Report of the Local Government Efficiency Review Group

8. Shared Services
8.1 Shared Services in Local Government
8.1.1 As noted in section 3.1, local authorities already have considerable
experience of shared service provision aggregated at national, regional and
local levels. This includes the use of various shared service models,
including:
• Joint procurement or commissioning of work – where two or more local
authorities jointly purchase a service or part of a service from an
external supplier;
• Lead authority model – where one local authority provides a service on
behalf of one or more others;
• Third-party provision – where two or more (or sometimes all) local
authorities engage a third party to provide a service on their behalf;
• In-sourcing – where one local authority has the skills and resources
needed by another local authority, with individuals working for another
local authority, usually on a temporary basis.
8.1.2 Although evidence of all of these approaches exists across several service
areas within local government, the Group considers that a further expansion
of the shared approach to service provision offers the potential to realise
cost savings, to re-engineer processes to align with new systems, and to
improve services to the public. Shared services offer the potential not just
to save money, but by economising can free up resources for more
productive work on core areas of local government service provision.
8.1.3 The Group considers also that while extensive use of shared service models
have been made for newer service areas such as the charge on nonprincipal
private residences (NPPR), local authorities also need to examine
existing services, and how some of these could be transferred to a shared
service model.
8.1.4 Section 85 of the Local Government Act 2001 allows any local authority or
any public body to enter into an agreement with another local authority to
provide a specific function on its behalf. Such agreements usually contain
provisions regarding the transfer of financial responsibility and the levying of
a charge for the provision of services on behalf of another local authority.
Section 86 of the Local Government Act 2001 allows for arrangements to be
made between two or more local authorities for the joint provision of
services. Section 87 of the same Act authorises the Minister for the
Environment, Heritage and Local Government to direct local authorities to
make an agreement under section 85 where he/she feels such an
agreement should be made, having first given the authorities concerned the
opportunity to make representations on the subject.
85