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| | 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 centralisation
will allow these reforms
to be pushed through.
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 reorganisations
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 | |
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| | 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
organisations. 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 centres | |
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| | pick up new business.
Given that logically
shared services centres
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
centre. And if one local
authority sees the value
in setting up a shared
services centre and
marketing to those
around, then so will
those neighbours,
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
personalised 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 | |
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| | performance-related
rewards for officials
who lead the drive,
while recommending that
financial allocations to
organisations 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.
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