Advocates of shared services have had cause for frustration. Sir Peter Gershon provided a major boost for the cause in his 2004 efficiency review, but progress has been limited: most central government departments have been in no hurry to share systems or processes with others, and while there have been initiatives in local government these are matched by the caution shown by many authorities.
But as public finances tighten the pressure to find efficiencies will intensify, and authorities will have to think seriously about how to cut operating costs.
David McElhinney, chief executive officer of Liverpool Direct, believes the model he describes as a "shared platform" could offer a viable option for many bodies. Setting up a shared service is a collaborative process that can take a lot of time to get right, and be hindered by sensitivities over surrendering control to another public body. But a shared platform is already in place and available for a client organisation to begin using the service.
McElhinney acknowledges the similarities to an outsourced service but says a shared platform is different, in having been built specifically to provide economies of scale to public sector bodies. He talks in terms of high quality technology and tools that can help organisations extract more value from their business - claims most businesses would make for a similar service - but draws extra credibility from the fact that Liverpool Direct is a joint venture between BT and Liverpool city council.
Liverpool Direct has been around since 2001, initially to provide front and back office services for Liverpool city council. It began marketing itself to other authorities soon after, but has taken some time to find takers for the service. It is only over the past couple of years that it has found momentum. "We've been seeing more activity in the past two years than in the previous six with the shared platform," McEllhinney says.
Liverpool Direct now has contracts with four other councils, two central government departments, over 10 third sector bodies and quasi non-governmental organisations, a police service and 300 schools. Liverpool remains its biggest customer; its business includes the second largest revenues and benefits operation in the UK, taking in about £300m per year of the former and paying out £350m of the latter.
Another large customer is the Security Industry Authority, for which Liverpool Direct handles all the processes for licensing security staff, including the production and dispatch of identity cards and running the organisation's contact centre. It has also made inroads into the Building Schools for the Future programme, providing the technology in eight new schools in Liverpool, and has begun to provide services for registered social landlords, with recent deals with London Quadrant and Helena Partnerships.
McElhinney says Liverpool has claimed benefits on two fronts from the venture. BT provided the original investment; the operational savings have accrued to the point where in 2007-08 the city received £19.5m in cash benefits, through areas such as increased debt collection and reducing overpayment of benefits.
The city also has a 20% stake in Liverpool Direct, and while McElhinney says the details are commercially confidential, he confirms that Liverpool gets a return. He also expects the business to increase over the next couple of years as we move towards the end of the current comprehensive spending review period. "We are seeing more activity in the marketplace," he says. "People are seriously concerned about the future financial landscape and want to build more value as they move towards 2011."
This article is also on the Kable website
