CABINET
15 FEBRUARY 2016
Subject: The Delivery of Shared Services by Cherwell, South Northamptonshire and Stratford-on-Avon District Councils
Lead Officer: Paul Lankester
Contact on 01789 260101
Lead Member: Councillor S Thirlwell
Summary
The purpose of this report is to clarify the arrangements for the future delivery of three way shared services by Cherwell District Council (CDC), South Northamptonshire Council (SNC) and Stratford-on-Avon District Council. The report covers the future of three way shared services and examines the options for the future provision of the current three way shared services.
Recommendation To Council
(1) That following the decision from Cherwell District Council no further three way joint working proposals with Cherwell and South Northamptonshire be developed;
(2) That an option from paragraph 2 be selected in respect of the future operation of ICT and Legal Services; and,
(3) That the arrangements for the shared transformation team be continued until the end of the secondments (March 2017).
1 Background/Information
1.1 Shared services were (and are) considered to be an important method for delivering better value for money for the public. Since 2012 CDC, SNC and SDC have been seeking opportunities to work together in partnership. As part of this partnership work the three Councils prepared bids in 2013 and 2014 to the Government’s Transformation Challenge Award. In addition the three councils were successful with a further bid in conjunction with South Staffordshire District Council (SSDC). All three bids have been successful with over £2million awarded.
1.2 The bids led to the introduction of a three way shared transformation team, which will be in place until March 2017. This team has overseen the development of service reviews. Between April 2014 and October 2014 shared services were put in place for ICT and Legal Services, after the Council agreed in April 2014 to enter into the necessary legal agreements (so-called ‘s113’ agreements) to allow joint working across all services where the Cabinet endorsed a business case.
1.3 Other bids covered the introduction of shared ICT systems for financial management and land and property (the latter with SSDC) and the development of alternative delivery models for services. Initially the three Councils developed a programme for the development of shared services. During 2014, proposals emerged for a confederated approach to service delivery. The potential for delivery of services using alternative models was considered by the three Councils at the Joint Arrangements Steering Group [JASG] in November 2014 and subsequently by the three Councils through the respective Cabinets / Executives and Council in December 2014.
1.4 While CDC and SNC did adopt the approach, SDC did not consider the confederated approach at Council, but re-affirmed its commitment to developing shared services. The Cabinet, taking into account the proximity of the all-out elections in May 2015, recommended any final decision be made by the newly elected Council. This was accepted by the Council.
1.5 The Confederated Approach
1.5.1 The model is described in detail in the business case presented to the Council in December 2014. This approach was developed during 2014 by the three Councils as a potential model to be used. In essence the approach set out a move towards setting up public sector companies to operate the Council’s services.
1.6 SDC Overview and Scrutiny Committee
1.6.1 The Council in its decision in December 2014 requested the Overview and Scrutiny Committee to undertake a review of this proposal. This review was reported to Council in April 2015 and included a request for officers to prepare alternative budget options. The alternative options available have been prepared by officers and will be considered as part of the proposed strategic budget review that is planned to commence in March 2016.
1.7 Activity by Cherwell and South Northamptonshire Councils (CDC SNC)
1.7.1 Since the Council decided to defer its decision on the proposed confederated approach, CDC and SNC endorsed the outline business case in December 2015 and then approved a further iteration of the business case, which included, by February 2015, a two-way approach to the confederation. The two Councils have also continued a programme of activity to review the potential for further two-way shared services in all service areas. SDC has not been directly involved with much of this work.
1.7.2 At the meeting of the Cherwell Executive held on 1 February 2016, the issue surrounding the future of three way working was discussed, the following recommendations were agreed:
1.1 To note the progress towards the implementation of the business case for a two way confederation approach as adopted by Council in February 2015 as the basis for the delivery of savings, increased resilience, business improvement and income generation in the medium term.
1.2 To agree that, following discussions with Stratford-on-Avon DC (SDC), no further three way joint working proposals with SDC be developed as SDC have indicated they do not wish to pursue the confederation as their future operating model.
1.3 To agree that the existing three way shared services (Legal and ICT) are reviewed by officers to consider their suitability for continued three way working in light of the fact that SDC do not wish to pursue the confederation and to request that, subject to the approval of recommendation 1.4 below, officers report to the Joint Commissioning Committee on proposed governance and operational delivery arrangements to ensure effective continuation of either or both of these shared service arrangements on a three way basis should such reviews conclude that this option is considered to be desirable.
1.4 Subject to the reviews referred to in recommendation 1.3 above recommending the continuation of three way working for Legal and/or ICT, to delegate authority to the Joint Commissioning Committee to take any executive decisions on the future governance and operational delivery of the said teams to ensure the services are able to continue to meet the strategic objectives of South Northamptonshire Council, Cherwell District Council, and the confederation delivery model.
1.5 To note that SDC are willing to continue the operation of the three way transformation team until the secondment period finishes in March 2017 and recommend to Council that the Transformation Team Section 113 agreement (between Cherwell, South Northants and Stratford-on-Avon) be extended to reflect this (subject to a similar decision being made by SDC).
1.7.3 Given these recommendations it is clear that there is no prospect for progressing joint working opportunities with Cherwell, unless the Council changes its position in relation to the willingness to consider the “confederation delivery model”.
1.8 Leaders’ Meeting
1.8.1 The Leaders of the three councils met in December 2015 and it was clear given the developing devolution agenda and the differing visions of the Councils, the development of further shared services on a three way basis would create greater risks than the benefits that they would accrue. The Leaders therefore agreed that it was impractical to continue with any new arrangements.
1.8.2 However there are decisions required to clarify the future operation of the three shared arrangements for the transformation team, ICT Service and Legal Services. Options are discussed in the paragraph below.
2 Options available to the Cabinet
2.1 The options open to the Cabinet/ Council are to consider whether the existing shared services should continue to operate in their current format or to withdraw from the shared service arrangements.
2.2 For the Legal and ICT Services in respect of the option to continue to work in a shared arrangement CDC and SNC have made it clear that SDC must commit to the vision of operating the services through a jointly owned public controlled company, in line with the business case both councils adopted in February 2015. If SDC is unwilling to so commit, there are two options either to both transfer the SDC staff to CDC/SNC and commission the services from these Councils or to withdraw from the joint working arrangements with CDC and SNC and operate the services directly or in another shared arrangement or outsource. It should be made clear that each of these options require the same decision from all the partners.
2.3 The situation in relation to the Transformation Team is slightly different. As the staff in the team are on secondment until March 2017, it is suggested the most preferable arrangement is to keep the team as it is until that time. The team will continue to focus on delivery of the programme as set out in the TCA bid led by South Northants in 2014, ensuring effective transition arrangements, supporting the TCA projects that are delivering ICT transformation (document management, land and property systems) and sharing learning as appropriate. There is however the option for the Council to withdraw from this Team too.
2.4 There are financial costs associated with any change to the delivery of services at this time, particularly if a new shared arrangement is not put in place. The cost to SDC is not known at this stage but the financial implications section outlines the savings that have been made to date and it could be construed the costs of operating as a single council may be equivalent to those savings. In addition there are risks associated with resilience and capacity from operating individually as a Council. SDC has the option to operate services alone, commission services with the other two current partners or, develop new shared services with other local authority partners. Alternatives are currently being investigated.
3 Evidence Base
3.1 Cabinet reports 17 June 2013, 2 December 2013, 10 March 2014, 16 June 2014, 15 December 2014. Council resolution 15 December 2014 and 27 April 2015.
4 Members’ Comments
4.1 These are contained in the report.
5 Implications of the proposal
5.1 Legal/Human Rights Implications
5.1.1 These will vary dependent on the option for the future delivery of the services. Staff and union consultation will be required under the terms of the Localism Act 2011 before a final decision if SDC is minded to transfer staff to CDC/SNC and/or commission the services in future. Should the three way shared services should cease to continue exit arrangements will be enacted as set out in the three way S113 agreements (see excerpt below).
In the event of a termination for any reason the Councils shall:
(a) co-operate in terminating, modifying, restructuring, assigning or novating contractual arrangements entered into to mutual advantage and properly and timeously execute any documents necessary.
(b) use best endeavours to secure an amicable financial settlement
(c) immediately transfer or return any property including data belonging to the other councils.
5.2 Financial Implications
5.2.1 These are covered in terms of the business case in paragraph 3 above. In addition the savings for Stratford that arose from the first six months of operating the Shared Legal Services was £25,000 and £107,000 for the partnership with Shared ICT Services in the first year of operation.
5.2.2 At this stage detailed financial implications cannot be provided as they will be determined if and when it is decided to cease either the three-way Legal or ICT Service and revert to a different arrangement. If this course of action is pursued there may be additional human resources costs, if either team does not have enough staff to deliver the service following separation. It is believed that this is an unlikely scenario for Legal Services, and for ICT work is currently being undertaken to assess any resources gaps.
5.2.3 There are no financial implications arising from the continuation of the Transformation Programme Team as this is externally funded.
5.2.4 The loss of further three-way shared working opportunities could mean that potential savings through joint working are reduced. The future savings of £100,000 pa which were included within the Medium Term Financial Plan have been removed.
5.3 Environmental Implications
5.3.1 There are no direct environmental implications to this report.
5.4 Corporate Strategy
5.4.1 This report covers issues associated with key objective 3 Responsible Community Leadership.
5.4.2 It should be noted that the decisions made in respect of this item will impact upon the Council’s Sourcing Strategy, it is likely that this will need to be reviewed as a result.
5.5 Analysis of the effects on Equality
5.5.1 There are no deleterious effects on Equality from this proposal.
6 Risk Assessment
6.1 The scale of the potential reductions in financial grant from Central Government requires the Council to take a strategic view as to how services will be provided in the future. The fiscal controls and political priority to keep council tax rises to a minimum means that there will be little opportunity to raise funds from previously used options. The scale of the reductions will require a strategic approach to be undertaken either through a phased reduction in the Council’s operation or the growing of income streams or a combination of the two courses of action.
6.2 Revenue balances can only be used in the short term to help the Council manage the net budget reduction process. Delivering shared services with other local authority partners does provide a potential income opportunity. It follows the highest risk option is to delay the decision on the strategic approach to be employed for the delivery of services into the future.
7 Conclusion
7.1 The three Councils have successfully bid for government funding to drive forward the partnership and delivered shared services in ICT and Legal Services. The Councils do not have a shared vision as to the ultimate vehicle for delivering services and the scale of the sharing of services. Taking into account the devolution agenda and other emerging fiscal policies, it is considered that there is unlikely to be the potential for further delivery of shared services between the partner councils. This means that the Councils need to consider the most appropriate way forward for the delivery of the existing shared services.
7.2 Cherwell have already agreed that unless SDC adopts the “confederation delivery model”, this will result in no further three way joint working. They have also required that the current arrangements for ICT and Legal to be reviewed. South Northants Council is expected to adopt the same approach.
Paul Lankester
CHIEF EXECUTIVE