With so much bad economic news focusing on the private sector, it’s tempting to imagine that local authorities are a safe haven for jobs. But, although councils will never grab the headlines in the same way as a Woolworths or a Lehman Brothers, they too are feeling the squeeze.

According to a survey by the Local Government Association, 15 per cent are actively cutting jobs, including councils in Bristol, Leeds, Newcastle, Northumberland, Nottingham and Oldham, while another 22 per cent are doing so indirectly via recruitment freezes.

What gives such cuts extra significance – especially for the HR profession – is that they are invariably concentrated on back-office functions, as Stephen Moir, president of the Public Sector People Managers’ Association (PPMA), explains.

“Many local authorities are feeling the recession’s effects and are looking at significant workforce reductions,” says Moir, who is also HR director at Cambridgeshire County Council. “But a lot of the roles in local authorities are statutory responsibilities such as social care and teaching, while many others are in front-line services that nobody would consider withdrawing. You’re hardly going to cut back on refuse collectors, for example.”

Of course, pressure to cut costs in the back office is a long-term trend, not cyclical, but this is only accelerated by economic pressures, Moir adds. One way to make those efficiencies is implementing shared service centres – as Cambridgeshire has recently announced it is doing with Slough and Northamptonshire.

One high-profile case that councils are watching is that of Southwest One, a joint venture set up by Somerset County Council, Taunton Deane Borough Council, Avon and Somerset Police, and IBM. Comprising 660 staff seconded from Somerset County Council, 150 from Taunton Deane and 600 from the police force, the service provides HR, IT and finance and is expected to expand. A year into the decade-long deal, the savings are undeniable – a projected £1.7 million a year – and Somerset has been able to levy below-average council tax increases as a result.

Shared services have been slower to take off in the public sector than some people had predicted, but Richard Crouch, head of HR and OD at Somerset County Council, says that he expects the recession to provide a “burning platform” for other authorities to implement similar reforms. He expects the impetus for such radical change to come from outside HR.

“I was presenting a session recently in a room full of public-sector HR professionals and we ran a straw poll of how many were thinking about moving to shared services,” Crouch says. “Only a few hands went up – certainly not as many as I’d expected. But, while they might not be thinking about it, other leaders in their organisations certainly are. If you talk to political leaders at councils, they are wedded to this model.”

There is no doubt that the move to shared services can cause great upheaval for HR – Crouch said it was a standing joke that he went from managing a department of 150 HR officers to a retained team of only four – but people’s worries about such reforms go beyond job security. A survey of 200 senior HR practitioners by consultancy Marshall-James found that 54 per cent were concerned about the detrimental effect of shared service centres on HR career pathways.

“In another 10 years, organisations will be struggling to find senior HR people with the right depth of knowledge, skills and experience to continue providing high-level strategic input into organisations,” says Andy Cook, managing director of Marshall-James. “With hindsight, HR professionals may come to regret that they didn’t value highly enough their practical experience of how HR works in real life, rather than being pressured into fitting such an important function into an academic model.”

Crouch argues that, in the case of Southwest One at least, those fears are unfounded. “We have catered for that through the contract,” he says. “Our ‘professional excellence model’ means that everyone who transferred across has their own mentor. Career development and succession planning are priorities for us.”

Crouch adds that all staff transferred under Tupe have guaranteed jobs for all 10 years of the contract, and that introducing the SAP self-service application in April will reduce their amount of routine transactional work.

But Vanessa Robinson, CIPD adviser, organisation and resourcing, warns that moving to shared services is no quick fix. “The results might be attractive for cash-strapped organisations, but one caveat is that it may require a large initial investment to be done properly,” she says.

Martin Rayson, director of resources at Boston Borough Council in Lincolnshire and the PPMA’s lead on HR transformation, believes there is no point hiding from the fact that the HR function in local government will be performed by fewer people in future.

“There will be an overall shrinking in numbers employed in HR. But I’m sure that this will be cushioned by natural wastage, and that those who remain have the potential for a better career path,” he says. “Councils are not unique in looking at shared services. Perhaps they have moved more slowly than other organisations, but that means we can learn from the experience of other sectors. This has all been on the agenda for some time, but there’s no doubt that in the current climate it has been given added momentum.”

Joint venture aims to expand beyond neighbours

Three local authorities that recently announced a unique shared service partnership have signalled their intention to provide services for up to eight other local authorities.

Cambridgeshire and Northamptonshire county councils were joined before Christmas by Slough Borough Council in their venture to jointly provide payroll, procurement, finance and HR services. The deal is ground-breaking, since most authorities implementing shared services have been geographically close and similar in type – but Slough, as a unitary authority, is different on both counts.

The partners have indicated that, with Slough on board, they could have enough capability within a year to provide services for up to eight other councils.

“Having Slough join the scheme means that our vision of delivering local government shared services can expand and shows we are not constrained to sharing with only neighbouring authorities,” says Paul Blantern, Northamptonshire’s corporate director of customer and community services.