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Shared Services


The UNISON Scotland Response

July 2006

Executive Summary

  • UNISON Scotland recognises that co-operation and joint working are one of the strengths of the Scottish public service model and shared services may deliver benefits if properly planned and delivered.

  • However the consultation paper places insufficient emphasis on the challenges that face the introduction of shared services. There is little evidence base for many of the assertions made in the document and the many problems are either ignored or glossed over.
  • The consultation paper would also have benefited from earlier trade union input and has not been properly addressed under the STUC/SE Memorandum of Understanding.

  • Shared services can lead to the centralisation of services and the loss of democratic accountability. Public services are more complex than many of the private sector examples given in the paper and are accessed by disadvantaged users who need personal contact.

  • The claimed levels of savings are to say the least optimistic. In reality many of the projects identified are still at the development stage and there is little experience of delivering shared services on this scale and complexity. Claimed savings are often achieved by displacing workload to front line staff. Experience of large scale IT projects in the public and private sector is not encouraging.

  • The consultation paper is very weak on staffing issues. The artificial distinction between front line and back office functions is demeaning and much less evident in the public sector where integration and joined up working is important. Vague references to consultation are inadequate for the scale of change envisaged and will inevitably lead to industrial conflict.

  • The biggest omission in the paper is any serious consideration of the impact of EU procurement law on shared service models. This requires national guidance before any progress is possible on shared services.

  • In conclusion the shared services strategy requires a new realistic approach to the task and one that is inclusive of stakeholder interests. Whilst a good idea in theory the practical application has many challenges that are simply not properly tackled in this consultation paper.



UNISON Scotland welcomes the opportunity to submit a response to the Scottish Executive regarding A National Strategy for Shared Services. We are Scotland's largest union representing over 150,000 members across the public sector.

UNISON Scotland recognises that all public sector organisations should be aware of opportunities to work more efficiently and effectively. We also welcome the commitment to reinvest savings in services, the retention of key skills and the presumption against redundancy. Public Service Organisations (PSOs) in Scotland already continuously review their operations under best value and have a record of achieving efficiencies under the existing best value arrangements. For example Scottish local government has already contributed £621m of savings under the Best Value regime.

There are however significant challenges facing a shared services strategy and these are largely absent from the paper. We will address these issues in this response.

Approach to developing a shared services strategy

UNISON Scotland feels that the consultation document itself would have benefited from earlier trade union input. UNISON members as providers and users of public services are better placed to comment on service delivery than the management gurus from the private sector whose very careers rely on ensuring that there is a new best way to do things. It's not that long since decentralisation was the buzzword for service delivery!

Equally the delivery structures outlined in the paper make very little reference to a partnership approach to this strategy. The principles only refer to ‘communication' when there are substantial issues that will be a matter for negotiation. This top down, expert led approach is bound to attract significant resistance. In addition there is no evidence that this matter has been addressed properly under the STUC/SE Memorandum of Understanding.

The literature on shared services is inevitably dominated by companies and consultants who are selling a ‘new' product or by government departments tasked with delivering this vision. This means the practical problems are glossed over in favour of the often theoretical gains. Hard evidence is more limited. Sharing services in the public sector is in its infancy. There is therefore little to evaluate.

The Executive paper highlights the success of shared services in Western Australia. Yet much has still to be evaluated. The Western Australia Department of The Premier and Cabinet's one stop shop for Finance and HR only went live at the end of 2005 with pilots in selected agencies starting in April 2006; the roll out to the rest starts in July 2006. It is not possible to evaluate of this project yet. The Whitehall ONE project has recently been cancelled because the projected savings were too small to justify the disruption involved in reorganisation. Even when projects have delivered the wider costs are rarely mentioned and UNISON and other trade unions' private sector experience with shared services have not been wholly positive. In particular the complexity of large scale computer systems and the displacement of workload and tasks are often forgotten.

Any reorganisation creates disruption and moves the focus of an organisation internally rather than on the delivery of services to the public. This means the approach to shared services whilst starting from a position that it is a good idea in principle has to be developed with more realism than is evident in this consultation paper and with a more inclusive approach. The alternative is delay, delivery failure, system breakdown and industrial conflict.


While UNISON is broadly supportive of the aims of the Efficient Government Initiative and of PSOs working together to improve service delivery we have concerns about shared services leading to increased centralisation and the attendant decrease in service access for users and the loss of democratic accountability. Public services are different to private sector operations and some of the language in the consultation paper is incompatible with the values of public service.

Economies of scale could lead to the bigger authorities providing services for the smaller ones and so to increased centralisation. This centralisation of service delivery leads to less personal service for both for users and for the staff. Disadvantaged groups in particular lose out when services are delivered remotely. Private sector examples of this include the energy industry where high street contact points were closed in favour of remote contact centre working. Whilst this may be more efficient for the companies involved it has led to significant customer confusion. Public bodies cannot opt out of dealing with disadvantaged service users who often need time and personal contact to assist them to access the services they need.

The delivery of complex public services requires experienced staff with local knowledge. Centralised services are less responsive to local needs and the lack of local knowledge means that problems have to be resolved by senior staff, increasing costs and the time. Many experienced staff, usually women and low paid, will be unable to relocate to a centralised service and their knowledge will be lost. In addition contact centre turnover rates are amongst the highest in any industry further adding to the dislocation of service. It also means that other staff (so called ‘front line' staff) in contact with users have to resolve problems and act as an intermediary between the user and the remote contact centre - leaving less time for service delivery.

There is a conflict between current moves to devolve decision making to local levels and pulling service delivery to the centre. It is possible to resolve these tensions but not without acknowledging their existence and fully involving staff and the communities they service in the process. The current political crises around A and E provision has partly arisen from not involving communities in defining the problem and so created a suspicion about the reasons behind the decision made by health boards. One way of minimising these problems is to focus on developing local and virtual solutions as distinct from centralised ‘big shed' arrangements or outsourcing. Auckland Libraries joint automated library management system is an example of how a locally managed "shared service" can work.

The consultation paper is also weak on the management arrangements for shared services and in particular how conflicting priorities would be resolved.


The paper holds out the promise of massive savings, although there is little detail on how exactly these figures are arrived at. The alleged savings are not always realised once projects are in place. The consultation paper suggest only 67% of savings are realised and even this may be optimistic. The Australian "Whole of Government Information Technology Infrastructure Consolidation and Outsourcing Initiative" announced in 1997 claimed it would save $1 Billion over seven years. The Auditor-General now says the savings were "overstated. The Department of Finance announced in 2003 that it was abandoning its outsourcing model. Its contract with IBM was not renewed and IT work would be brought back in house. Whitehall's plans for shared services are currently under review partly because of the difficulties involved in quantifying non cash savings. There are relatively few actual examples of the large scale shared service provision envisioned in this strategy. Even these claims only reflect the staff savings of staff directly providing the services they replace. The knock-on costs to other departments are rarely taken into account. The costs and disruption of reorganisation also have to be taken into account when savings are quantified.

The investment needed to realise these savings is high. The paper states past experience shows an investment ratio on 2:1, in other words an investment of £60m to save £30m. It is unlikely that many PSOs will be willing to divert capital programme priorities in this way. This will then lead to expensive private finance options that will divert revenue from front line services. Even the biggest cheerleaders for PFI in the UK government accept that IT PFI projects have not been a success.

This would reinforce the early evidence highlighted by the Scottish Parliament Finance Committee that most efficiency savings are coming from front line services such as health and local government.

There has to be recognition that whilst new technology does offer opportunities to work differently and provide an improved local service it is not in itself a magic bullet. Not all of the new technologies are proven and can often come at a high cost. The recent computerisation of government departments does not have a good track record of improved service.


The consultation paper focuses on so-called back room activities. This term is resented by the staff that provide support services and is extremely de-motivating. Their roles are often fully integrated and provide essential functions to support service delivery. This de-motivation can lead to a high turnover of staff and consequently a reduction in the service provided. The creation of a new two tier workforce is highly undesirable.

Public services are often very complex involving not only a wide range of service delivery options but also partnership working skills across a number of agencies. Personal professional relationships are the key to successful cross agency working. These relationships cannot be created overnight but need time to develop trust and understanding. This is a factor that is often little understood by the salespersons and the external consultants brought in to advise on shared service projects. They are used to commercial operations that have a more focussed product or service to deliver and recent trends in commercial fields have moved further in this direction. Even at fairly junior levels effective delivery of public services requires staffing by people who understand the working of the whole organisation. A process that cannot always be turned into a simple contact centre script.

In the current labour market there is a great deal of competition among employers for skilled staff. The Employers Organisation recently published a report stating that nine out of ten local authorities experience difficulties with recruitment and retention of professional staff. Public sector employees will move to other sectors where financial rewards are often higher. It is important for organisations to retain skilled and experienced staff. Recruiting and training staff is costly and time consuming. The CIPD estimates that the average cost of labour turnover per employee is £8200 rising to £12500 for managers/professionals. Average staff turnover in Scottish contact centres exceeds 25%, above the UK average. In addition outsourced services experience double the staff turnover rates of the public and not-for-profit sectors.

Job losses are an obvious concern as are changes in employment terms and conditions. Past efficiency drives have a focussed on cutting staff numbers. Whilst we welcome the commitments in the consultation paper to retraining and redeployment, experience in the past have not always been positive. Similar joint working initiatives such as Joint Future have often struggled to properly tackle the staffing consequences of integrating staff from different organisations. There also needs to be a much clearer relationship between the anticipated savings and the cost of retraining staff for new roles. Long term planning for this type of organisational change is always helpful.

As highlighted above the commitment to ‘communications with staff and their representatives' is insufficient. There will be a range of negotiation, contractual and statutory consultation requirements on PSOs. A few glossy newsletters will not suffice. Again the consultation paper would have benefited from a more substantial and professional staffing input.


The paper is extremely vague on shared service structure. The options given are public, private or hybrid models but little discussion of the implications of these options. There is also little discussion of EU procurement rules despite the problems they have caused for NHS shared services in England and some Scottish local Authorities.

As set out above there are very real problems with outsourced delivery of these services and UNISON will strongly oppose any attempts to privatise service delivery. Within a public service delivery model there is of course a role for other suppliers to assist with systems and expertise although even this has significant procurement challenges as similar large scale public and private sector projects have demonstrated.

The Executive's own review of procurement recognises that there is a growing awareness of savings that can be made in the procurement process but there are problems in implementing the many positive ideas that come forwards. The Authorities Buying Consortium has only 20% of the spending of the local authorities involved, this cannot be just because they don't want to share. Communities have different priorities and needs and want their authorities to be able to make local decisions.

A key challenge is to develop models that address the requirements of EU procurement rules without leading to front or back door privatisation. This is a fast developing area of EU and Scots law and requires national solutions. One PSO simply providing services for another PSO may well open up these procurement difficulties. We have similar reservations over the viability of joint venture models. The Teckal case and subsequent case law (e.g. Stat Halle and Carboterma) highlights the complexity of joint working, particularly when private sector partners are involved.

There are further complications when the voluntary sector or bodies that are not ‘contracting authorities' under EU law are involved in shared services.

One possible solution might be a common service model along the lines of the NHS and Police models although even these may have to be changed to meet developing legal requirements. This may require the development of statutory common services arrangements and we would wish to enter into a dialogue with the Executive on this issue. We recognise that further EU and UK government guidance is expected on these issues. However, they start from a policy perspective that is hostile to the Scottish public service model and will promote contestability and privatisation. It is therefore clear that Scottish policy and guidance is required. Until that guidance is in place UNISON will be forced to advise our branches and service groups to approach any proposals with great caution.


UNISON Scotland recognises that sharing can lead to cost savings and improved services for communities however the current paper glosses over the many difficulties that will have to be overcome in order to achieve the promised efficiency gains. The paper is weak on evidence and over influenced by the consultants and salespersons who are often the biggest beneficiaries of this type of government initiative. Not least of the issues that are simply ignored is the impact of EU procurement legislation and this must be addressed before any progress can be made.

We do welcome the commitment to reinvest savings in services, the retention of key skills and the presumption against redundancy. However the processes of negotiation with staff and their representatives are absent and the consultation document itself would have benefited from earlier trade union input. We expect therefore further involvement in this process at all levels. It is the detail and the processes for introducing shared services that will determine whether it will improve Public Services and there is still a great deal of work to be done in this area.


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For Further Information Please Contact:

Matt Smith, Scottish Secretary
14, West Campbell Street,
Glasgow G2 6RX

Tel 0845 355 0845 Fax 0141 342 2835

e-mail matt.smith@unison.co.uk

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