Herefordshire saves £619,000 in 12 months through shared services

Hoople, a Joint Venture Company (JVC) that was set up between three partners across local government and the NHS in Herefordshire in 2011, has revealed savings of £619,000 in just 12 months by integrating back office functions, including IT.

Cutting costs through shared back offices was a key plank to the government's strategy of cutting IT and organisational costs when it took power over two years ago. 

Herefordshire Council, Wye Valley NHS Trust and Herefordshire Primary Care Trust (PCT) spent £1.5 million on implementing UNIT4’s local government platform based on its Agresso Business World ERP suite, to enable the first cross-sector shared services in the UK.

According to a detailed report released by the Local Government Association (LGA), Hoople expects to save £12 million for the bodies over the next 10 years.

However, this figure leaps to £33 million when taking into account the overall shared service reforms, which include outsourced functions, such as audit services, and services that are still offered solely by the Council to the two NHS organisations, and not provided by Hoople as a JVC. These include communications and information governance.

Incorporating these additional shared service reforms in 2011/12, Herefordshire expects to save £2 million in its first year.

Hoople uses key performance indicators that include financial savings agreed in the business case and operational performance, but these will be extended next year to include customer satisfaction, service level improvements and the impact on the local economy.

Related:

The report reads: “The key benefit so far from combining separate activities to form Hoople Ltd has been a reduction in costs, in part relating to streamlining the management structure.

“The original business case suggested that a successful transformation programme, reviewing processes bottom up, could also realise savings in the range of between 10 – 25 percent depending on the current staffing and efficiency profile.”

It continues: “The largest were through head count reductions in repetitive or routine transactional work.”

In year two, Hoople expects to save £438,000, which then falls again to £340,000 in year three.

The LGA report highlights that although costs and benefits had been provided over a 10-year period in the original business case, in practice partners are focusing on the delivery of benefits over the first three years, which is when the bulk of benefits are expected.

The success of Hoople at a local government level seems to be at odds with the government’s achievements in central departments, where a recent Public Accounts Committee said that it had ‘failed’ in setting up centres to share back office functions, as costs had soared to £1.4 billion, some £500 million more than expected.