Sutton Council could team up with Merton Council to provide a human resources system that will generate shared savings of £500,000 in a first among London councils.

Sutton executive Lib Dem councillors agreed to the project at a meeting on Monday night in a move that has been backed by the Conservative opposition.

If approved by Merton’s cabinet on September 21, Sutton will be the host service provider and take responsibility for delivering HR services to both boroughs, with Merton paying for the arrangement.

The move will see approximately 100 HR staff in both Sutton and Merton working more closely together to achieve big savings in areas such as procurement.

The merge between the two follows an increasing trend of local authorities using HR outsourcing or shared services as a way of increasing efficiency and cutting costs.

But Sutton Council’s executive member for Councillor John Drage said it was the first of its kind in the capital.

He said: “We have been working closely with Merton over the past 12 months to develop this leading–edge model of shared HR service.

“The arrangement is the first of its kind in the capital and by working together, we can pool our resources, leading to service improvement as well as reaping significant cost savings for the benefit of Sutton’s taxpayers.”

In March this year, Merton Council was awarded a four-star and improving strongly rating from the Audit Commission Sutton Council was awarded the same mark by inspectors in November last year.

As joint head of service, Dean Shoesmith, will oversee the strategic direction of HR services, as well as staff in both boroughs.

Merton Council deputy leader Coun Samantha George said: “By bringing the two teams together we can create a more efficient way of working for both boroughs and transform the way HR functions work for the long term.

“Working together we'll ensure we can provide even better services at a price residents can afford."

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