Seven Scottish Councils outline ambitious shared services scheme

An ambitious business case for a shared services scheme has been outlined by seven local councils in Scotland that aims to generate annual savings of up to £30m after five years. The councils involved include East Renfrewshire, Inverclyde, Glasgow, Renfrewshire, East Dunbartonshire, West Dunbartonshire and North Lanarkshire. The business case proposes a two-phase implementation process. The first services to be shared will include ICT, revenue and benefits services, transactional finance and transactional HR. It is estimated that these are valued at about £111m, and once transitioned into a shared services model, could save the councils £19m per annum after five years.The report describes the second tranche of services as more "complex and specialist", and will "carry more risk than those in phase one", due to not being well tested in previous shared services models.The second-phase services are worth an additional £43m and include professional finance, professional HR, and centres of expertise such as VAT, internal audit and risk. The councils anticipate that if the integration is successful, it could generate a further £11m of savings per annum after five years.
The report indicates that there is "little financial benefit" in sharing call centres and face-to-face services, which are likely to be considered by councils at a later date, if at all. "The detailed business case is a prudent and robust plan to share support services. It presents significant financial savings for the councils involved that will continue to help protect essential frontline services and jobs," said councillor Jim Fletcher, leader of East Renfrewshire Council.
"These are the most ambitious proposals in the UK, and the Clyde Valley councils have been one step ahead of the financial difficulties facing the UK public sector," he added."Each council taking part would benefit directly from the shared support services proposals, and the more councils involved, the greater the savings for each." The councils are considering two options for the speed at which to implement the two proposed phases.
The report states: "In the first scenario, phase-one services are transitioned in over two years, embedded, and then phase-two services transitioned in from year five onwards. This could be seen as a conservative, medium-risk option. "In the second scenario, there is a rapid transition of both the phase-one and phase-two services over two and a half years, which could achieve higher savings by year five, but will carry more risk, primarily due to the rate of change."For scenario one, the councils estimate an annual saving of £18.6m by the end of year five, and an annual saving of £32.4m by the end of year 10.Scenario two will achieve annual savings of £30.1m by the end of year five, and £34.3m by the end of year 10. To ensure the councils are able to implement an effective shared service, an investment of £31m is required over the first five years, which will be split between capital for systems and infrastructure (£16m) and revenue for the change programme and staff release costs (£15m).
A publicly owned shared service organisation will be created to deliver these benefits, and it is estimated that this will involve the transfer of up to 3,357 staff. Over the first five years, primarily through voluntary redundancy and natural staff turnover, 25 per cent of these staff will leave the service. The Scottish public sector is facing a period of prolonged budgetary constraint, with total Scottish government spending falling by 11.6 per cent in real terms between 2010/11 and 2014/15.

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