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Corporate services: simplifying the system

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The anxious tapping of calculators and scratching of heads can already be heard around town halls as councils set about compiling next year’s budgets.

The “more with less” rhetoric is well rehearsed, the prognosis is bleak and the changes planned are radical; salami slicing individual budgets will no longer cut the mustard, the experts cry.

Councils will be looking at a suit of options to cut costs. But with all top-tier authorities obliged to conduct wholesale reviews of corporate functions by 2010-11, this would appear to be a good place to start.

Local Partnership’s Delivering Efficient Corporate & Transactional Services (DECATS) programme sets out to do precisely that and with some of the first wave of participating councils due to unveil their findings later this month, the time is ripe for a progress report. 

Six councils – Croydon and Haringey LBCs, Derby and Manchester City Councils, Hertfordshire CC and Wigan MBC – are at varying stages of the process and Local Partnerships is bullish about the programme’s potential.

“Authorities are going to have to save between 10% and 15% of their back office costs in order to hit Treasury targets and we believe those in the programme will be able to do that,” said Local Partnerships director, David Locke, who heads up the programme.

Step change

The DECATS programme was kicked off by Local Partnerships predecessor organisation, 4ps, back in August 2007. It pledged to deliver “a step change in efficiency and improvement in local authority corporate and transactional services”.

The emphasis is on standardising processes and where appropriate, sharing services. In addition, Local Partnerships is hopeful participating councils will be able to share solutions derived from the programme with each other.

Over the last two years concepts have been developed, business cases drawn up and this summer the number crunching began in earnest. So-called “diagnostic reviews” were carried out in Croydon, Derby, Hertfordshire and Manchester to ascertain where efficiencies could be made. Haringey and Wigan will follow in the coming weeks.

The diagnostic phase, which costs a not-inconsiderable £120,000 per council, involves a review of 32 local authority support functions, corporate and transactional practices, from customer contact to finance, IT and HR services.

Next, a business case is made for the council’s support services which comprises a ‘target operating model’ for each function and a plan to get from the current position to the target position mapped out.  

Simplification

PricewaterhouseCoopers (PwC) has been drafted in to carry out the reviews and public sector partner Chris Buttress is adamant the main goal is simplification of systems and tackling some of the “inconsistent, fragmented and duplicated ways” that councils operate rather than shared options.

“Rather than looking to shared services across several organisations, councils could significantly benefit from getting their own houses in order through standardising ways of working,” said Mr Buttress. 

Councils often have thousands of different applications such as IT systems, databases or software - a cull of which would dramatically increase efficiency, according to PwC. Comparable private sector companies can have as few as 10 core systems, the consultants said.

So, the theory seems simple: simplify systems, iron out the inefficiencies and watch the savings come rolling in. But is it working in the real world?

According to those on the ground, the early indications are encouraging.

Reverse

Through its diagnostic review, Croydon discovered that 60% of its staffing costs was on corporate or back-office services, leaving just 40% for the front line – a ratio it now wants to reverse. 

Croydon’s deputy chief executive Nathan Elvery, who presented the DECATS findings to his management board last week, said: “It has given us a whole new basis on which to make informed judgements.

“Local government is about service delivery so we do not want the majority of our resources to be in the back office. Our ambition is to address this over the next three years.”

Hertfordshire is also confident the programme will play a major part in achieving its ambitious goal to save up to £100m over the next three years.

“Customer contact, ICT systems and commissioning are among the main areas we’re looking at. We’ll be taking it to the members so they can consider what we might do for next year’s budget,” said director of strategy and partnerships John Sellgren.

Saving

According to Local Partnerships, Manchester is looking at saving £100m over 10 years through the programme.

And more councils are set to join. A seventh, as-yet-unnamed council is on the verge of signing up while more than 30 other councils have expressed an interest. Local Partnerships hopes other public sector partners, such as primary care trusts and the police, will join in the future. 

Moreover, all 150 top-tier councils are now required to carry out a “systematic review of their functions, systems and processes to drive simplification and standardisation” by 2010-11.

The stipulation, outlined in the government’s Operational Efficiency Programme, published alongside last year’s budget, could potentially generate more business than the programme can handle.    

“We hope to get ten to 15 through the process each year so there is a capacity issue in that we will not be able to do every upper tier council in the next 18 months,” conceded Mr Locke. 

The early stages of the DECATS programme suggests much can be done by councils before they even think about shared service or joint venture options and shows that there is long way to go on the efficiency journey.  

It would be naïve to think the programme will solve all participants’ budgetary worries but it will certainly give them some more options as they try to balance the books for up coming years.

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Readers' comments (1)

  • No it sounds really plausible standardisation.

    The reality is that top-down management dislikes things that aren't neat and tidy and lined up along divisional lines.

    Accountants are the worst for this.

    Of course this won't deliver service improvements. Just line things up nice and neat

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