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LGSS Law shared service notches up £600k+ savings in 12 months

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The legal services team at Local Government Shared Services (LGSS) – the business support venture between Cambridgeshire and Northamptonshire County Councils – delivered savings of more than £600,000 in 2011/12, it has been revealed.

The figure was contained in a report – commissioned by the Local Government Association and written by Drummond MacFarlane – on shared services operations.

The £606,000 contributed towards total ongoing savings from LGSS of £3.79m for the 12 month period. The highest proportion of savings came from operations (£1.58m) and finance (945,000).

The report also suggested that:

  • Legal services made a “significant operating surplus” in 2011/12
  • The average cost of providing an hour’s legal advice had fallen from £63 per hour to £53 per hour in one year
  • Establishing the joint legal team had provided a critical mass in the delivery of specialist services
  • LGSS had been appointed as legal adviser to NHS Cambridgeshire.

LGSS, which was set up in October 2010, was the largest of the five shared services arrangements looked at by Drummond MacFarlane in preparing its report.

The others were: Hoople Ltd in Herefordshire; Devon and Somerset Fire and Rescue Authority; Vale of White Horse and South Oxfordshire; and Procurement Lincolnshire.

The report claimed that some £30m had been saved across the lifetime of the five arrangements.

But the LGA warned: “The majority of local authorities are already sharing services and, while the savings have been significant across the lifetime of the projects, they are nothing like large enough to make up for the sizable cuts to local government funding which are being made.”

The Association recently claimed in a separate report that popular services could be cut or stopped as a result of the financial pressures on local authorities, in particular from reduced budgets and the rising cost of adult care.

The LGA has also produced a new tool designed to help local authorities understand and track the benefits of sharing front and back office services.

Cllr Peter Fleming, Chairman of the LGA's Improvement Board, said: "Councils are the most innovative and efficient part of the public sector and this report demonstrates the kind of steps they are taking to save money and improve services.

"Efficiency savings aren't enough to make up the 28% cut in the money councils receive from central government, but measures like the shared service arrangements currently in operation at more than 200 local authorities do help to dampen the impact.”

Chris Pattison, Chairman of report authors Drummond MacFarlane, said: "Our research has shown that where public bodies plan well and sympathetically for the sharing of services and implement them early the rewards can be quite considerable."

The LGA claimed the report demonstrated clear financial benefits had been achieved “through reducing staff (removing duplication and management posts), integrating IT, reducing accommodation, and improving procurement”.

The report also concluded that:

  • The set-up and integration costs for merging services were modest with less than a two-year payback period for all the shared services analysed.
  • The shared services had succeeded in providing the same or better levels of performance at less cost.
  • These initial benefits were typically delivered rapidly with strong top-down leadership.
  • As shared services matured and evolved they were able to benefit from wider business transformation such as better use of IT and assets, improved processes and cultural change programmes.
  • Baseline financial and performance information was essential to make the case for change and track the benefits of shared services in terms of efficiencies and service improvements.
  • Good performance against organisations' key performance indicators were complemented by good staff indicators such as high staff morale, low staff sickness and low turnover rates.
  • Rapid implementation helped build momentum for change.
  • Expanding established shared services to provide services for other public sector partners in a locality was “a useful way to generate income and ensure efficiencies through greater economies of scale”.

A copy of the Drummond MacFarlane report, Services shared: Costs spared?, can be viewed here.