FactCheck: is bigger better?
The claim
“There is a strong case for asking councils to share more services.”
Secretary of State for Communities and Local Government Eric Pickles, Financial Times comment column 22 October 2010
The background
Eric Pickles has encouraged councils to get their thinking caps on and become more creative about how they provide their services and spend their money. The 28% cut in central government’s grants to councils announced by the Chancellor was, for some, a far worse settlement than they’d planned for.
Today, Hammersmith and Fulham, Kensington and Chelsea and Westminster announced plans to merge, creating a supersized council with a whopping budget of just under £2bn. They’d share all services, including education and children’s services, adult social care and environment services in a bid to save just £100m. And remember, the secretary of state’s warned cutting budgets shouldn’t mean cuts to frontline services.
But will sharing services and managers work, and how much cash could it save? We’ve been finding out.
The analysis
Sharing services is actually already being done by lots of authorities.
Hambleton Council in North Yorkshire shares services and staff with its rural neighbour Richmondshire District Council. Among other things, they share a chief exec, many senior managers, HR teams and do their procurement as one.
The councils reckon the only jobs that have been lost have been through natural wastage (which is around 8% per year in the public sector) and that last year the changes saved the two bodies £358k out of a total budget of just under £17.5m. This year, they expect that saving to be just under half a million pounds as more services have been combined. The councils’ chief exec Peter Simpson said the system has worked for them and envisages all services being shared in future.
Further south, Lincolnshire County Council says it shares legal services and procurement with its 7 district councils. And Worthing council told us it’s been sharing with neighbouring Adur council since 2007 – they now pool the majority of their services. Out of a total budget of £27.5m, the councils expect to share savings of £6.5m by the end of 2013/14.
All of these councils are pretty small in comparison with big hitters like Hammersmith and Fulham. And it’s at this level that mergers could start to crack at the joins. Iain Roxburgh senior associate fellow at Warwick Business School is a former council chief exec himself and supports sharing services – but has some concerns about how it would work in big cities.
Putting one person in charge of mega authorities like the London boroughs means that the chief exec would face a “frightening amount of meetings they have to attend and a frightening amount of essential papers you have to read,” he says. “You’d have to supplement that with a strong deputy team for each borough which could eat up some of those savings.”
The verdict
Well there does seem to be a strong case for services to be pooled – to a point. Our councils have found it works for them and the proof is where it matters – on the balance sheet. But for the larger authorities, sharing service could mean some new costs. And the Unite union is already warning that mega authorities would mean local councillors would become insignificant and have little impact on council decisions.
So, we’ll give Mr Pickles a fact rating on this one – he’s right to say councils can make savings by pooling resources. But there are warnings out there that a local authority’s ability to best serve its community could be affected if it got too big.
There are 4 comments on this post
[...] ‘Sharing Services’ Cathy Newman, FactCheck, posts on the requirement of Eric Pickles for local councils to share more services and comments on [...]
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[...] the West Country, Lambeth, Southwark and Lewisham in South London, Hambleton and Richmondshire in Yorkshire and Babergh and Mid Suffolk in East Anglia. Too many local authorities already share chief [...]
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I’m always intrigued when staff is reduced ‘by natural wastage’. Presumably the people who leave for other jobs are stepping up, so are likely to be the people you want to keep. And those who retire are by logic, the most experienced.
Add to that the fact that those who are leaving are not necessarily in the jobs you want to get rid of, forcing at the very least someone to be retrained to fill the vacancy.
And, of course, the overall workload is unlikely to reduce so the poor sods who are left are going to have to do more for no more reward.
It doesn’t sound ideal to me.
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The three options open to councils who need to make savings are to tough it out on their own by slimming down the internal staff, outsource if its cheaper or share with a number of partners. The 2006 Cardiff Business School research suggests that three to four sharing is the best number to be effective, whereas two is too few and more than four too complex.
A more important issue is the way in which senior managers in authorities are being thrust into these multimillion pound shared service programmes without appropriate training. Canterbury Christ Church University have launched the UK’s first postgrad certificate in shared services and maybe we need more of that training to get shared services right.
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