Shared Services: Scottish Executive Consultation

Briefing No.137 May 2006

Introduction

This briefing provides an overview of the Scottish Executive's latest consultation on Shared Services, released in May 2006. This document, entitled: A Shared Approach to Building a Better Scotland, highlights the Executive's vision of shared services across Scottish public services.

Shared services can include corporate support functions such as human resources (HR) and payroll as well as some operational processes such as the collection of council tax or client management. The Scottish Executive believes that such services may be more efficiently carried out on a shared basis rather than each individual public sector organisation having its own services.

The Scope for Shared Services

The Scottish Executive identified shared services as one of the five key work streams they wished to take forward in the June 2004 launch of their Efficient Government Initiative. The use of shared services is expected to play a significant role in the delivery of a long-term target of £1.2bn annual cash savings by 2010/11.

This consultation document sets out the Executive's proposals for taking forward shared services across Scotland. It claims to provide evidence to support their view that shared services can release significant efficiency savings for investment in front line services, but equally highlights the potential for shared services to drive up service quality and consistency.

The Executive believes that shared services could provide potential savings of between £250m and £750m across the whole of the Scottish public sector.

The consultation paper identifies two main areas in which there is a potential for shared services:

1. Support functions: such as accounting, payroll, human resources as well as Information and Communications Technology (ICT).
2. The common operational processes and systems that underpin front line services and which are duplicated across multiple organisations. This would include issues such as council tax collection, housing benefit, client management, education admin and customer contact systems etc.

The Scottish Executive aims to develop shared business support functions and common business processes that are more independent of the traditional structures and boundaries that exist within the public sector. They claim this will be more adaptable and better able to meet the needs of the joined up and customer focussed front line services that will be the focus of the debate on public service reform over the coming months and years.

The Executive has already initiated a number of complementary work streams in support of their reform objectives. To deliver a shared services strategy an implementation group is proposed reporting to the Efficient Government Steering Group. This will be supported by service based groups and cross service project boards.

The paper sets out an indicative timeline. Early delivery includes a range of NHS and NDPB projects by 2008. Local government and the broader objectives have a longer timeline to 2010.

Implications of Shared Services

UNISON Scotland supports joined-up government and is always willing to look at innovative service delivery options. The strength of the Scottish Public Sector Model is that these options are available when public bodies operate in co-operation not competition. However, shared services models have significant problems that are not covered in this consultation. It was not so long ago that the same management gurus promoting shared services were arguing for decentralised support services! What comes round……

Many of these problems were originally highlighted in P&I Briefing No. 10 back in 2001 largely based on our private sector experience. These concerns include:

• Less personal service, both for users and for the staff. Disadvantaged groups in particular lose out when services are delivered remotely
• Loss of experienced staff and their knowledge, particularly local information
• Devaluation of the essential administrative tasks staff undertake
• Devaluation of the service provided in the eyes of the public.
• Alleged savings are not always realised. In particular workload is shifted from support staff to front line supervisory staff
• Complex delivery of public services needs staffing by people who understand the working of the whole organisation
• De-skilling of administrative staff can lead to their de-motivation and a high turnover.
• Not all of the new technologies are proven and can often come at a high cost.
• Particular problems that cannot be resolved at the front line have to be shifted to a line manager.

Shared Services can lead to a whole range of difficulties that need constant monitoring. Trade union involvement is essential.

The paper highlights the importance of early and continuous communications with staff and engagement with their trade unions. Unfortunately that didn't include this consultation paper which could have been more comprehensive with trade union input. There is also a comment that best employment practice should be used in handling staffing reductions including a presumption against compulsory redundancy in favour of natural wastage, supported by retraining and redeployment.

UNISON Scotland would have obvious concerns about any job losses and changes in employment terms and conditions and would want to ensure that the union is involved in all discussions at the earliest opportunity.

Other than staffing the weakest aspect of the paper is on shared service structures. The paper vaguely describes the options of public, private or hybrid models. There is little discussion of the EU procurement rules that have caused problems for NHS shared services in England and in some Scottish local authorities. A related concern is the potential loss of democratic accountability and the additional costs if council services are bought in from an external supplier. Off shoring is not mentioned – or ruled out.

The paper also highlights that investment is needed to realise any savings from shared services. It states, according to past examples, an average ratio of upfront investment to net annual return of 2:1. In other words, £60m investment is needed to produce net annual savings of £30m.

However, later in the paper the Executive reveals that other sources of investment would have to be looked at including public service organisations' budgets, prudential borrowing and private sector investment.

Further Information Action for Branches

The full consultation paper can be found at:

http://www.scotland.gov.uk/Publications/2006/05/04145500/0

P&I Briefing 10 http://www.unison-scotland.org.uk/briefings/shared.html

This is an important issue that could impact on thousands of members jobs.

Discuss and consider the implications of the paper for your branch and send views to Dave Watson by 12 June 2006.

Contacts list: Dave Watson d.watson@unison.co.uk Kenny MacLaren k.maclaren@unison.co.uk @ the P&I Team 14 West Campbell St Glasgow G26RX Tel 0845 355 0845 Fax 0141-307 2572