Local government has saved millions of pounds by adopting shared services, according to a report by the Local Government Association (LGA).

Research by consultancy Drummond MacFarlane found that five councils using shared services had saved £30m up to March 2012 from reducing staff, better integrating IT, using property more effectively and improving procurement.

The report, Services shared: costs spared? said the set-up and integration costs for merging services between authorities had been modest, with less than a two year period payback period for all the shared services analysed, while the shared services provided the same or better levels of performance at less cost.

It noted that 'baseline financial and performance information is essential to make the case for change and track the benefits of shared services in terms of efficiencies and service improvements.'

The LGA research also suggested that expanding established shared services for other public sector partners was a useful way for authorities to generate income and ensure efficiencies through economies of scale.

Peter Fleming, the chair of the LGA's Improvement Board, said the majority of English local authorities were now sharing services. 'Councils are the most innovative and efficient part of the public sector and this report demonstrates the kind of steps they are taking to save money and improve services,' he said.

The five shared service projects examined in the report were: the Hoople initiative in Herefordshire; Local Government Shared Services in Cambridgeshire and Northamptonshire; Devon and Somerset Fire and Rescue Authority, Vale of White Horse and South Oxfordshire; and Procurement Lincolnshire.

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