The claim
“There is a strong case for asking councils to share more services.”

Secretary of State for Communities and Local Government Eric Pickles, Financial Times comment column 22 October 2010

The background
Eric Pickles has encouraged councils to get their thinking caps on and become more creative about how they provide their services and spend their money. The 28% cut in central government’s grants to councils announced by the Chancellor was, for some, a far worse settlement than they’d planned for.

Today, Hammersmith and Fulham, Kensington and Chelsea and Westminster announced plans to merge, creating a supersized council with a whopping budget of just under £2bn. They’d share all services, including education and children’s services, adult social care and environment services in a bid to save just £100m. And remember, the secretary of state’s warned cutting budgets shouldn’t mean cuts to frontline services.

But will sharing services and managers work, and how much cash could it save? We’ve been finding out.

The analysis
Sharing services is actually already being done by lots of authorities.

Hambleton Council in North Yorkshire shares services and staff with its rural neighbour Richmondshire District Council. Among other things, they share a chief exec, many senior managers, HR teams and do their procurement as one.

The councils reckon the only jobs that have been lost have been through natural wastage (which is around 8% per year in the public sector) and that last year the changes saved the two bodies £358k out of a total budget of just under £17.5m. This year, they expect that saving to be just under half a million pounds as more services have been combined. The councils’ chief exec Peter Simpson said the system has worked for them and envisages all services being shared in future.

Further south, Lincolnshire County Council says it shares legal services and procurement with its 7 district councils.  And Worthing council told us it’s been sharing with neighbouring Adur council since 2007 – they now pool the majority of their services. Out of a total budget of £27.5m, the councils expect to share savings of £6.5m by the end of 2013/14.

All of these councils are pretty small in comparison with big hitters like Hammersmith and Fulham. And it’s at this level that mergers could start to crack at the joins. Iain Roxburgh senior associate fellow at Warwick Business School is a former council chief exec himself and supports sharing services  – but has some concerns about how it would work in big cities.

Putting one person in charge of mega authorities like the London boroughs  means that the chief exec would face a “frightening amount of meetings they have to attend and a frightening amount of essential papers you have to read,”  he says.  “You’d have to supplement that with a strong deputy team for each borough which could eat up some of those savings.”

The verdict
Well there does seem to be a strong case for services to be pooled – to a point. Our councils have found it works for them and the proof is where it matters – on the balance sheet. But for the larger authorities,  sharing service could mean some new costs. And the Unite union is already warning that mega authorities would mean local councillors would become insignificant and have little impact on council decisions.

So, we’ll give Mr Pickles  a fact rating on this one – he’s right to say councils can make savings by pooling resources. But there are warnings out there that a local authority’s ability to best serve its community could be affected if it got too big.