UK, Public Sector, Shared Services

Transforming the UK public sector through shared services II

What was so different about a broken sink in North London from one in West London that it required a hand-built computer system to deal with it?

The answers lie deep in the roots of the culture of local government, and certainly support the CBI’s view that shared services should be pioneered by central government where a high degree of centralization will allow these reforms to be pushed through.

Article provided by Top-Consultant.com

Given the statistic that in 2005 only 17% of local authorities were sharing services, it would be easy to assume that the whole sector was suffering from “not invented here” syndrome. But it’s more than that. Local government in Britain represents a fierce tradition of local autonomy that dates back to before the Norman conquests. Much of the sadness provoked by the local government reforms in the 1970s was that the reorganizations destroyed administrative units with over a thousand years of continuous
self-government, a tradition arguably more fundamental to British democracy than Magna Carta, the Bill of Rights or the Reform Act.

With this tradition came a strong sense of civic pride, a phrase that nowadays seems to belong to a different era. Local authorities developed their services in a vacuum, even to the extent of supplying utilities such as power generation or telecommunications. The rivalry this engendered was not so much “not invented here”, as “that might be good enough for Wessex folk, but the burghers of Barsetshire deserve something better”. In the absence of a developed services industry, local authorities were forced to invent their own structures and confront along the way the problems of patronage and nepotism which bedevil all such organizations. Indeed, my old union NALGO (now part of Unison) started, not as a trade union, but as a (National) association (of Local Government Officers) aiming – and to a very large extent succeeding – in imposing fair and standard conditions of employment, recruitment and promotion on all local authorities.

The snag with all this is that local authorities also became major providers of employment in their own areas, and thus the move to shared services involves stakeholder conflicts of horrendous complexity (not that many of those stakeholder conflicts don’t exist already).

The CBI notes that while shared services will inevitably involve job losses, jobs can also be created as shared services centers pick up new business. Given that logically shared services centers will tend to be located in areas of weak employment, this can only be a good thing, as exemplified by Westminster’s relocation of revenue collection services to Blackburn. There are one or two snags to this. For a start one can hardly expect Westminster employees to jump with joy when they read the news that their jobs have been handed to ten thousand proles in Blackburn, Lancashire. The second is that, having won that argument, it then becomes a case of which marginal constituency gets the shared service center. And if one local authority sees the value in setting up a shared services center and marketing to those around, then so will those neighbors, potentially undermining the business case.

So the route to shared services is likely to be a rocky one, as the CBI acknowledges, noting that even where local authorities have signed up for shared services, they tend to undermine the business case for demanding highly personalized services, even where there is no significant benefit over the standard ones.

The CBI recommends a blend of sticks and carrots to achieve shared services, introducing performance-related rewards for officials who lead the drive, while recommending that
financial allocations to organizations eventually be reduced, assuming that they have gained from the benefits of shared services. Any other problems come under the filler of “careful consultation”. With the public sector spending 2.5% of budgets on back office functions such as HR and finance, compared to 0.75% in best practice private sector companies, the prize is there to play for. The consultancy industry has the skills and infrastructure needed to deliver on this promise.

But I suspect it will not be that easy. Public sector unions, for example, are not as dumb as they sometimes seem. They know, for example, that the voters of Westminster will not be unduly troubled when the council abandons Blackburn for Bangalore. Once the local link is broken, why stop there. The word “offshore” only occurs once in the report, mentioned in passing in a private sector case study. But it’s a shadow that hangs over the whole argument. The CBI has outlined what looks like a knock-down case for shared services – making it happen, however, could be the UK consultancy industry’s biggest challenge.

By Mick James, Contact Mick with your views or suggestions at: mick.james@top-consultant.com