It’s almost six months since the Treasury’s Operational Efficiency Programme published its recommendations. At the time, I was doubtful about the extent to which public sector organisations would be willing to cut costs by sharing back office functions but there have been some interesting developments since then.
In theory, the sharing of back office functions should be easier to set up in central government than in local government, which is made up of hundreds of stand-alone sovereign organisations but, if anything, recent evidence shows just the opposite.
Not a lot has happened in central government. The Cabinet Office has suggested that other departments might like to use the shared service centres currently operating at HMRC and the DWP and Yvette Cooper has written to ministers telling them to get their fingers out and cut HR, Finance and IT costs, but that’s about it. There has not been a major push to consolidate back-office services across government departments.
In contrast, a number of local authorities are getting together to share services. Initiatives are under way in Lincolnshire, Gloucestershire, south London, Norfolk, Cambridgeshire and Northamptonshire to combine some HR, Finance, IT and Procurement services. Perhaps this is because local authorities are already feeling the sending squeeze that, for many in central government, still only exists as a topic of conversation.
Of course, a few local authorities banding together to share services does not necessarily indicate the start of a trend and, as Tony Travers said last week, there is still an air of unreality about the looming budget squeeze in many town halls. There is also the possibility that some of these joint initiatives might not deliver the anticipated level of savings.
That said, in the battle to cut public sector overheads, the evidence seems to show that some councils are ahead of the game. So far, local initiatives appear to be working more effectively than directives and exhortations from the Treasury.