By politics.co.uk staff
Councils have been urged to "boldly go beyond the back office" when it comes to shared services.
The New Local Government Network (NLGN) thinktank released a report recommending councils engage with new models of shared services to meet the needed efficiency savings.
This could include sharing chief executives and senior management teams or virtual centres.
The localism thinktank highlighted a funding gap brought about by public spending cuts and the savings councils are currently making through shared services. NLGN said to bridge that gap councils would need to share even more.
Councils face government funding cuts of 26% in the period to 2014. Some are expected to save up to 8.8% of total expenditure in the first year, and a median expectation of 5.8%.
The report concludes that at present sharing back office services will save at most 3.6% of expenditure, but is more likely to save 1.8%.
The average reduction in council spending power is 4.4%5, a Department for Communities and Local Government (DCLG) spokesperson said.
The report's authors said sharing services could have implications for the structure of local councils.
"Sharing services also brings questions about the nature of local authority boundaries to the fore. We are keen to preserve existing democratic structures but there is a vital debate to be had about the potential for the majority of council services to be merged together across economic geographies. It is also apparent that the 'market' for shared services is underdeveloped," they said.
"There are implications for the nature of local authority workforces, and potential for reform of organisational structures to more generalist pools of employees, coupled with targeted incentives, to help combat the 'human' barrier to sharing."
The report also recommends the development of an 'eHarmony-style' market place for councils looking to share and trade services and 'invest-to-save' bonds.
NLGN's Tom Symons said councils will survive the spending cuts if they innovate.
"Those councils that boldly go beyond the back office when considering shared service agreements will emerge in time as leaner and sharper organisations better able to deliver the services people need," he said.
The Department for Communities and Local Government said the "timely" report highlighted many of the steps that could be taken by councils.
"It rightly highlights that areas like revenue and benefits are ripe for shared services, and that councils don't have to be physically next door to each other to realise these savings," a spokesperson said.