Local Government as Drivers of Shared Services

Transcription

1 SHARED SERVICES WORKING TOGETHER FOR THE COMMON GOOD Local Government as Drivers of Shared Services Caroline Creamer and John Driscoll

2 November 2013

3 Table of Contents 1.1 Shared Services: What does it Mean? Shared Services: Potential Areas of Collaborative Working Shared Services: From 'Competition' to 'Collaboration'...8 SHARED SERVICES AGENDA ON THE ISLAND OF IRELAND Shared Services in Northern Ireland Shared Services in Ireland Shared Services in the Irish Border Region Island of Ireland Overview...16 GUIDANCE FOR FRONT-LINE / SPECIALISED SERVICES Cost Savings and Effective Service Delivery: The Twin Lens Shared Services are also about Quality Improvements Proximity Creates Opportunity Strong Relationships and Leadership Buy-in is Key Supporting the Implementation of Shared Services Mapping General Competencies Potential Areas Cooperation in Shared Services Sharing Responsibilities: Emergency Planning Sharing Natural Assets: Opportunities in Tourism Sharing Financial Resources: Economic Development Sharing Expertise: Specialised Staff & Services Working Together for the Common Good: Local Government as Drivers of Shared Services...43 Page 1

4 This research on shared services in the public sector has been undertaken as part of the International Centre for Local and Regional Development s (ICLRD) EU-Funded initiative, CroSPlaN II. Funded under INTERREG IVA, and administered by the Special EU Programmes Body, this two-year programme promotes the development of a cross-border planning network by enhancing and promoting the opportunities that exist for collaboration and addressing identified areas of need. For further information, see Acknowledgements The ICLRD would like to thank the CroSPlaN II Steering Committee and the CroSPlaN II Shared Services Advisory Committee for their assistance, advice and guidance throughout the course of this research. We also convey our sincerest thanks to the numerous interviewees and focus group attendees who were consulted during the course of this shared services programme of activities; the views and opinions expressed contributed significantly to this work. Page 3

5 About the Authors Caroline Creamer is a Research Fellow with the National Institute for Regional and Spatial Analysis (NIRSA) at the National University of Ireland Maynooth. She is also Deputy Director of the International Centre for Local and Regional Development. A qualified town planner, Caroline's research interests include regional and local development and regeneration, spatial planning practice and policy, governance and planning reform agendas, and inter-territorial and cross-border development. John Driscoll is Director of the International Centre for Local and Regional Development. He is also Vice President of the Institute for International Urban Development, Cambridge, Massachusetts where he is engaged in research, teaching and consultancy activities that focus on regional and city development strategies. From 1989 to 2005, John was a Senior Research Associate and Lecturer in Urban Planning at the Harvard Graduate School of Design. He is currently a Research Fellow at the Joint Center for Housing Studies at Harvard University. John has over 30 years experience of crossregional planning, urban regeneration and economic development in the United States, the EU, Central and Eastern Europe, the Middle East, Sub-Saharan Africa and Asia. Page 4

6 Chapter 1: Introduction The reform of public services is high on the political agenda in every EU country and reflects the constant challenge for local and national governments in meeting local service needs at a time of severe financial restraints and declining public resources. With councils increasingly having to demonstrate 'value-for-money' and increased efficiencies, the concept of "shared services" has over the past six years become an integral component in enhancing the operational working and delivery of services within the public sector - and of particular relevance to this report, local government reform on the island of Ireland. While local Councils have shared activities over a long period, "the potential that sharing gives to restrain expenditure and improve service delivery has become more and more important" (Tomkinson, 2007: 1); this is especially so since the global financial crisis. Collaboration, based on a shared interest and responsibility, is now according to Sullivan and Skelcher, "central to the way in which public policy is made, managed and delivered" (2002: 1). Such shared services are increasingly becoming key tools in the delivery of local services - with the rigidity of both organisational and physical boundaries becoming more porous. They have, according to Tomkinson, a role in raising the "standards across local government in order to avoid what has become colloquially known as a postcode lottery (where the provision of services differs depending on where the recipient lives)" (2007: 5). A key principle lying behind the concept of shared services is that of "working together for the common good" (Sullivan & Skelcher, 2002: 1). Cooperation through a shared services agenda, it is contended, can "be a practical and cost-effective way for councils to share experiences and resources, tackle common tasks or take advantage of economies of scale" (Financial Sustainability Review Board, 2005: 85). In the current financial crisis, public sector agencies - and indeed the private sector - have been left in little doubt that they must challenge themselves to collaborate and engage with the shared services agenda. As noted by the Local Government Delivery Council, a key challenge for public services is proving the cost-effectiveness and value of a service in ways it has never had to do before; the ultimate outcome of this process being that "Services will only be provided where there is a strong business case that convinces funders that the results justify the investment" (2010: 7). A strong business case, however, should not be equated with the achievement of cost savings only. The challenges facing the public sector - and our communities - are becoming increasingly complex, both in scale and scope. When the global financial crisis is added to this, and in particular its implications for the budgets of central government departments and regional and local government, the requirement for a range of actors with complementary expertise to come together to work collaboratively on shared interests becomes implicit. Page 5

7 1.1 Shared Services: What does it Mean? Shared Services can mean many things and, unsurprisingly, there are many models - and hence definitions - of what constitutes a shared service. In the Republic of Ireland (heretofore referred to as 'Ireland') context, where the emphasis has primarily being on shared services in back-office functions, the concept of shared services is defined as "single centralised units providing specialised administrative and back office support services to a number of organisations, which are often geographically dispersed, leading to (a) greater efficiency, (b) increased quality of service, and (c) a more service focused ethos" (Department of Finance, 2012). Tomkinson (2007), in his analysis of shared services across local government in England, defines shared services as "the shared provision by more than one local council of a specified service in which service aims and objectives are mutually shared and for which local people are the end customers" (p.2). According to the Scottish Government (2007: 7), engaging with the shared services agenda should enable organisations to achieve economies of scale and skills; high quality service delivery; cost reduction; improved knowledge; and access to specialised skills-sets ( accessed 5th October 2010). In addition, the South Australian Financial Sustainability Review Board list lower staff costs, exchange of best practice, improved community outcomes, coordinated services, and improved compliance with standards and legislation as the core financial and non-financial benefits of the shared services agenda (2005). Across other divisions of the public sector, the definition of shared services is very similar. For example, within the higher education system in the UK, shared services is summarised as "institutions cooperating in the development and delivery of services, so sharing skills and knowledge, perhaps with commercial participation" (JISC Briefing Paper, 2008). The sharing of services is not an end in itself but rather it is a means of achieving a strategic goal or ambition (Local Government Group, 2011). The definitions noted above illustrate the different ways of sharing services and various models that are appropriate to activities and functions that are being shared. Each model has its own set of objectives and goals. Models include: Back-office: including Human Resources, ICT, Legal Services, Payroll, Accounts Payable, Procurement, etc.; Front-line: including shared chief executives and senior management teams; Service-Based: including transactional services such as registration of births and deaths, payment of rent, collection of taxes, etc.; and Asset Rationalisation: including grouping services in a single building (this can be with other public sector bodies), selling-off surplus buildings; sharing machinery - and its associated upkeep, etc. For the purpose of this scoping report, the International Centre for Local and Regional Development (ICLRD) - see Appendix 1 for further information - is specifically interested in those models, which focus on front-line and/or specialised services, and thus ensure better quality services for the end-user. There are also a number of distinct attributes to a shared service. According to the National Audit Office (2007; quoted in Northern Ireland Assembly Briefing Paper, 2012), there are five attributes to a shared service as outlined in Table 1.1. These attributes place an emphasis on both the efficiency of services and a customer driven approach and an emphasis on continuous process improvement. Page 6

8 Table 1.1: Distinct Attributes to Shared Services Distinct governance Standard processes Economies of scale Customer driven Continuous process improvement Five attributes of shared services A distinct organisational structure with a dedicated management team delivers the operational aspects of corporate services for one or more organisations Processes are standardised and streamlined Scale is achieved through combining processes previously executed independently A culture of service delivery is ingrained within the shared services centre. Resources are committed to key account management, monitoring key performance indicators and the achievement of service-level agreements. Dedicated project teams manage process change to drive improvements to both efficiency and levels of service. (Source: National Audit Office, 2007) 1.2 Shared Services: Potential Areas of Collaborative Working With the emphasis on 'back-office' shared services to date, much of the collaborative working across central and local government has been in the spheres of Human Resources (HR), finance, procurement and ICT. The growing interest in exploring the options for a shared services agenda within front-line services is resulting in other services coming into play. There are a growing number of instances where local and regional authorities are pooling or sharing service provision in areas such as emergency services, health administration and inspection, water and waste-water, tourism and area promotion (Byrnes, 2005). Similarly, as part of the ICLRD Executive Training Programme with the ten Councils that make up the Irish Central Border Area Network (ICBAN) 1, a working group was established on shared services. This was made up of senior management within local government, representing both jurisdictions on the island of Ireland - including Chief Executives, County Managers and Directors of Service. This group identified potential areas where shared services may be feasible; these included: emergency services / planning; training and capacity building; arts, heritage and culture; recreation services; and environmental and technical services. Echoing lessons learned, a fundamental conclusion out of this working group was that shared services must have a citizen-centric focus in their design and delivery. This recognises that "Spatial variations in community preferences are best accommodated through decentralised decision-making...local councils are likely to possess superior knowledge of both local demand side and local supply conditions" (Dollery et al, 2009: 211). 1 This programme took place between October and December 2011, and was funded by INTERREG IVA. Page 7

9 1.3 Shared Services: From 'Competition' to 'Collaboration' Across local government, the emphasis has for too long being on 'competition' rather than collaboration. Joint working was regarded as too complex on an intra-jurisdictional level - never mind on a cross-border basis. Commonly cited barriers to implementing shared services - or even having the discussion - include: cultural differences, political concerns around autonomy, protection of roles internally, and different visions in terms of end-goal. While all of these can be overcome, they have led to Councils being unwilling to share ideas or even to consider the option of rolling-out a joint service. One consequence of this has been a duplication of services within close proximity of each other, particularly on a cross-border basis. Questions of trust, power and motive are key to any form of shared service (Sullivan & Skelcher, 2002). Of these, TRUST is key within any potential partnership to progress a shared ambition. There must be a willingness to open the organisation - and the books - to scrutiny. There must also be recognition within each Local Authority as to its core competencies and specifically, those sectors in which it considers itself a 'leader'. Given that there is no reason why a Local Authority cannot be engaged in a number of shared service programmes involving different partners and using a range of models, it is essential that Councils play to their strengths. For example, in such a scenario, each Council would specialise in a particular service and contract out its services to the other members of the shared services programme. In Spain, voluntary associations of local authorities - known as Mancomunidades - cooperate together to deliver effective and efficient services. This model of shared services is supported not only by regional government but also by the existence of a legal framework to facilitate this inter-municipal collaboration (O'Keeffe, 2011). The Mancomunidades have an independent budget and financial autonomy from the participating bodies and provide an extensive range of local services that are either compulsory on the part of local governments or undertaken on their own initiative (see Section 2.7 for further information). As noted by O'Keeffe, "the most common areas of action are sanitation and health, education, employment promotion, maintenance of public spaces (parks, gardens and cemeteries), water distribution and conservation, waste collection and management and electrical connections" (2011: 8). Research in support of promoting shared services across local government within Australia proposes that there are five criteria for identifying appropriate services for shared delivery. These criterion, which can be considered by local governments elsewhere - including on the island of Ireland - are: a) Strategic Services - these require that expert local knowledge be retained 'in-house'; b) Non-strategic, low-risk, rule-based and high-volume transaction processing services; c) Services requiring access to the latest technology without on-going significant capital investment; d) Requirement for specialist expertise; e) Services in which expert skills are not readily attainable by all Councils but which could be garnered through service sharing (KM Management Consulting, 2005). That Local Authorities must stop competing with each other is widely accepted; as is the argument that they must be prepared to 'open up' and share their own experience and learning. This should not be seen as a pre-requisite of a shared services agenda but rather, should be embedded within the corporate terms and responsibilities of Councils. It is essential now, more than ever, that Local Authorities are committed to sharing their learning, while also being prepared to learn. Page 8

10 Chapter 2: Overview of Current Shared Service Initiatives As highlighted in Chapter 1, there are many motivations lying behind the adoption of a shared services programme. These range from the achievement of cost reductions through economies of scale and standardisation, to the deepening of partnerships, the enhancing of capacity, and improving the quality of services and the customer experience. The dramatic downward shift in funding levels combined with the loss of staff and the need to still maintain services has led both central and local governments to actively pursue cost savings in how services are delivered - hence a current focus on a shared services agenda. Presently, shared services within each jurisdiction on the island of Ireland focuses largely on back-office functions for example, information technology, human resources and procurement. This section provides a brief overview of the shared service initiatives currently being rolled-out by central government in both jurisdictions, the drivers behind these and, where relevant, the extent to which other tiers of government are involved in this agenda. Having reviewed the shared services programmes for Northern Ireland and Ireland, this chapter briefly examines the role of the crossborder networks in promoting a shared services agenda to date - albeit the resulting initiatives are not always branded as 'shared services' - and the emerging all-island agenda in this area. Finally, this chapter considers the issues emerging from recent discussions with senior personnel in local and regional government, North and South, and the key findings from the 2012 study by the International Centre for Local and Regional Development (ICLRD) on Shared Services Across Local Government: Sharing International Experiences (Peel et al, 2012). The conclusions of this timely report provide guidance for scoping potential approaches to front-line/specialised services in the Irish border region. SHARED SERVICES AGENDA ON THE ISLAND OF IRELAND 2.1 Shared Services in Northern Ireland In Northern Ireland, the Northern Ireland Civil Service Reform Agenda includes a shared services agenda as a core element of achieving efficiency savings and improving productivity. The Gershon Report of 2004, an independent review of public sector efficiency in the UK, notes a series of efficiency targets for the Northern Ireland Office including: a rationalisation of back-office functions including HR, ICT, and corporate services across government departments; improved procurement; improved working practices in the prison service, investment in core ICT Infrastructure and an increase in the front-line time of the PSNI (p.54). Gershon further noted that such reforms would necessitate a reduction in the number of civil service and public sector officials - a consequence of both reform and a shared services agenda that often paints the concept of shared services in a poor light. As reported in Eolas, Northern Ireland provides some of the UK s most developed examples of government shared services, partly due to its small geographic size and separate civil service. Following on from the Gershon Report, seven projects were established from October 2004 onwards: Accounts NI; The Centre for Applied Learning; HR Connect; IT Assist; Network NI; Records NI; and Workplace The latter, Workplace 2010, would have involved the sale, refurbishment and leaseback of office buildings, but was cancelled in February 2009 with the collapse of property prices. Page 9

11 This 'change programme' has been overseen by the Department of Finance and Personnel s (DFP) Information Strategy and Innovation Division. A shared service solution for the North s health and social care sector is currently being investigated through the model of a BSO or Business Services Organisation (31st March 2011). In January 2010, the Enterprise Shared Services (ESS) - a Directorate within the Department of Finance and Personnel - was established to improve cooperation and co-ordination between common corporate services such as HR, finance, IT and training'. ESS brings together responsibility for Account NI, The Centre for Applied Learning, HR Connect, IT Assist, Network NI and Records NI into a single Group Level command within DFP. The ESS is focused on supporting the Northern Ireland Civil Service (NICS) which, in turn, supports the work of twelve government departments 2. The ESS Annual Report for the period ending March 2013 notes that: "ESS performs a critical supporting role to the NICS and its Agencies. The 25,000 staff could not do their jobs without the range of services we deliver. In essence, we are fulfilling our purpose of providing shared services which enable our customers to focus on delivering their core business". However, there has been some criticism of Northern Ireland's shared services programme. For example, the Northern Ireland Public Sector Alliance has criticised HR Connect as wasteful and damaging to the morale of staff across all departments, while Northern councillors opposed single business services and waste disposal organisations in 2010, the end result of which was the cancellation of a long-awaited merger (Eolas, 31st March 2011). Introducing reform and new methods of delivering services at local government can be more complex than at the centre, due to its fragmented nature. In addition, in the context of both Ireland and Northern Ireland, local governments have less room to manoeuvre given the centralised nature of service delivery and a reliance on fiscal transfers from central government to meet local budgets. Key rationales for the Reform of Public Administration (RPA) in Northern Ireland is the achievement of economies of scale in the delivery of public services and the devolution of certain functions to local authorities. By May 2015, the newly configured 11 Councils in Northern Ireland will be responsible for new functions that will include: Planning: including local development plan functions, development control and enforcement; Urban Regeneration: including environmental improvement schemes, area based regeneration, community development; Enhanced Local Economic Development: including functions transferred from Invest NI; and Local Tourism: including small-scale tourism accommodation, business support and advice to developers on tourism policies. A more detailed overview of the services being transferred is noted in Chapter 3. 2 These include: Office of the First Minister and Deputy First Minister; Agriculture and Rural Development; Culture, Arts and Leisure; Education; Employment and Learning; Enterprise, Trade and Investment; Environment; Finance and Personnel; Health, Social Services and Public Safety; Justice; Regional Development; and Social Development. Page 10

12 2.1.1 The ICE Programme Introduced in 2010 as an alternative to the Business Services Organisation (BSO) proposed by PwC in late 2009 as part of the local government reform process, the ICE Programme (Improvement, Collaboration and Efficiency) is a Local Authority-driven initiative through the Northern Ireland Local Government Association (NILGA) and Society of Local Authority Chief Executives (SOLACE). The programme focuses on collaboration and the potential for shared service development between Councils at local, sub-regional and regional levels (McSorley, 2010). Councils in Northern Ireland have been involved, to varying degrees, in collaborative practices with neighbouring Councils and local partners over many years and they have also undertaken individual efficiency and improvement measures to ensure that services are delivered in the most cost effective way possible. ICE builds upon these successes and draws on the experience of other multi-sector partnerships e.g. the Regional Improvement and Efficiency Partnerships (RIEPs) in England. Increasingly, the ICE Programme is taking on even greater relevance as a vehicle to deliver on certain customer facing and support services in new ways; largely focused on a regional and sub-regional delivery scale and delivering value for money. The ICE Programme builds upon existing corporate planning processes and encourages a systemic review and improvement of local government at all levels. While the ICE Programme places an emphasis on collaborative working, Councils remain the key decision-makers, setting their own strategic direction while, at the same time, supporting local communities and the local economy. Presently, there are five ICE work streams: 1. Customer Facing Services: this includes Service Review and Improvement (SRI) Pilots being undertaken in Environmental Health, Waste Services and Building Control; 2. Human Resources: A draft vision has been prepared in respect of a unified pay and reward framework for local government, with the HR workstream also looking at a local government web-based recruitment portal for Councils; 3. Support Services: this covers such services as insurance and brokerage and is examining opportunities for Councils to jointly tender for such services; 4. Procurement: A Local Government Procurement Strategy has been developed while the Procurement Group has also been working with procurement officers in Wales on the development of accountable procurement practices which demonstrably support local businesses and economies; 5. Information Technology: Network NI has provided capital funding for implementation of this IT shared service, leading to systems convergence, with 25 of the 26 Councils either already connected to Network NI or in the process of joining. An independent review of the ICE Programme is underway. Martin Horton of SOLACE Enterprises 3 has been commissioned to undertake this work, the cost of which will be met by the NILGA secretariat. This exercise will include an assessment of governance issues, representing an eighteen month stock take of progress achieved, with recommendations for further development of the I.C.E. programme and its culture changing work (ICE Newsletter, June 2013). 3 SOLACE Enterprises is a pioneering public service improvement company which, through a collaborative approach, is committed to improving public service delivery and quality across the UK. See for further information. Page 11

13 2.2 Shared Services in Ireland The emergence of the shared services agenda in Ireland goes back to early and the first inklings that maybe all was not well with the Irish economy. In January 2007, the then Taoiseach announced that he had invited the Organisation for Economic Cooperation & Development (OECD) to undertake a major review of the Irish Public Service to make recommendations as to future directions for Public Service reform. The OECD's report, Public Management Reviews - Ireland: Towards an Integrated Public Service, was published in At the same time, an efficiency review was announced in 2008, which cut across all spending programmes. In order to achieve and maximise efficiency gains in the sector, local authorities were asked to identify areas of possible efficiency gains, including in the area of shared services. The resulting report, Report of the Special Group on Public Service Numbers and Expenditure Programmes, was published in The Fine Gael/Labour Programme for Government, published in March 2011, began a review of services that could be combined between two or more local authorities, giving examples of human resources, technology support and fire services. The potential for cooperating across Local Authority boundaries is a priority of the Irish Department of Environment, Community and Local Government s Local Government Efficiency Review Group (LGER) which, in its July 2010 report, highlighted the need to obtain optimal efficiency in the delivery of local government service areas across functional boundaries, including joint administrative arrangements between county/city areas, and between town and county areas within Ireland. This report included 106 recommendations with a target of 511million in savings. Shared services, as a key reform initiative mandated by Government, was further reiterated in the Public Service Reform Plan published in November 2011 by the newly formed Department of Public Expenditure and Reform. Within this Plan, the key drivers for shared services were identified as: Cost reduction; Maximum benefits from the existing skill sets in the sector; Efficiencies in service delivery through the use of technology and training; Improved customer service; Ease of interaction for the citizen and business with the Public Sector; and Clear evidence of value for money (CCMA, 2013). These resemble the distinct attributes of shared services as outlined by the National Audit Office (2007) - with the exception of cost reduction (see Table 2.1). The inclusion of cost reduction by the Department of Public Expenditure and Reform is not surprising, however, given its core remit. Despite this, it should be noted that the Plan also noted that the international evidence suggests that the cost savings associated with shared services are usually less than anticipated, and that the cost savings factor is but one of a number of main drivers influencing the shared services agenda - the one key factor being effective service delivery. More recently, the Action Programme for Effective Local Government Reform, Putting People First, stresses the importance of developing cooperation between particular local authorities on a jointly administered basis to secure the rational and effective delivery of services (DoECLG, 2012). Page 12

14 Table 2.1: Shared 'Attributes' and 'Drivers' of Shared Services Distinct governance Standard processes Economies of scale Customer driven Continuous process improvement Attributes of shared services A distinct organisational structure with a dedicated management team delivers the operational aspects of corporate services for one or more organisations Processes are standardised and streamlined Scale is achieved through combining processes previously executed independently A culture of service delivery is ingrained within the shared services centre. Resources are committed to key account management, monitoring key performance indicators and the achievement of service-level agreements. Dedicated project teams manage process change to drive improvements to both efficiency and levels of service. Drivers of Shared Services Maximum benefits from the existing skill sets in the sector Ease of interaction for the citizen and business with the public sector Clear evidence of value for money Improved customer service Efficiencies in service delivery through the use of technology and training Cost savings N/A Cost Reduction (Source: Blended Chart - National Audit Office, 2007 & CCMA, 2013). Taken together, these reports and plans place an emphasis on creating a national, regional and local governance system that is "leaner", "smarter" and "efficient". In the case of local government, they argue that Councils should act in unison as a 'sector' rather than as individual authorities. To assist in the delivery of public sector reform, the Public Service Reform Oversight Group (PSROG) for Local Government 4 was established in December This group is charged with making decisions on behalf of the sector and report - horizontally and vertically - on the progress being made in implementing the recommendations of the LGER Group. An interim report by the County and City Manager's Association (CCMA) in July 2012 noted staff reductions to the order of 8,243 personnel and total cost savings of million since While the sector was congratulated on these achievements over a relatively short timeframe, the Minister for Local Government demanded further savings by calling for a greater focus on the potential of shared services, procurement and greater flexibility in work practices. In terms of the latter, this could be argued to be a 'big ask' given the reduction in staff numbers 5 as a result of early retirement schemes and embargos on recruitment. 4 Membership of this grouping includes representatives of the local government sector, the DoECLG and the private sector. 5 This has been estimated at approximately 24% headcount reduction by the Local Government Efficiency Review Implementation Group since its peak (LGERIG, 2013). Page 13

15 The 2013 CCMA report highlights how, in the current programme, procurement and shared services have been identified as the key platforms for the delivery of services with a focus on procurement efficiency savings and the identification of 31 shared service projects classified by (see Table 2.2): Transactional Shared Services: involving Payroll, HR, Treasury Management, Procurement, ICT Back office; Centres of Excellence: including services such as legal and veterinarian services; Shared Technology: including technological innovations such as the 'Fix Your Street Programme', and open source initiatives; and Shared Procurement Initiatives: for example, a regional shared library book procurement tender among three of the Dublin Councils, namely Fingal, South Dublin and Dún Laoghaire- Rathdown County Councils. In response to the breath of the shared services agenda at local government level, and to allay worries among Councils on their collective capacity to deliver, the CCMA Programme Management Office (PMO) was established in January Resourced from within the sector, and supported by all Local Authorities, the PMO is responsible for leading and coordinating the sector's response to the Public Service Reform Plan and the recommendations of the LGER. Under the CCMA's Shared Services Plan, two deployment options have been agreed by the PSROG and PMO for the delivery of these initiatives: A partnership model involving the PMO and a selected lead authority to provide the service: to date, for example, Kerry County Council is the lead authority for the Local Authority National Procurement Office; Offaly County Council is lead authority in charge of waste collection permitting for local authorities; while Dublin City Council manages the controls at a national level for the internal movement of hazardous waste (LGERIG, 2013). Table 2.2: Classification of Shared Services across Local Government in Ireland Transactional Shared Services Centres of Excellence Shared Technology and Enablers Shared Procurement Initiative Shared Payroll Legal Services Fix Your Street Library Service Procurement Transactional HR Veterinary Services Local Government Portal Paid Parking Treasury Management Knowledge Management Open Data Online Services Public Lighting Maintenance (both procurement and centre of excellence) National Procurement Office Staff Welfare Open website Development Accounts Payable Internal Audit Spatial Information- GIS Page 14

16 Transactional Shared Services Centres of Excellence Shared Technology and Enablers Shared Procurement Initiative ICT Back Office Public Lighting Maintenance (both procurement and centre of excellence) Social Media E-Invoicing DTTAS-Pavement Mgt. Sys CRM-MS Dynamics Integrated Inspectorate CRM- Open Source Housing Assessment Open source- document Management Debt collection Register of Electors Laboratory Services Corporate Services Priority Projects Peer Reviewed PSROG Reviewed (Source: County and City Managers' Association, 2013). A sectoral model where design and implementation lies with the CCMA or Local Government Management Agency (LGMA) who will then, in turn, select a Lead Authority to lead the delivery of the service: this includes, for example, speciality services such as veterinary services, legal services and housing assessments (CCMA, 2013: 39). Under both options, 'Lead Authority' status is awarded to Councils on the basis of a bidding process. 2.3 Shared Services in the Irish Border Region It is worth noting that there is another player in the shared services space - that of the Local Authorityled cross-border networks, some of whom have been in existence since the mid-70's. And while their work programmes are not always necessarily thought of in terms of 'shared services', this is exactly what they do. The three cross-border networks, East Border Region Ltd. (EBR), Irish Central Border Area Network (ICBAN) and the North West Region Cross Border Group (NWRCBG), have for example been providing a dedicated service to their member Councils in respect of the INTERREG Programme. The networks enable the development of joint cross-border programmes between the Local Authorities; this includes management of the INTERREG application process on behalf of the authorities and, where successful, management of the approved Project. Projects Page 15

17 developed and managed through EBR, for example, tend to involve all ten-member Councils as partners. To facilitate the delivery of such programmes, EBR puts in place a dedicated Partnership Agreement with each Council and, in some cases, other partners. Whilst each Council implements their element of the project on the ground, the INTERREG element is managed by EBR. Local Authorities on both sides of the Irish border have been involved in many joint initiatives over the years, for example in waste management and tourism, but these have largely tended to have been on an intra-jurisdictional basis. It has mainly been through the cross-border networks that the Councils have begun to think of the sharing of resources on a cross-border basis to meet a common need. While the cross-border networks have in recent years being primarily focused on the delivery of INTERREG Programmes, the resulting projects have further contributed to the concept of sharing services on a cross-border basis in the Irish border region. The model employed by the networks has been relatively successful, and there are undoubtedly aspects of these processes which should be considered for future shared service programmes being led by local government, including initiatives in biodiversity and energy (in which EBR has experience), and GIS and data capture and analysis (in which both NWRCBG and ICBAN have expertise). The networks thus demonstrate how local authorities can work together for mutual benefit and provide specialised and shared service to local governments. 2.4 Island of Ireland Overview Currently in both jurisdictions, there is a mix of centralised, devolved and decentralised responsibilities, all of which are very much in transition over the next two to five years. In the shortterm, central government agencies in both Ireland and Northern Ireland will be looking to increase efficiencies in those areas where central government has a strong role i.e. payroll, HR, Treasury Management, procurements, accounts payable and ICT. These shared services are in effect mandated or driven by central government administrative priorities. The downward pressures on fiscal revenue has been a strong reason for seeking cost savings through efficiencies and different reform mechanisms, some of which fall directly under Local Authority control and others which do not. At the same time, there appears to be an emerging confidence at local government level that, based on their competencies and local knowledge, they themselves are in a unique position to take a lead role in identifying, developing and implementing a shared service programme based on their core functions - front-line services. Councils in both jurisdictions, for example, are very aware of their growing responsibilities in the areas of community and economic development. Such emerging opportunities will be discussed further in Chapter 3. GUIDANCE FOR FRONT-LINE/SPECIALISED SERVICES As part of its INTERREG IVA funded programme of activities, administered by the Special EU Programmes Body, the ICLRD conducted two short action research reports into the concept of shared services, namely: a) Shared Services: Propositions for Local Government Collaboration b) Shared Services Across Local Government: Sharing International Experiences Page 16

18 Both of these reports are available to download from the ICLRD website ( As well as engaging with the international literature on shared services, the reports draw on a series of case studies that consider varying aspects of the rollout and delivery of the shared services agenda in the public sector. Case studies included the Clyde Valley (Scotland), Asturias (Spain), New York (U.S.A.) and Ontario (Canada). Some key findings emerging from this research by the ICLRD, and subsequent discussions and focus groups, on the theme of local government-led shared services programmes are now highlighted. 2.5 Cost Savings and Effective Service Delivery: The Twin Lens Within central government administrations in Ireland and Northern Ireland, the issues of cost savings and effective service delivery are two of the main drivers influencing the design of shared services programmes. Cost Savings Local government across the island of Ireland has not escaped the austerity of the global financial crisis of 2007/2008. Rather, the cumulative reduction in financial resources available to support local government services has, to date, been significant. The March 2013 report by the CCMA notes that since 2008 there has been a 28% reduction in Exchequer funding for local government in Ireland, and a 24% reduction in staffing (CCMA, 2013). Similarly, within the United Kingdom, a 2013 report from the National Audit Office highlights that between April 2011 and March 2015, Westminster plans to reduce the funding of local authorities by 26% in real terms; with "the overall reduction of local authority income forecast to be 14 per cent in real terms and further reductions have since been announced". The on-going Reform of Public Administration (RPA) in Northern Ireland is also creating a significant level of uncertainty with regards to future funding levels for the new Councils in Northern Ireland. Given the financial challenges facing both central and local governments, the development of a shared services agenda has initially been in response to these fiscal pressures. Yet, experience has shown that the cost savings associated with sharing services and/or merging local authorities are usually less than expected. For example, a long-running local government efficiency programme in New York State in the United States found the average savings among sixty-four completed projects for shared services and municipal consolidation was in the order of just under 5%. A September 2012 Northern Ireland Assembly Briefing Paper suggests a higher figure; "shared services have the potential to deliver savings in operation costs of around 11-15%". In regards to the cumulative experience of the shared services agenda, the Scottish experience is closely regarded given the considerable efforts undertaken towards a shared services agenda. Audit Scotland (2011) noted that sharing services may not necessarily reduce costs although they may provide more effective service delivery. The level of savings that are achievable through shared services depends, according to the National Audit Office (2007) and re-iterated by the Northern Ireland Assembly Briefing Paper (2012), on how efficient an organisation is before it embarks on a project. Furthermore, as noted in previous ICLRD research on shared services, and echoed in the more recent report from the CCMA report, the roll out of shared services will require an up-front capital investment to finance the design, development and implementation of new structures and technology necessary to ensure success (Peel et al, 2012: 47). Page 17

19 Effective Service Delivery The issues of more effective service delivery linked to new governance arrangements begin to take on more importance over the shorter-term goal of cost savings. As noted in the ICLRD Canadian case study, cost-cutting alone can generate temporary improvements but, after a few years, the pressures build up again (Commission on Reform of Ontario's Public Services, 2012). A 2012 review of previous and current attempts of public service reform in Ontario Province, Canada notes, "The imperative to restrain spending should instead be an opportunity to reform programs and service delivery. Simple cost-cutting can be effective in hitting near-term deficient reduction targets but it does not encourage longer-run fiscal stability or allow for reforms that will generate more value-for-money spent (Commission on Reform of Ontario's Public Services, 2012: iii). While the stark reality of budget cuts at both central and local government within both administrations on the island of Ireland have focused the discussion of shared services on achieving cost savings, there is a strong case to take a longer-term perspective that emphasises improvements in the quality of services and the achievement of efficiencies. Furthermore, while it is hard to predict exactly when, there may be a bottom point in regards to continued budget reductions for local authorities, an argument currently being raised by the CCMA (2013). A recent National Audit Office report on the financial sustainability of local government notes that the scope for absorbing cost pressures through reducing other lower-cost services is diminishing (Comptroller and Auditor General, 2013). It has been noted that debates on implementing shared services in Scotland has focused too much on the solution as an end in itself rather than a means to achieving better outcomes for service users and residents (McKinlay, 2011: 45). Increasingly, there is a growing argument that shared services agendas need to be evaluated as a function of the services provided, rather than the form it takes. 2.6 Shared Services are also about Quality Improvements. As noted above, the real opportunity in local government reform lies beyond the single lens of cost savings. The quality of the services delivered and their contribution to the quality of life of the community and its residents is now understood to be as important in the longer-term economic and social sustainability of a community. As noted by the Local Government Association, there are a number of key lessons emerging from previous and on-going shared services programmes, which determine the success of shared services; they include: Strong leadership; Visible commitment (buy-in) from senior managers and councillors; Good project management; Effective consultation with the trade unions and staff representatives; and Good communications with staff (LGA, 2012: 7). Two of these factors of success were repeatedly highlighted in previous ICLRD research and in discussions with senior personnel involved in the public sector; they were: strong leadership (see Section 2.8 below) and the buy-in of staff to the process of shared services (see Section 2.9 below). While the use of shared services has historically tended to focus on back-office services, there is a shift in focus towards front-line services. This, in turn, is driving an interesting convergence between what are deemed to be more citizen-centric models of shared services and the emerging model of community planning in Northern Ireland that will focus on how services are to be delivered. This Page 18

20 citizen-centric view is also being emphasised as the shared service experience in the UK continues to evolve. For example, the Department for Communities and Local Government is piloting new concepts such as Whole Place Community Budgets 6 where the emphasis for coordinating service delivery and increased efficiencies occurs locally. The pilots, being undertaken in four locations, will identify pragmatic approaches that focus on specific outcomes rather than structures or budgets. Interestingly, the report from the National Audit Office on this programme notes that this new approach "appears consistent with a mature approach to managing change and cost reduction" (p.8). These new approaches are showing how the shared services agenda can define the next generation of effective service delivery; the emphasis being on providing high quality services that meet the expectations of all citizens and which targets duplication across agencies and sectors. This approach is also about building greater accountability into the system; an objective that is also a longer-term goal of the local government reform process. 2.7 Proximity Creates Opportunity As noted in the Scottish case on shared services developed by the ICLRD, understanding shared services as a network of collaborative working offers a more fluid, flexible and outcome focused interpretation of the shared services agenda (Peel et al, 2012). In Spain, rural municipalities experiencing population decline found that they have to work together to maintain services and proactively develop economic strategies (Peel et al, 2012); with the aforementioned Mancomunidades often being formed to execute a joint project (O'Keeffe, 2011). Mancomunidades can be formed for a specific task or a fixed period of time or they may exist on a permanent basis. By pooling their resources, local Councils have been able to leverage complementary external funding and to respond to a range of local issues. Shifting demographics within regions, such as the Irish border region, can also be a driver for shared services. In identifying opportunities for shared services between and among local governments, functional service areas underpin the logic of proximity creates opportunities for providing and maintaining services, even at a time of budget cutbacks (Peel et al, 2012: 8). The concept of working with neighbouring local authorities in providing services supports the spatial planning concept of clustering among smaller towns and villages that is found in the Regional Development Strategy (RDS) and Investment Strategy for Northern Ireland (ISNI) - with both strategies referring to a hierarchy of settlements and services - and the Irish National Spatial Strategy (NSS). In looking at the considerable experience of shared services in Scotland, it has become evident that the operationalisation of shared services must be undertaken sensitively, with respect to the specific conditions of place, time and context. 2.8 Strong Relationships and Leadership All four of the international cases developed by the ICLRD emphasised the key role of leadership and good working relationships in developing a shared services programme (Peel et al, 2012). This occurs 6 See case study on Integration: Measuring the costs and benefits of Whole-Place Community Budgets, Dept for Communities and Local Government and National Audit Office, 13 March Page 19