Should councils collaborate? Evaluating shared administration and tax services in English local government

ABSTRACT

Decentralized public organizations have many advantages, but can be inefficient due to suboptimal organizational size and duplication of activities. Selective inter-organizational collaboration may produce economies of scale without undoing the benefits of decentralization, assuming that co-ordination and re-organization costs are low. The authors tested this popular reform logic using data from all English councils, focusing on shared administration and tax collection. There were no significant benefits from either kind of collaboration.

KEYWORDS:

• Collaboration
• efficiency
• local government
• shared services
• tax administration

IMPACT

Shared service policies have been widely implemented, despite any firm research evidence that they are efficiency-enhancing. In one of the first empirical studies of its kind, this paper challenges the assumption that sharing administrative and tax collection services invariably leads to cost savings. We describe three conditions that must be met if shared services are to achieve savings, and discuss alternative routes to improved efficiency that avoid the ‘perils’ of collaboration. While the analysis focuses on English local government, our framework offers insights to public managers and policy-makers in other jurisdictions and levels of government.

Acknowledgement

This research was funded by the British Academy and Leverhulme Trust (Grant No. SG160949).

Notes on contributors

Ruth Dixon is a Research Fellow at the Blavatnik School of Government, University of Oxford, UK.

Thomas Elston is an Associate Professor in Public Administration at the Blavatnik School of Government, University of Oxford, UK.