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Cutting-edge shared services in Scotland are still rare, despite pressure on councils to reduce costs, says Jackie McGuire. As a regular reader of The MJ, I am constantly surprised by the number and diversity of shared service, joint venture and outsourcing initiatives being undertaken by English local authorities as they strive to achieve best value by addressing the need to cut costs through service reconfiguration. By way of contrast, developments of this nature are less prevalent in Scotland, although there have been a number of notable developments, including the Glasgow City Council partnerships and ALEOs, such as City Building, and Glasgow Community and Safety Services – which have their detractors as well as their supporters. More recently, City of Edinburgh Council has embarked on a programme to establish new service delivery partnerships for a range of functions to be procured through competitive dialogue. Additionally, a number of Scottish councils are progressing shared services, for example, the six councils in the Edinburgh, Lothians, Borders and Fife Forum which have identified a number of specific areas which offer greater potential for shared services and long-term savings, including payroll, procurement, road maintenance, mobile/flexible working, and integrated audit functions. But the big bang, giant transformation project of the kind favoured by Essex CC is not, as yet, the kind of model that is being developed in Scotland. While there have been murmurings about shared frontline services and shared management, cutting-edge change north of the border has been comparatively limited. Scottish councils are looking at ways of reducing costs. For example, Glasgow City Council is to shed 4,000 jobs over the next three years, and it's far from alone in its efforts to reduce the size of its workforce. However, in the Independent budget review commissioned by the Scottish Government and published in July, the Scottish public sector is urged to look at other means of costs reduction, including revisiting propositions which might not have been pursued vigorously or considered appropriate in less-demanding times, including strategic partnerships with the voluntary/third sector and private sector interests. The report identifies a range of service delivery options which ought to be considered, including joint ventures, collaborative delivery units and outsourcing. The question is, will Scottish councils take up these challenges and, if so, where are we likely to see developments occurring? In a new survey undertaken for Brodies LLP by Ipsos MORI, we sought the views of local authority chief executives and finance directors. The 39 participants indicated that in Scotland, few authorities currently collaborated at all in the provision of fleet maintenance, housing management, licensing, refuse collection or the provision of school meals, because few believed that collaboration has successfully achieved costs savings, either through workforce reductions or improved asset management. Nonetheless, most Scottish councils are considering collaboration with other councils over back-office services, roads maintenance and waste management, while fleet management and facilities management are areas most likely to be considered for collaboration with private sector organisations. Outsourcing happens, but not across the board. One-third of those interviewed indicated that their authority outsourced adult care services, and one-quarter, IT or IT support. However, outsourcing other services to the private sector is not common. Nevertheless, one-third say they are considering outsourcing facilities management, waste management and recycling. All but one of the chief executives interviewed agreed that councils in Scotland were likely to adopt collaborative working or shared services between public sector organisations. However, fewer than half of the chief executives and finance directors agreed that councils in Scotland were likely to adopt joint venture arrangements with the private sector, outsourcing of services on a service-by-service basis, or large-scale outsourcing. However, it is interesting to note that one-quarter would consider off-shoring contact centres, and there is a small body in support of off-shoring IT support or payroll, with finance directors appearing slightly more receptive to the idea of off-shoring than chief executives. All of the interviewees acknowledged the challenges they faced, but relatively few were currently collaborating on shared services. Nonetheless, it is this model of service provisions that is favoured as the means of tackling current and future financial challenges. Perhaps the pace of change is not fast enough to effectively address financial constraints, and there is a need to raise awareness of how the barriers to effective shared services have been addressed by those who have successfully engineered shared service arrangements. If so, there will have to be a closer examination of the barriers to shared services and alternative business models. Advisers will also have to deliver solutions which are both reliable and cost effective. On their own, long-term efficiencies may no longer be acceptable. Short-term results are also required. If the real worth of change can be identified in the short term as well as in the longer term, that may be the best driver for change. Jackie McGuire is partner and head of the public sector services group, Brodies LLP

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WHITEHALL

Don't take the low road to savings

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