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Standardised sharing of back office services by central government can deliver more for less

The CBI commented ahead of the Government’s statement on Civil Service Reform, and launched a report showing how standardising shared services in government could deliver essential budget savings while maintaining good service quality.

Matthew Fell, CBI Director for Competitive Markets, said:

“We welcome the Government’s intention to reform the civil service to achieve a leaner, fitter public sector.

“Measures to remove unnecessary administrative barriers between Whitehall departments will encourage more efficient joined-up working. Linking pay to performance and adopting the CBI’s recommendation to raise skill levels in finance, IT and project management will make staff more commercially-minded.

“Opening up public services to competition will deliver the most high-quality, innovative solutions and best value for the tax payer. One specific area where efficiencies are already being made, and performance improved by opening up the market, is in shared services.”

The CBI Public Services report, A problem shared: realising savings through shared services, explains that many central government departments and bodies perform similar services which could benefit from economies of scale if they were shared effectively.

The report highlights the potential of sharing back office functions such as HR, ICT and finance. Real savings have already been made by central government departments, like the £35 million saved by the Department for Work and Pensions in 2009/10 working with Oracle, but there are still obstacles to overcome in order to standardise the implementation of shared services:

• Sometimes functions have simply been centrally located across a department, rather than standardised and thus genuinely shared, preventing the real benefits of sharing services from being realised
• In some cases shared service centres are too small (being based on a single small department) or are operating below capacity because of the voluntary nature of participation – two existing centres currently have  50% spare capacity.

Separately, many local authorities have made significant progress in sharing their back office functions, and there is the opportunity for many more to follow suit – 134 local councils out of 353 in England have yet to share any services. Research by the Audit Commission showed that savings of £140 million could be achieved from local authorities sharing services on revenue and benefits alone.

The CBI report sets out seven recommendations to help standardise shared services for both central and local government:

1. All existing shared services centres should be compared with the best performing shared services centres and required to set out how they intend to improve. 
2. The Cabinet Office should direct all government departments and agencies not already doing so to sign up to existing shared services arrangements in the short term, and to the new independent shared services centres in the medium term.
3. All new statutory agencies established should be required to have their HR, ICT, procurement and finance functions delivered through shared services arrangements.
4. The implementation plan for the Cabinet Office’s strategic vision for shared services should be published, outlining how the new independent shared services centres will be established.
5. All local authorities not already doing so should share common back-office functions, such as HR, ICT and finance, either by introducing new shared services arrangements or by participating in existing shared services centres.
6. Local authorities leading the way in sharing front-line services should share best practice with neighbouring authorities.
7. When implementing shared services, local authorities & central government should open competition to both private and public providers.

Matthew Fell added:

“At a time when budget savings have to be made, central government must standardise the sharing of back office services, like ICT and HR functions, which can deliver both better value and maintain or improve quality.

“To achieve this, the Cabinet Office needs to direct all government departments not already doing so to sign up to existing shared services arrangements in the short term and set out detailed plans to establish independent shared service centres to cater for the whole civil service in the future.”

A problem shared: realising savings through shared services

 Notes to Editors:

The CBI is the UK's leading business organisation, speaking for some 240,000 businesses that together employ around a third of the private sector workforce. With offices across the UK as well as representation in Brussels, Washington, Beijing and Delhi the CBI communicates the British business voice around the world.