Squeeze on public funds could prompt Scottish local authorities to consider shared service agreements, says expert

Yvonne Dunn of Pinsent Masons, the law firm behind Out-Law.com, said she was surprised at the lack of large scale shared services projects in the Scottish public sector and said that economic pressures are likely to see local authorities look towards such arrangements to help them deliver public services for less cost.

Dunn was commenting after East Ayrshire Council and South Ayrshire Council launched the Ayrshire Roads Alliance, a body set up to provide road maintenance, street lighting, parking enforcement and traffic calming services, among others, across the two local authority areas. The councils expect the shared services arrangement to provide more than £8 million in savings over the next 10 years.

"Economic circumstances can drive more shared service agreements," Dunn said. "The amount of money that local authorities have to spend in delivering services is diminishing at the same time as the cost of delivery is increasing. There has been a realisation that local authorities have to look at ways to reduce costs of delivery and shared services allow them to drive efficiencies."

"It is encouraging to see the Ayrshire Roads Alliance and we would expect the vanguard announcement of this arrangement between East Ayrshire and South Ayrshire councils to prompt other local authorities to assess how they too can make efficiencies by sharing services with other councils," she added.

Dunn said that local authorities and public bodies in Scotland have appeared amenable to entering into shared service agreements in recent years but said that there had been a lack of examples.

The expert acknowledged that, beyond the Ayrshire Roads Alliance example, there are many services that local authorities provide that can be shared, including back office administrative tasks, waste disposal operations and other front line customer services, as well as through merging IT or HR functions.

Dunn said, though, that a fear about losing autonomy and over the public's reaction to any potential job losses in a local area may be acting as barriers to local authorities entering into more shared service agreements.

"The key factor in making shared service agreements work is obtaining buy-in from senior stakeholders within local authorities," Dunn said. "It helps if one local authority takes the lead in driving the detail behind the service sharing but to make it work you require early engagement and the creation and agreement of key guiding principles for a deal so that the lead authority has a mandate on which to act."