As councils explore every possible option for greater efficiency savings, The MJ and Fujitsu ask where the future of shared services lie. Heather Jameson reports.

For many local authorities shared services have seemed like the panacea for making the cash savings demanded by the Government. Already most councils have examined their options, the question is, what next? The MJ and Fujitsu set out to ask debaters at the Chartered Institute of Public Finance and Accountancy conference in Birmingham earlier in the summer.

The consensus around the table is the barriers to shared services have prevented them from making the progress they should. 'At one level, it's a complete no-brainer, but on another level, there are a number of problems.'

These obstacles can be technical, contractual, cultural – or any of the countless other hurdles that need to be overcome. 'And officers tend to keep politicians in the dark until the last minute,' one debater suggests, an attitude which can often add to problems later in the process.

'I'm interested in the sovereignty issues which stop shared services happening in two-tier areas,' claims one debater. No one wants to lose control – but then is it the right system? 'If a Martian landed…would we be able to explain it in a rational way?'

'There's not a lot of evidence for me that it is a no brainer,' argues one debater. He claims he would like to see real evidence of the savings which can be made, rather than just a presumption that sharing services must provide better value for money.

Others believe there is already plenty of proof available. 'There is academic evidence of the savings shared services can make. There are real barriers and real advantages to shared services. The deliverability of genuine savings and improvements have to be demonstrated.'

One way forward, would be if local government 'sacked all the middle managers' – a controversial idea – but the problem of asking people to share and rationalise their departments can mean they stand in the way of effective shared services because they end up trying to protect their own people and jobs.

Managing the expectations of everyone involved can be tough. Many local authorities want to sell their services, but few want to buy. It is just not possible for everyone to be the leader, when no-one is interested in following.

'The way forward is cloudy,' someone claims. 'Unless people are willing to buy shared services, instead of just selling them, there will be no market.'

Another debater is ahead of the curve on this issue. 'We have a shared service, and we have already banked £11m in savings. One of the things that has made it successful is that we don’t mind being a provider or a receiver of services, and our partner felt the same way.'

'The public sector is changing so much at the moment. We are now thinking shared services directly to customers, rather than just back office functions, is the way forward.'

'There's a lack of understanding. If you are thinking about handing over your services and getting rid of your staff, you have to understand what you are doing.'

Local government is traditionally not keen on taking risks, and it has to get much better at understanding the risks that are involved in developing shared services.

Our debaters believe shared services are the only option. 'We as a council are focusing on outcomes. If that’s shared services or another model of delivery, we don’t mind.'

'In my experience, while local government is allowed to chose the model of services delivery they want, shared services will come up in some areas but it will not be uniform across the country.'

And shared services may not always provide the savings that council feel are needed. 'There are economies of scale but there are no diseconomies of scale.'

'You can have the right systems in place but if you have the wrong people, it won't work and I’m not sure how to bottle that.'

The real way forward is to move in a single direction, and personalities are key. 'You have to start with a common vision. If you don't get the 'why', it won't work. We did have a common vision.'

Politics also play their part. 'My leader said under no circumstances will I have a shared chief executive.'

One service provider tells the group: 'We only target chief executives and leaders. Even if you target directors of finance, it doesn't work. They see you as competition. If you want to do it properly, you have to have political buy-in and you have to have chief executive buy-in.'

The issue of job losses surfaces. We hear of one major council which wanted to join a shared service, but it was not willing to make any job cuts. 'You have to be open, but in their case it was an absolute pre-requisite. You have to go in with your pre-requisites, but you may find they change.' We even hear from one debater who is willing to sacrifice his job – or go up against others in competition to take on the same role in a single rationalised job.

But it doesn't always have to be about cutting staff. 'When I have tried to get involved in shared services that would create jobs, its sellable to politicians.'

'If you look back ten years, people were expecting to outsource their problems.' But if that is the case, you are entering into a partnership where both sides are 'conning each other' from the start.

One debater points to the fact there are still a lot of two-tier areas, and the group acknowledges the current government is highly unlikely to attempt another round of reorganisation any time soon. It is, of course, the reason shared services have to work.

The future seems to be expanding shared services into new areas, not just back office: 'There is a lot of scope in front line services'. Now we are looking at a 'mushrooming' effect. When senior people leave, councils are increasingly looking to fill posts with shared staff, but it is 'largely opportunistic' rather than a planned move to join up.

And some local authorities – particularly districts – have ended up 'prostituting themselves, joining up different services with different partners in a bid to make ends meet.

There are examples of success. 'We have a shared vision but we have agreed to have a shared convergence but in future if there's a better value for joining up another service.'

While the Government's agenda to switch employment from the public to the private sector leaves councils with another opportunity for the future of shared services – should we be encouraging more mutuals?

But as one debater says: 'I'm a little cautionary about social enterprise.' Local government contracting out to mutuals and social enterprises will have to should the blame when they fail – and the public will have to accept that.

'The concept of failure – it is such a step from what we are at now. Entrepreneurs know they may lose it all a couple of times before they make it big.'

'It's wrong to discuss the subject as though all areas are the same. Its very easy to envisage a situation in which, because the way finance falls, we have no option but to deliver things in a different way.'

The feeling round the table is that not every service is suitable for outsourcing or sharing. Adult social care and council contact centres are two key aspects of local authority responsibility that our debaters are keen to protect.

We hear of one London borough which considered sacking all its staff and transferring them to a mutual or commercial operation – but as yet nothing so radical has been implemented.

Another option for the future may be to play the outsourcers at their own game. One debater suggests setting up a firm to sell to the private sector, rather than just to other councils and the rest of the public sector. Why can't councils be in a position to provide call centres for private sector firms?

But we are warned, there is a major difference between entrepreneurism and commercialism – and the mutual model sits alongside both. As one debater says: 'Mutuals have been around for a long time. Why aren't there more of them?'

Another adds: 'I don't mind working for different partners but I prefer to know who is taking decisions. That's not always clear when you are doing business with central government.'

If councils are trading with schools, why not with GPs and others. The clear feeling is, that councils will have to get far smarter in their business intelligence before they can move forward.

'If shared services has a future it will probably be exemplified by where the Greater Manchester Group of Authorities are in five years time. They are making significant progress.

'It wont just be about saving money. It will be about doing things because they are the sensible thing to do. The leader of Salford says, we are not interested in being a provider, we are interested in the best services we can provide for the people in Salford.'

The future of shared services and efficiency has plenty of options of where to go, but it seems local government has to get a whole lot smarter and more creative in the future.

So will shared services be enough to meet the savings needed? One debater puts it into perspective: -

'I need two and a half people to die for every person coming into social care. I have three people coming in for every one leaving. In a few years time, all we will be able to do is adult social care. It's the biggest problem facing UK Plc.'

The MJ Fujistu Roundtable Panel:

• Jeff Collingwood, director Baretous Consulting;
• Paul Blantern, chief executive of Northamptonshire CC and head of LGSS Northamptonshire CC;
• Rita Greenwood, managing director R&R Greenwood Ltd;
• Andy Mahon, partner BDO LLP;
• Damian Dewhirst, associate director Navigant;
• Margaret Lee,director for finance Essex CC;
• Jonathan Roberts, partner Grant Thornton UK LLP;
• Rachel Musson, assistant director- Accountancy and SAP Business Support Birmingham City Council;
• Jez Leaper, director KPMG;
• Neil Thornton,chief finance officer North East Lincolnshire Council;
• Graham Harris, managing director Dartford BC;
• Barry Marshall, head of finance Norwich City Council;
• Mike Suarez, executive director of finance & resources Lambeth LBC;
• Michael Burton,Editor The MJ;
• Heather Jameson, Deputy editor The MJ.