Five local authorities have saved £31m by moving to shared services arrangements, according to a report.
The study, commissioned by public sector lobby group the Local Government Association, and produced by consultancy Drummond MacFarlane, found that five separate shared service arrangements had total savings of nearly £31m over a five-year period.
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The local authorities included Cambridgeshire and Northamptonshire county councils; Devon and Somerset fire and rescue authority; Herefordshire council, Herefordshire primary care trust and Wye Valley NHS trust; Procurement Lincolnshire; and Vale of White Horse and South Oxfordshire district council.
But the report said the challenges and constraints to sharing services remain. Organisations have different cultures, structures and processes which have to be integrated if the new organisations are to be effective, it said.
Chris Pattison, of Drummond MacFarlane and author of the report, said the complexity of linking up IT systems has been an obstacle in the past, but said the advent of superfast broadband is enabling more local authorities to connect services beyond neighbouring boroughs. Returns on projects could come in within two-years, where councils had done appropriate planning toward shared services, he said.
“We saw set up costs being recouped in two years, and year-on-year costs being achieved at end of their first financials. But where projects had been less well planned this took longer.”
He added that cost cutting has left some organisations less well placed to make the business case for shared services and oversee the implementation of projects. “It’s interesting that Devon and Somerset fire and rescue authority did not make any cost cutting and saw double the return on investment. There is a link between project management capability and [successful implementation], he said.
Recently six London councils announced an Oracle shared services implementation, which they expect will lead to savings of £18m over four years.