Cash-stricken councils work together to save costs

Mark Sheldon is rather hoping a problem shared is not just a problem halved - more like a problem quartered. The chief financial officer at Cheltenham Council is leading the council in taking the shared services route, much like an increasing number of cash-stricken councils trying to comply with the Local Government Spending Review.

Last month, its Go Project officially got under way. It will be harmonising job roles and processing finance, IT and HR departments that will see Oxfordshire District and Forest of Dean Councils link up in November, with Cheltenham and Cotswold Council joining to complete the quartet by April 2012.

“The project is the outcome of discussions started last year between all the FDs in each council,” says Sheldon, who joins the likes of Dover Council, which last year hired a shared services director to link Canterbury and Thanet Councils, and Somerset Council, which has financial shared services with the county’s other public bodies.

“We see pressure to cut back office costs looming,” Sheldon says. “We believe that we can save 20 percent by removing the need for four payroll teams, four invoicing teams, four of everything in VAT accounting - and auditing.”

The logic of the shared services model is beautifully simple: remove duplication, achieve economies of scale, create self-service (staff input holiday dates, sick leave and other information); leaner finance teams are freed up to add more value, according to Sheldon.

Difficult times

The harsher reality is that shared services, either between councils or departments, are designed to strip out cost – financial professionals included – and this adds extra burden on those left behind.

Paul Brittain, head of finance at Norfolk County Council, says five finance jobs will be shed this year and 40 more will go next year, as it rolls out an internal shared services platform, bringing IT, HR, finance, legal, customer services and organisational development into a single function. Norfolk County Council spends £48m a year on support services (out of a £603m total budget), and it needs to save £5.3m from this as part of its contribution towards £60m savings for 2011-12.

“We are facing difficult times,” he says. “With less staff, we also need a financial reform project to see how we strip out unwanted expertise. Until this project, each services department had its own finance and accounting processes, so standardising it all through a single finance team is a challenge.”

Brittain’s solution will be to have finance business partners liaising with each of the services directors and report back to him and the board.

“[The finance department] is probably taking a bigger hit than the HR department in terms of cost savings,” he admits, but says that it is “manageable”.