset County Council’s head of HR and development Richard Crouch added he would rather “put his head down a toilet” than witness a new law. “It’s nonsense to legally require back-office services to merge while not doing the same with front-office services,” he said.

Meanwhile, Graham White, HR director at Westminster City Council, said: “I am not in favour of making it law, but only because this will create panic buying by the public sector and under-pricing by the private sector, both of which will result in poor delivery.”

Mark Lawrie, local government partner at Deloitte, said a new law would “remove the need for a long, protracted debate and address a wider, pressing need to save money”. He said the average county saved between £1-2m a year by introducing shared services, which could equate to nearly £100m annually across England’s 48 counties.

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