Local authorities are mistaken if they think they can go it alone on delivering the IT-enabled cost savings ordered under the Transformational Government agenda and the Gershon efficiency review, Ian Watmore has warned.
The head of the Prime Minister’s Delivery Unit, who is overseeing plans that will set targets for using shared services across the public sector, said even the largest local authorities were unlikely to deliver sufficient efficiency gains through internal reorganisation.
“With a few notable exceptions, we have not historically achieved benefits from shared services, often because projects were subscale. You do not get standard business processes by inventing your own processes and getting software to fit them,” he said.
Watmore’s comments are likely to cause concern among local authority IT directors with high-performing departments and those who have signed long-term outsourcing and business process reorganisation contracts.
Steve Williams, corporate head of IT at Sunderland City Council, said, “In organisations that are always excellent, the measurement culture forces us to think that we do everything best. Why on earth should we do anything with a two-star authority when we are already a four-star [the highest ranking] authority?”
David Myers, director of shared services at the Cabinet Office, said, “There is an element of transformation that can be achieved without sharing with others. But if there are opportunities to be had [to achieve greater savings], why look a gift horse in the mouth?”
Councils could benefit by creating a pool of highly skilled people in support functions that serve multiple local authorities, he said.
The public sector spends some £7bn a year on support services, such as finance, human resources and payroll. The government is targeting a 20% cut in spending on these functions using shared services.
Some large councils say they are already on target to achieve this level of savings by consolidating their own support functions in shared services centres.
Newcastle upon Tyne City Council, for example, expects to have cut the headcount in its support functions by 20% by October.