Fresh drive for shared services to save £600m for highways frontline

Matthew Lugg: too many councils procuring alone

Matthew Lugg: too many councils procuring alone

Local authorities are to be urged to overcome “inertia” and secure the investment needed to set up shared services to deliver the same highways services at 15% less cost.

The Highway Maintenance Efficiency Programme has identified that fewer than a third (44) of England’s local highway authorities share any highways services. More than a fifth of these arrangements were not consciously entered into, but are  legacy contracts that multiple councils are party to following local government reorganisations.

The HMEP is to launch a toolkit with the aim of encouraging more councils to set up shared services. There are currently 32 shared services, nearly a half in operational maintenance, with the most popular services to share being winter maintenance and specialist maintenance services. Councils spend £4bn a year on highways services, so a 15% saving would equate to £600m.

The document will provide guidance on setting up and operating shared services, which the HMEP says can allow skilled highways staff to be retained, saving on redundancy costs, and can bolster councils’ direct service organisations by increasing their order book.

Matthew Lugg, the HMEP advocate, said he was encouraged by the examples of shared services in the sector he had identified in order to develop the toolkit. But he said that many authorities were not exploring the potential for shared services.

“There seems to be an increasing number of small councils going out to market to procure highways services independently. You have to question how they are going to achieve value-for-money and ask who is advising them to carry on doing things on their own.”

The Department for Communities and Local Government last week called on councils to enter into more shared services. Its document 50 Ways to Save claims that, if authorities saved only half that achieved by the three London boroughs participating in the ‘tri-borough’ initiative to establish shared services including transport, “it could deliver national savings of £2bn for councils”.

The Local Government Association’s improvement and innovation board chair Councillor Peter Fleming said that the savings from shared services to date underline “that sharing services is not enough to make up for the sheer scale of the funding cuts being imposed by Government. By their nature, savings become harder to make, not easier”.

The toolkit will acknowledge that upfront funding is needed to establish shared services, and that external funding, such as that previously provided by the regional efficiency and improvement partnerships, is no longer available. It  will provide guidance instead on developing invest-to-save options. The toolkit itself aims to reduce the upfront cost by providing an off-the-shelf methodology.

The Shared Services Toolkit will be launched at the Future of Highways Delivery event to be held on the 14 March. For more information, go to: www.highwaysdelivery.co.uk