IfG.CC - The Institute for eGovernment

The public sector IT managers' society said attempts at shared services had in the recent past failed, falling at the political hurdle.

But faced with the current financial situation, public sector chief executives were said to be faced with few options for substantial savings, and shared services was now seen as necessary in order to maintain frontline services.

Taking off with a bang - BT, reveals that the public sector is ready to share services with other public sector organisations.

Environmental services and social care were the areas most likely to be merged. A similar proportion of councils, 89%, intend to share more back-office functions.

Some 89% currently share either frontline or back-office services according to the survey, carried out by law firm Browne Jacobson.

The employment of shared services has been most prevalent within the public sector, with Whitehall leading the way in pushing streamlined processes and efficiency as it seeks to create savings in the current economic climate. The Local Government Association has provided research demonstrating that councils are saving more than £156 million a year through shared services, with 219 English authorities sharing IT, recycling and waste, procurement and other corporate services. The use of shared services in councils according to Jonathan Hamill, Sales & Marketing Director at APD Communications, “can result in real savings and will increasingly be key to ensuring budget cuts do not affect the essential services provided to the public.”

In line with this, the Cabinet Office had a commitment in the Cabinet Office Business Plan to publish a model for Whitehall shared services in July 2011.

According to the document, the Department for Work and Pensions, the Home Office and the Ministry of Justice have already made respective savings of £35m per year, £13m and £20m through their back-office shared services centre.

The Cabinet Office is running out of time on a series of IT deadlines in its business plans.

By the end of the month, the department is expected to develop a cross-government shared services plan. With the deadline three weeks away, work is still ongoing.

At the same time, it will have to provide an assurance and reporting regime for all major projects, aimed at improving transparency over progress and ensuring deadlines are met.

The councils set up the LGSS in October 2010 to cover back office, professional and frontline services, including ICT, finance and HR. The aim of the shared service was to create efficiencies, as well as cut costs, across both councils, in the face of reduced central government budgets, rising costs and an ageing demographic. To generate revenue, the councils also planned to provide its shared services to other councils.

And, we have seen many successes so far across local government with considerable cash savings being made. Sadly though, this is a success which seems to be eludingcentral government.

Last month the National Audit Office criticised a number of central government shared services projects for not delivering sufficient value, believing that the true benefits from implementing shared services have not been realised. In its report it believes that theERP technology currently in place in central government isexpensive and not capable of handling the infrastructural changes and integration requirementsthat would enable significant cost efficiencies. I tend to agree.

The briefing: Shared ICT services: more than meets the eye? points out that sharing services ranks high on the agenda of possible responses by councils to austerity, and that many have been established.

However, a large number end before delivering the anticipated benefits, and for others the path to implementation can be far from smooth. These points are illustrated in the two case studies described in the briefing.

Speaking to UKAtv, John Callan said Cheshire East and Cheshire West and Chester councils have been sharing back office services such as ICT, HR and finance for the last three years.

He said the savings so far have run into "many millions" and insisted the opportunities for saving money continue. Indeed, there are opportunities to share other services too.

The Rt Hon Margaret Hodge MP, Chair of the Committee of Public Accounts, today said: "Government could save significant sums of money if it pooled back office functions such as finance, HR and procurement. Securing efficiency savings is essential to protect public services from further cuts that could otherwise have been avoided.However, shared service centres have failed to deliver the savings they should have. They cost £1.4 billion to set up, £500 million more than expected, and in some cases have actually cost the taxpayer more than they have saved.I welcome the Cabinet Office's ambitious new strategy for improving shared services. But unless it learns from the past it will end up making the same mistakes again.In particular the Cabinet Office must show much stronger leadership. In the past it has left it up to individual departments to decide whether they use shared services. Departments which do use shared service centres have been allowed to stick to their own ways of working rather than using a single system suitable for all, undermining the scope for efficiency savings.It is extremely frustrating that the Cabinet Office has ignored recommendations made by this Committee in our previous reports. We expect it to engage constructively this time around."

Delivering UK public services costs some £475bn a year - £240bn if one excludes procurement of goods, services and works. However, duplication in the public sector is rampant. There are thousands of independent and different finance and payroll systems in the public sector, even for organisations that have identical functions. Most organisations have their own IT, legal, estates and buildings management and procurement teams (back office services). Most have independent approaches to frontline activities as diverse as waste collection, social care and passenger transport.

Cornwall council has published a pre-tender for various shared services, for itself and four local NHS trusts, covering areas including IT infrastructure and devices, document management, helpdesk and consultancy services.

According to a notice published in the Official Journal of the European Union, the council is looking for a 10 year contract in partnership with local health organisations including Royal Cornwall hospital trust and community health organisations. The council says it is looking for a private sector company or a consortium to deliver the services and "to make substantial investment within public sector services of Cornwall".

Cornwall council has issued a tender worth up to £800m on behalf of itself and three local health organisations for a wide range of equipment and services, including ICT.

According to a notice in the Official Journal of the European Union, Cornwall council, Peninsula community health, Royal Cornwall hospitals trust and Cornwall partnership foundation trust are seeking an "innovative and incremental strategic partnership" with a company or consortium. The council revealed its plans to set up a "trading joint services venture" with a private firm in August.

Cornwall council is set to formally consider proposals to set up a new shared service organisation in partnership with a private company for the delivery of a range of services including payroll, telephony and web enhancement.

The council's cabinet will look at the plans, which the authority estimates could save about £2.5m, on 13 July. The plans were initially considered by the authority at the end of last year, but they are now being revisited following a "soft market testing" exercise to seek the views of potential private partners.

The council and four health organisations (Royal Cornwall Hospitals NHS Trust, Cornwall Partnership NHS Trust, Cornwall and Isles of Scilly Primary Care Trust,and Isles of Scilly Community Health Services) are looking to share IT services, procurement and document management.

Yesterday, a pre-tender notice was published by the council on the Official Journal of the European Union (OJEU) website. The notice said the local authority is seeking a supplier to “examine the opportunities and support the implementation of more joined-up procurement and commissioning between the council and health”.

Yet while the shared services project has brought concerns from councillors, unions and the public about what it means for the future of council services and jobs, Mr Double is confident it is the best way forward.

Shared services arrangements in local authorities are succeeding in saving money and lessening the impact of spending cuts, a Local Government Association (LGA) report has concluded.

The Services Shared: Costs Spared report, commissioned by the LGA and produced by Drummond MacFarlane, examined five shared services projects in detail and shed light on how efficiencies were being made by councils sharing back office functions, including HR, IT and legal services.

Self-service and shared services are recognised as a means of cutting local government costs, but few councils are putting the two approaches together to improve council websites, according to Socitm's Better Connected 2011 report.

Budget cuts and the drive to share services has encouraged some unlikely collaborations between neighbouring councils and other local public sector agencies, and some local authorities are now seeking to embed the practice by sharing their network infrastructures.

As network and telecoms contracts come up for renewal, they are finding the money to merge network infrastructures to achieve future savings, more efficient sharing at the applications level and to join up service delivery across agencies. They are also keeping an eye on the development of the Public Service Network (PSN).