Fenland District Council will be saving £137,000 a year under new plans to share planning services with Peterborough City Council.
Cabinet members agreed to go ahead and merge planning services, which will save a total of £446,000 by the end of 2018/19 financial year.
The district council has warned that it needs to save £1.8 million over the next two years and is looking to find efficiencies.
Will Sutton, cabinet member responsible for planning, said: “This is a very significant step forward.
“We have worked closely with Peterborough City Council over the past few years, with their planners helping to put our new Local Plan in place and providing other policy and development support.
“Now we are taking that partnership to a new level. Sharing resources will not only enable us both to deliver significant savings, it will also maintain and improve aspects of the service.
“In addition, it has the potential to generate extra income for both councils through trading planning services with other local authorities.”
A report to the cabinet meeting states that each council will retain their planning committees. The shared service will be fully in place by January 2016, following a period of consultation with affected staff and the finalising of the details of the working arrangements.
The report states: “It is clear that this proposal is not on the basis of Peterborough City Council taking over Fenland District Council’s planning team, but focussed on an equal shared service delivery model that will deliver efficiencies, improve service resilience and seek to achieve additional income for both councils.”
The city council will make an annual saving of £100,000 and £325,000 in total over the same period. Fenland has already linked up with other councils to run its revenues and benefits and building control services.