This article considers what Joint Delivery of Services means for local government services, potential scope, and considers what the options are for future operating models.

Context

The pressure for more efficient and effective delivery of local government services has been mounting in the last 2 or 3 years. The earliest and most important driver for change was the Gershon Review in 2004. The Independent Review team concluded that two of the main areas where efficiencies could be made were

	Joined up approaches to back office functions such as finance, HR and IT.
	Removal of duplication across organisations within transactional services, e.g. payment of Housing benefits or the multiplicity of contracts between individual authorities and different agencies.

The pressure for change is set to intensify during 2007 with the soon to be published Lyons Inquiry looking at the case for change in local government funding, and the 2007 Comprehensive Spending Review which is expected to continue with the value for money and efficiency themes articulated by Gershon.

What is the Joint Delivery of Services Agenda in Local Government?

Joint Delivery of Services in local government has a different meaning depending on who you are talking to. For some, it means 2 or more local authorities (or other government agencies) collaborating in setting strategy, priorities and planning for a particular service. This can involve sharing knowledge, skills or some resources. The most frequent example is seenwith co-sourcing agreements and central purchasing groups.

For others, Joint Delivery of Services means 2 or more authorities jointly delivering services through some form of unified management entity responsible for delivering services to or on behalf of the partnering authorities. This could include a discreet (from the partnering authorities) organisation with staff delivering services across partnering authorities, standardised processes, common and shared systems, co-location of offices and service level agreements.

The shape and form of the joint delivery or shared services model will depend on the objectives of the partners. Typically the objectives of those authorities exploring joint delivery of services include:

	Delivering better value for money (the same service for less cost or better performance for the same cost)
	Convergence on at least the best performing council’s service levels across the participating partners… longer term improving or sustaining performance or quality within a service
	Provide a more consistent service across the partners and a single interpretation and application of policy. For example, a consistent customer experience whenever (and through what ever channel) citizens and businesses interact with local authorities,
	Improvements in capacity and resilience of the services, enabled through the achievement of sufficient critical mass and scale.
	Easier to attract and retain staff and the necessary skills through providing more opportunities to specialise and career development afforded by larger organisations.
	Enabling external revenue generating opportunities

This is not an exhaustive list. The objectives will help determine the scope of activities to be included, and the shape, structure and role of the service delivery operating model.

Other considerations on the agenda of those local authorities considering joint delivery will include:

	Strategic Governance - Local authorities will want to retain responsibility and ultimate accountability (to the community / citizens) for all services; even where responsibility for delivering the services has been delegated to another management entity. Local authorities will want to exercise strategic decisions and control over services through their participation on the Governing Body of service delivery entities.
	Strategic Delivery - Where service delivery is delegated to (commissioned from) a separate management entity, there will be the question as to who is responsible for operational strategic decisions? As a minimum the local authorities will want to set the service levels (SLAs) and appoint monitoring officers to monitor performance standards.
	Local Decision Making - Local authorities will want to continue to own the budgets and funding available for their communities. They will want to retain decision making regarding local variation to services and service levels.
	Local Delivery - Access to front line services will need to be local where physical contact or presence is necessary to carry out the service. Where local contact (or presence) is not a feature of the service and activities are transactional in nature, then there will be the opportunity for services to be consolidated into one or more shared delivery centres.

The members and officers of each authority will have very strong, and often divergent, views on the above. Again, the answers or preferred solution(s) in terms of the shape and form of joint delivery of services will depend on the individual objectives of the partners.

Potential Scope

The potential landscape for shared services in local government is very different to other public sector bodies or private sector organisations. There is not only potential for shared (or jointly delivered) services in corporate and transactional services (e.g. F&A, HR & Payroll, ICT and Revenue billing and collection) there are also significant opportunities for joint delivery for many front-line services like Customer Service, Benefits administration, and Planning.

Alsbridge recently developed a strategy for joint delivery of services for 6 district councils and a county council who wanted to explore in which services joint delivery (across the 7 authorities) would add greatest value and contribute to resolving a number of operational problems (like lack of capacity and resilience).

The following criteria were applied in determining which services should be in scope and in which order of priority they should be considered.

Criteria and weightings – Relative Ease of Implementation
Weighting

The analysis undertaken for these authorities identified a shortlist of about 15 services (or service groupings) which would deliver a compelling business case for joint delivery in these areas.

The scope of services on their agenda for potential joint delivery solutions included:

Corporate & Transactional Services	Front-line Services
ICT Treasury & Finance Property & Estate Management HR & Payroll Legal Services Audit Revenue – billing & collection Benefits administration	Customer Service (contact through centres, telephony, internet) Planning Building Control Waste Management – Refuse & Recycling Waste Management – Street scene Open Spaces & Grounds Maintenance Environmental Health

The shape and structure of the optimal joint delivery model for the above services will vary considerably and is dependent on a whole range of factors, not least the shared objectives of the partnering authorities.

The next section sets out the range of operating models which could be considered. Determining the optimal and / or most appropriate model will be the subject of another article.

Operating model options

In a recent paper, the Chartered Institute of Public Finance Accountants (CIPFA) identified 11 different models enabling joint delivery of services. These can be simplified down to 6 models as follows:

At one end of the spectrum there is informal collaboration, which involves least change, and for obvious reasons is often the most attractive for many Officers and Members. The further to the right (on the above chart) the models require a greater degree of interdependence and integration among the partners. At the far right of the spectrum the service delivery is outsourced to private sector service providers.

In outline, the key characteristics of each joint delivery model are:

Collaboration / Co-sourcing - Coordinated strategy, knowledge sharing or co-sourcing through informal collaboration mechanisms. Individual authorities choose on a case-by-case the extent to which they participate. The relationship is informal and success is completely dependent on establishing mutual goals and objectives, and the quality of the relationships between the officers and staff involved.

Formal Partnership - Governed by a formal agreement (e.g. public – public partnership) between partnering authorities to define and formalise sharing arrangements. These may involve pooled budgets, and sharing of assets and/or resource, which can be co-located. For the formal partnership to be really effective the staff are managed within a separate management entity; processes are standardised, and underpinned by convergence onto common systems. Services are managed to agreed service levels and governed via a joint committee or board. Employees continue to be employed by the individual participating authorities, and decision making structures are restricted by local government legislation.

Lead Authority - One authority manages delivery on behalf of the other local authorities. The relationship and service levels are set out in a legal contract with service level agreements (SLA’s). Both resources and assets are often transferred to the service provider, and all benefit from the efficiencies which flow from standardisation of processes and systems, and convergence onto the ‘best’ (across the partners) performance levels. These arrangements are likely to be subject to EU procurement regulation (OJEU).

Separate Legal Entity (owned by the partnering authorities) - This could take the form of a company (with liability limited by guarantee or shares), or a charitable trust. Each partner would transfer assets and staff to the new entity and the relationship between local authority and service provider would be governed by a legal contract. This model provides a greater degree of flexibility, for example, it could offer services to other public sector agencies, or the private sector. If this type of entity only serves the partner authorities (who control it via a joint governance board) then the procurement of services may not be subject to EU procurement regulation.

Joint Venture - A separate legal entity, similar to above, only jointly owned with a participating private sector service provider. Again, the relationship would be governed via a legal contract (which would be subject to EU procurement regulation). The private sector partner contributes investment (possibly easing the up-front commitment required from the local authorities) and resource / expertise. The local authorities would participate on the Governing Board and second officers to the Executive responsible for operations.

Third Party Service Provider - The partnering authorities jointly contract with a private sector service provider. This is typically a long term relationship where many of the existing employees and assets transfer to the service provider. It is not possible to delegate statutory functions to the service provider (or to the other separate legal entity models listed above) unless there is a statutory instrument made under the Deregulation and Contracting Out Act 1994 permitting such delegation. Many local authorities have gone down this road for discreet front line services, like waste management, or with Corporate (support) services.

Conclusion

There is continuing mounting pressure on local government authorities to explore new ways of delivering greater value through more efficient services. The pending Comprehensive Spending Review is likely to squeeze further the funding for these services.

Collaboration, joined up working and shared services across local authorities and other public sector agencies are themes that are not going to go away. For those authorities hoping to acquire unitary status in the near future, and for those areas where 2/3 tier structures will remain, the need to restructure the way in which services are organised and delivered will be a key enabler to delivering the required efficiencies and improvements to services expected by central government, and more importantly the local tax payer.

The potential scope of services which may benefit from joint delivery across local authorities is huge. The scope usually represents a significant proportion of the cost base for any authority; hence the benefits can include significant cost savings, which could be diverted into higher priority services.

There are many different ways of working and operating models which may be adopted through which to jointly deliver services. It is important to identify and ensure each partner has shared aspirations and objectives, and that their agendas are aligned. There is no ‘right’ answer, it is which ever model fits the requirements for a particular service and meets the partner’s objectives.

The next article on this subject will address how to select the most appropriate and/or optimal joint delivery model.