London shared services could save £450 million

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20 January 2011 | Lindsay Clark

The Greater London Authority (GLA) is aiming to save £450 million by April 2013 through shared services and collaborative procurement.

The authority, which is responsible for London’s fire, police and transport services, has set the savings target for “the sharing of services and collaborative procurement” using the 2010-11 budget as a baseline.

Back-office functions including procurement, payroll and HR, marketing and ICT are among those which could be shared by the GLA organisations and its own support functions, saving money on salaries. Collaborative procurement is also expected to contribute to savings on the spend of around £2.2 billion. 

“Analysis of expenditure in 2010-11 suggests that significant savings should be achievable through collaborative procurement while a workforce analysis has been used to identify areas to be scoped for potential sharing of services,” the GLA Group Budget Proposals and Precepts 2011-12 said.

“The scale of the programme and the early development stage of many of the workstreams mean that significant savings are unlikely to be achieved before 2012-13,” the report said. Work on preparing procurement shared services has already begun.

Mayor of London’s budget and performance adviser, Nicholas Griffin, told SM that in the initial stages, the programme would not involve a shared service centre for procurement. Instead, lead buyers could be recruited from different agencies to manage categories for the whole group, as well as fulfilling their existing roles.

Although there have been many failed attempts at collaborative procurement in the past, Griffin said the central government cuts would create greater motivation to succeed.

“The environment we’re in now is quite different. We have had a short sharp shock from the Comprehensive Spending Review which has caused us to think hard about how we run ourselves. Now I think there is a real urgency to do something about it.
“The thing that will get us through this is the type and quantity of savings you can make. It’s hard to argue with those once you’re presented with them,” Griffin said.

Since 2008, London Mayor Boris Johnson has been considering forming a shared service centre for back-office functions across a range of agencies. Responses to the budget consultation close tomorrow (21 January). It is expected to be approved by the end
of March.

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