July 2024


Tough times for councils mean shared services must be the way forward

The stark economic challenges being faced by the UK public sector and local councils especially have been impossible to ignore recently. The sheer scale of the issue is becoming clearer over time with the Special Interest Group of Municipal Authorities (SIGOMA) indicating that a total of 26 local authorities (LAs) are at a near-term risk of issuing bankruptcy notices. These LAs are beset by debt (some accumulated in Covid days) and hampered by legacy infrastructure, and yet must support a population experiencing hardship driven by a cost-of-living crisis. The funding system appears to be broken regardless of a council’s location or political stripe, but what can be done to regain some sort of equilibrium?

This is a catastrophic environment that calls out for collective action, and for IT leaders to point directly to a greater use of shared services. Shared services are hardly new, and the approach has hovered in and out of fashion for decades, but their time has surely come. Quite plainly, authorities don’t have the necessary bandwidth, depth or breadth to act in isolation.

Pooling of services, resources and projects must be examined at every turn. By sharing core systems such as Finance and HR, authorities can gain not only economies of scale but also faster time to market, as well as access to best practices and replicated processes and workflows. Security, too, is improved through broader oversight, ESG goals become more attainable and hard-to-recruit (and retain) skills can be optimized and scaled. In turn, staff gain greater power and autonomy to address testing challenges that extend beyond local remits. Leaders also benefit from smarter procurement and streamlined contract and vendor management.

In the UK but also abroad, and notably in, for example, the Nordics and the Benelux countries, a culture of shared services is clearly becoming the way forward, alongside complementary models that support automation, rapid data insights and light-touch actions. That means cloud and self-service portals will often be the way forward for both staff and an increasingly digital-native, mobile-first populace.

But authorities will also need to be entrepreneurial as well as parsimonious. Raising revenues via everything from parking meters to street vendor licences and fishing permits will need to become a larger part of the revenue pot.

As Nick Mayes, principal analyst at PAC, writes in his foreword to the new executive report Reinventing the Case for Shared Services:

“Local government organizations in Northern Europe face an incredibly difficult balancing act. They are tasked with operating in as lean a way as possible in order to meet tightening expenditure constraints while, at the same time, delivering and enhancing vital services that meet the changing needs of the population. But it is not just a case of providing ‘more for less’. Citizens now expect services to be delivered at greater speed, through the channels that best suit their needs, while having greater transparency into quality levels.”  

Mayes is surely correct. Together with tightly run, tax spend-efficient services, today’s citizens always want experiences that replicate their everyday lives as consumers. They want compelling front-ends, excellent discoverability and fast processes unencumbered by roadblocks, delays or clunky interfaces. Sharing successful proven approaches makes more sense than reinventing the wheel and, amid the gloom, the PAC report points to some bright spots where innovation and creativity have led to enlightened outcomes.

We may think of the Municipality of Norrköping in Sweden with its Safe Meetings programme to provide remote human contacts in social services and planning, for example. The City of Vaasa in Finland has seen notable improvements in security through shared services compared to what its internal team of three staff could muster. Closer to home in the north of England, Chorley and Ribble councils have brought together 200 staff to share finance, governance, legal and other services. Further south, Watford and St. Albans have extended a collaborative effort, adding planning enforcement, building control and legal services to existing IT, HR, revenues, benefits, procurement, and financial services partnership.     

Some shared services are well established: Stafford Borough and Cannock Chase councils in the Midlands have saved about £1m per year since 2011 and continue to extend their efforts.

It’s hard to overstate the challenges that local authorities face. As ever, change will not be straightforward. Leaders must tread especially carefully on data sharing, be clear on goals, always cleave to citizen needs, and be ready to adapt when requirements or circumstances change. But desperate times call for desperate measures and nothing less than a wholesale embrace of a sharing culture will be enough to begin to address current challenges.

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