Navigating the shared service transition in local government finance

The way in which support services are being provided in local government is changing as councils respond to the financial reality of fewer resources. More and more councils are seeking to share their support services with others.

In the first of his quarterly blogs, Glenn Hammons examines his role as a senior finance officer working in a dynamic shared services environment.

Working in LGSS, an organisation set up by Cambridgeshire and Northamptonshire county councils to provide support services to the founder councils and an increasing number of district and borough councils, has given me a unique, insider’s view of the role shared services in finance has to play in shaping the future of local government.

My role as Head of Corporate Finance in LGSS provides strategic financial support and advice to four councils (the two county councils as well as two district council clients).

Over the past two years – and particularly over the last 12 months – the role has challenged me to develop solutions for funding, cross sector collaborations, conflicts of interest, managing the expectations of clients, fostering relationships with new clients, integrating these into services and leading teams through continual change. All this at the same time as delivering the core finance services of planning, budgeting, reporting, statutory accounts, treasury management and pensions investment to each client.

Arguably this is nothing new as these demands and expectations have always been placed on the role of a senior finance officer in local government. However, historically these have all belonged within one organisation and not across a number of geographically dispersed councils each with differing issues, cultures and expectations. So, the main change is complexity and being able to deliver effectively in such an environment.

Can a finance service provide a one size fits all approach to multiple clients? For finance transactional services such as paying people or collecting revenues the answer is certainly yes. But what about finance advice and support? The answer here is more debatable. My experience would suggest to a certain extent that a flexible and tailored approach is required as each client council faces differing issues and the culture within each organisation is different. Having said this, the provision of core financial advice across the financial cycle is not radically different in each of the four councils supported by my service. The solution has therefore been to foster a service delivery model where the majority of the service provision is the same, but aspects are tailored to meet the unique needs of each council. The analogy I use is that the basic sponge cake is the same for all councils, with each council choosing how they would like it decorated.

This service delivery model has been enhanced by creating centres of excellence to encourage best practice across the service. So, where a council already operates an innovative way of delivering finance services, this is shared and embraced by other councils supported across the team. For example Northamptonshire County Council was operating a self service model for delivering medium term financial planning, which engaged the senior management team. This approach has been implemented at Cambridgeshire County Council and is being developed for roll out at Norwich City Council. Another example is the integrated approach for closedown and accounts, which has been successful at Cambridgeshire County Council and has been adopted for use in Northamptonshire and Norwich. By sharing best practice between councils we see better outcomes for all clients.

It must be said though that it is not easy to instigate and implement the sharing of best practice. It is not something that happens overnight as teams working for each client haven’t met each other, are geographically dispersed (Northampton to Norwich is 100 miles with Cambridge half way between) and don’t know the way each other operates. To overcome this, each time a client has joined LGSS the functional teams supporting each council meet face to face with their counterparts in order to build relationships and then understand how each other provides their finance services.

To ensure the implementation of best practice across the team, each member of the management team is a nominated lead for a functional area of the team, as well as being responsible for providing services to a client. The use of technology has assisted with geographical issues: for example, management team meetings are held by video conference and an extranet has been developed to share information. Although it must be said, despite all the technology you can’t beat a face to face meeting!

From a personal perspective, providing services to a number of clients is not easy and you often feel like a circus act with the amount of juggling and balancing that you have to do. In particular, managing the expectations of clients without reducing service levels is an art form in itself. For example, how do you choose between a clash of important meetings in locations that are 25 miles apart? Prioritisation is key, as well as making sure you have people in your team who have the appropriate knowledge, skills and trust with the client who can deputise for you.

Being a chief finance officer (CFO) for a district and deputy CFO for a county has provided a unique opportunity for me to enable win-win situations for the benefit of taxpayers and breakdown a number of historic barriers to working collaboratively across local government in Northamptonshire. One such opportunity come through the creation of a business rates ‘pool’ where we instigated and led the creation of a pooling agreement that will generate over £2m per year of additional funding across the whole county. This success did not come smoothly with complex negotiations resulting in a last minute scare when the pool almost collapsed as a result of a disagreement on the share of any losses. However, following a hectic afternoon, when at times it felt as though months of hard work was going down the drain, of lobbying each chief executive/chief finance officer and an early morning conference call, an agreement was reached within minutes of the submission being made to the Department for Communities and Local Government. I certainly had a well earned visit to the pub that evening!

This work also placed me personally in a number of difficult situations with regard to conflicts of interest. How should the financial benefits be shared amongst the districts and the county? Why should the county give up the benefit of an index linked funding stream? How should the risk of any losses be allocated between the districts and the county? As my primary outcome was to achieve a solution that benefited the residents of the whole county, I balanced these conflicts of interest to deliver something all councils could sign up to. This involved a lot of close working with senior officers and councillors from all councils and it certainly paid off in the end.

If all this has not been enough to keep me busy over recent months, I have also been heavily involved in ‘on boarding’ a potential new client – Northampton Borough Council. As the finance lead on the project, I have been considering how the finance service can be integrated into the wider shared services model, identifying where efficiencies can be made, developing transition plans, financial due diligence of the business case, mapping TUPE lists against budgets and, most importantly, building relationships with potential new members of the team/the new client.

One of the most positive aspects has been the attitude of staff against a backdrop of continual change in a growing shared service environment. During the last few years they have seen new line managers, new clients, matrix management, team restructures and transfers of responsibilities to other teams in LGSS. However, they have been flexible and adaptable to embrace the new ways of doing things, learning from others and widening their own skills. A number of them have flourished and now hold senior finance positions in LGSS and across the public sector. This has been achieved through the creation of a working environment which accepts change as “the norm”, encourages staff to take responsibility and provides the space for them to reach their potential.

Having said all of this, I was reminded recently that you need to expect the unexpected as councillors voted for a freeze in council tax at the last minute, having considered an increase. So, the lesson learnt from this is that no matter what strategy you have agreed and even though you have got everybody signed up to it, politics is at the heart of everything we do in local government. But that is the value of democracy I guess!

In future blogs I will keep you updated on how things are evolving in the finance shared services world. One thing is for sure…it will certainly have moved on, so there will be plenty more to say!

Glenn Hammons is the Chief Finance Officer at East Northamptonshire Council and the deputy Section 151 at Northamptonshire County Council.