This report from the Public Policy Institute for Wales (PPIW) brings together existing evidence on shared services in local government. In particular, it outlines why councils choose to share services, what makes shared service arrangements successful, and how central governments can enable and support this.
Shared services involve the consolidation and standardisation of common tasks and services across different organisations or across parts of the same organisation into a single service.
Evidence suggests that councils’ most common motive for sharing services is cost reduction. This might be achieved through economies of scale, consolidating organisational structures, integrating IT, reducing building costs, and improving and reducing staff procurement. However, there is a great risk that, in practice, sharing services can increase costs.
Other reasons than cost reduction should be considered when sharing services. It should be seen as a way to achieve more consistent service standards, as well as strengthening local government and reducing its dependence on central government resources.
Evidence suggests that successful shared service delivery of shared services depends on effective leadership, planning, communication within and between councils, and accountability to central government and/or local communities. Welsh Government might encourage the development of successful shared services by supporting councils to make sense of complex legislation or contractual issues, assisting the establishment of networks, and providing income support throughout the transition to shared services.
Much of the existing evidence about regional collaboration among councils is weak. There is an over dependence on anecdotes and single case studies, many of which are not independently verified. It would be very valuable to track Welsh councils’ experiences in real time as they develop new regional collaborations. This research would help council leaders, officers and Ministers to identify and tackle problems at an early stage. It would also mean that Wales is able to contribute to the development of a more robust evidence base about this important issue which can help inform future policy – here and around the world.