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POLICY AND RESOURCES CABINET PANEL
11 FEBRUARY 2011
M I N U T E S
ATTENDANCE
MEMBERS OF THE PANEL
F Button, M Cowan,P V Goggins, S M Holmes (for K F Emsall), T W Hone, D E Lloyd (Chairman), S J Pile,J M Pitman, S Quilty, R M Roberts (Vice-Chairman),
R L Shakespeare-Smith (for D A Ashley), R H Smith,S J Taylor, R A C Thake, R G Tindall
Other Members in Attendance:
A M R Searing, Chairman, Overview and Scrutiny Committee
Upon consideration of the agenda for the Policy and ResourcesCabinet Panel meeting on 11 February 2011as circulated, copy annexed, conclusions were reached and are recorded below:
Note: No conflicts of interest were declared by any member of the Panel in relation to the matters on which conclusions were reached at this meeting except for the declarations made by S J Taylor, M Cowan, T W Hone, S Quilty,
S M Holmes, R L Shakespeare-Smith, D E Lloyd and R M Roberts (minute 5.1 refers).
PART I
ACTION1. / MINUTES
1.1 / The minutes of the meeting held on 12 January 2011 were confirmed as a correct record and signed by the Chairman.
2. / PUBLIC PETITIONS
2.1 / There were no public petitions.
3. / INTEGRATED PLANNING PROCESS 2011/12 – 2014/15
[Officer Contact: Mike Parsons, Director Resources and Performance]
3.1 / The Panel considered the Integrated Plan 2011/12 – 2014/15. In considering the Plan the Panel took account of: the latest information, provided at the meeting, in relation to funding announcements; information on changes made to the Plan since its consideration by service Cabinet Panels and Cabinet in January; the comments of Cabinet Panels following their considerations at their February meetings; and the recommendations of the Overview and Scrutiny Committee.
3.2 / The main points arising during consideration of each part of the Plan were as follows.
3.3 / Integrated Plan Part A: Corporate Objectives and Performance Framework
3.3.1 / The Panel was invited to note and comment upon proposed changes to the County Council’s Corporate Objectives and Performance Framework following a limited ‘refresh’ of the Corporate Plan to take account of the changing policy and financial context in which the Council is now operating. It was noted that the refresh has involved the removal of a number of indicators considered to be no longer relevant, or those which no longer exist as national indicators, or those over which it is considered the Council has little or no influence. A number of indicators have also been amended to reflect latest available performance information or, in the case of carbon emissions, to add a target for 2013/14.
3.3.2 / In response to a Member question it was clarified that an indicator on bullying is contained within the Children and Young People’s Plan (CYPP), and performance against the CYPP is monitored by the Children’s Services and Corporate Parenting Cabinet Panel which will also shortly be receiving a presentation on ‘e-safety.’
3.3.3 / In debate the need for clear targets against which progress can be easily monitored, together with data on progress which members of the public can easily access, was highlighted.
3.4 / Integrated Plan Part B: Financial and Human Resource Plans including Key Services Issues and Value for Money Analysis
3.4.1 / The Panel noted that changes to Part B of the Plan considered by Cabinet at its 31 January meeting had resulted in movement from a position requiring additional savings of £3.617 million to a surplus of £2.289 million in 2011/12 (agreed changes being contained within Item 4(iii) of the Cabinet papers for that meeting). Due to remaining uncertainties and concern about inflation, the possibility of interest rate rises and other risks, a contingency of £3.3 million was proposed at that stage.
3.4.2 / However, announcement of the Council Tax figures from district councils has increased resources: the revised Plan therefore includes provision for an increased contingency of £5.7million (as last year) to reflect a number of uncertainties over the medium term.
3.4.3 / It was noted that since January the Government had announced the Council Tax Freeze Grant, the Fire Grant and the Community Safety Grant: the latter being approximately 25% lower than currently.
3.4.4 / In relation to reserves, it was clarified that the reserve in respect of Icelandic Bank deposits may or may not be needed, depending on the outcome of the court challenge; it was confirmed that regular discussions are held with services to ensure that reserves are really needed; and cash balances are monitored to ensure that interest payments are maximised (after considerations of security and liquidity have been satisfied).
3.4.5 / In relation to business transformation it was noted that the four-year target for savings is £200m, accepting all uncertainties around the formula review. £135m has been identified through savings (of which £110m are efficiency savings), leaving a current gap of £65m by 2014/15.
3.4.6 / It was noted that there are a number of outstanding government grant announcements, and a virement package may be required once final announcements have been made. Outstanding announcements include the New Homes Bonus, the Music Service and a small number of other grants, as detailed in Item 6(iii) of the Cabinet meeting of 14 February 2011 (full information on changes to the Plan may be found in this report).
3.4.7 / The Director Resources and Performance confirmed that he is satisfied with the robustness of estimates, and that the authority’s reserves are adequate.
3.5 / Comments from Service Cabinet Panels
3.5.1 / The Panel considered the comments of service Cabinet Panels on Part B of the draft Integrated Plan. The Cabinet Panels had met earlier in the month to consider the changes made following Cabinet’s meeting on 31 January and further announcements, and to receive Parts A and C of the Plan. Executive Members for each of the Cabinet Panels were invited to provide further commentary and responded to questions in relation to their portfolios. The views of Cabinet Panels, and the comments of Executive Members, were considered and noted.
3.5.2 / It was requested by Members who had abstained from voting on the Plan thatwhere these are clearly stated at the meeting, the reasons for abstentions be recorded.
3.6 / Comments from the Overview and Scrutiny Committee
3.6.1 / The Panel received and noted a report which informed Members of the outcome of the Overview and Scrutiny Committee’s scrutiny of the Integrated Plan on 4 and 9 February 2011.
3.6.2 / The Executive Member for Education and Skills informed the Panel that whilst he was content to endorse recommendations 5(i) (‘that CSF be requested to ask schools to ensure that those budgets no longer ring fenced continue to fund those services for which monies were originally provided (e.g. family intervention and extended schools provision’); and 5(ii) (‘that CSF be requested to ask schools to ensure that school accounts are made more transparent and that they be published in the public domain’), schools had been given autonomy to decide how to spend their budgets: the authority therefore has limited powers to influence them in this regard.
3.6.3 / In relation to recommendation 6(i) (‘remind schools that they could use their financial allocation to assist with funding home to school projects’), this was endorsed. Recommendation 6(ii) (‘remind schools that they could utilise the expertise in the Passenger Transport Unit to develop their own bus network in the light of the current home to school transport review’)was likewise endorsed.
3.6.4 / In relation to recommendation 6(iii) (‘take measures to ensure that pupils currently receiving free home to school transport do not have it removed’), it was noted that the recommendations from both the Highways and Transport Cabinet Panel and the Education and Skills Cabinet Panel had been to adopt a ‘statutory only’ approach, and that whilst work was being done to look at whether some of the recommendations arising from the recent consultation could be incorporated, this would need to fall outside the revenue budget. The Executive Member for Education and Skills advised that he could therefore neither endorse nor recommend to Cabinet acceptance of this recommendation.
3.7 / Integrated Plan Part C: Treasury Management Policy
3.7.1 / The Panel considered Part C (Treasury Management Policy) of the Plan. It was noted that no changes had been made since the Panel’s consideration of the draft in January, except for the inclusion of wording to specify that the authority would transact only in sterling. This had been added following the Panel’s recommendation in January.
Conclusions:
The Panel:
3.8 / endorsed the Integrated Plan 2011/12 – 2014/15 by majority, the following Liberal Democrat and Labour Members having abstained from voting: M Cowan, P V Goggins, R G Tindall and S J Taylor.
3.9 / recommended that for future revisions of the Council’s corporate objectives and performance framework, consideration be given to involving Members at an early stage, for example through an informal seminar process.
4. / BEST PRACTICE ACCOUNTING PROJECT UPDATE
[Officer Contact: Claire Cook, Assistant Director Finance]
4.1 / The Panel received a report which updated Members on the current status of the Best Practice Accounting Project. Joanne Watts, Head of Accountancy Services, presented the update; Members were also introduced to Alistair Cullen, newly-appointed Finance Manager (Financial Accounts and Co-ordination).
4.2 / The Panel heard that key developments since the last update were that draft skeleton accounts and the restated IFRS adjustments have been provided to the auditors: queries remain around assets for re-sale, but it is expected that these will be resolved shortly, enabling the auditors to start work on the re-submitted accounts. Indications are, that, whilst a few authorities have completed IFRS re-statements, Hertfordshire remains in a good position in comparison with many other authorities. The componentisation policy has also been agreed, and valuers are being instructed for 2010/11. Details of working paper requirements for 2010/11 have been received from the auditors.
4.3 / The Panel was pleased to hear that there has been continuous improvement activity within the finance function, encouraging progress against the project’s work packages, and that work remains on target within current resources, although the risks identified within the report were noted. Members particularly welcomed work to move towards a quarterly close-down process, which should lead to improved processes at year-end.
4.4 / The difficulties associated with SAP and the componentisation approach were noted, and the Panel heard that Tech Forge was being used to try to overcome this. It was suggested that Hampshire County Council could be approached to provide further assistance, having experienced similar issues.
Conclusions:
The Panel:
4.5 / noted the update.
5. / ESTABLISHMENT OF A SHARED INTERNAL AUDIT SERVICE
[Officer Contact: Helen Maneuf, Interim Chief Internal Auditor]
5.1 / The following Members declared a personal, non-prejudicial interest in this item:
S J Taylor, as a Member of Stevenage Borough Council
M Cowan, as a Member of Welwyn Hatfield Borough Council
T W Hone, as a Member of North Herts District Council
S Quilty, as Chairman of the County Council’s Audit Committee
S M Holmes, as a Member of Dacorum Borough Council
R L Shakespeare-Smith, as a Member of North Herts District Council
D E Lloyd, as a Member of Dacorum Borough Council
R M Roberts, as a Member of Dacorum Borough Council
All Members remained in the meeting and participated in the debate.
5.2 / The Panel received a report which proposed the creation of a Shared Internal Audit Service by means of a partnership between the County Council and: East Hertfordshire District Council, North Hertfordshire District Council, Stevenage Borough Council and Welwyn Hatfield Borough Council. The Panel heard that the proposal builds on work, commenced under the Pathfinder Project, to establish shared services in a range of functional areas. Members also heard about the drivers for change in internal audit services; the Shared Internal Audit Service model; objectives of the shared service; risks and mitigations; financial and human resources arrangements; and the consultation processes being undertaken by each of the participating councils.
5.3 / In response to questions, Members were advised that the transition process has been considered, and appropriate transition arrangementsto the new service will be made. In respect of governance arrangements the Panel heard that participating district councils and the County Council will retain their existing Audit Committees and responsibility for ensuring the adequacy of their own systems of internal audit: it is expected that oversight of the shared service will be managed through a joint officer board comprising the Chief Financial Officers of those authorities participating in the service. The shared service will be governed by a Partnership Agreement between the participating councils.
5.4 / In response to questions about costs - and the likely savings arising from the shared service - it was noted that costs will be shared with partners, in proportion to the level of service they require, on a full recovery basis: meaning that the overall position for the County Council will be cost neutral. Further work is needed to identify efficiency targets and deliver cost savings (which will form part of the Partnership Agreement); however, the proposal will result in an overall reduction in the cost of audit services to council tax payers in Hertfordshire. It was recommended that savings achieved over the first stage should be reported to the Audit Committees of the participating councils.
5.5 / The proposal was welcomed and endorsed by the Panel, and Members noted that success with the shared service may assist with the further development of partnership work in other service areas. Although audit arrangements within the Hertfordshire Police Authority are currently undergoing change, it was also recommended that consideration be given to inviting HPA to join the shared service.
Conclusions:
The Panel recommended:
5.6 / that Cabinet approves the proposal that Hertfordshire County Council hosts and becomes a partner in the Shared Internal Audit Service between the Councils identified in the report;
5.7 / that Cabinet authorises the Director Resources and Performance to make the detailed arrangements to establish the Shared Internal Audit Service, including admission of further interested parties if appropriate.
6. / HERTFORDSHIRE PROPERTY PARTNERSHIP CONTRACT RE-PROCUREMENT
[Officer Contact: Angela Bucksey, Assistant Director Property and Technology]
6.1 / The Panel received a report which presented proposals for the re-procuring of the three major consultancy contracts which form the existing Hertfordshire Property Partnership. The report described the background to the Hertfordshire Property Partnership; the process undertaken to understand the needs of the organisation ahead of the re-procurement process; the objectives of the new ‘frameworks’ model and its proposed outline; and financial implications and expected savings.
6.2 / The Panel heard that under the new arrangements it is not expected that the existing Mace and Mouchel contracts will be re-let when they expire in 2012. Instead, it is envisaged that from April 2011 the proposed new arrangements, as outlined in the report, will run in tandem with the existing contracts, which will lapse on expiry. In respect of the Lambert Smith Hampton contract the Panel heard that a tender process will need to be undertaken to replace part of this contract, and a procurement process with a contract start date of April 2012 is proposed.
6.3 / In debate Members strongly endorsed the new approach, with particular benefits being identified as increased choice and competition, and a strong skillset based within the Herts Property function rather than being outsourced. In respect of the latter point it was suggested that it could prove useful for district councils to be able to make use of the expertise available within Herts Property (e.g. access to quantity surveyors). The Panel heard that meetings had taken place with district councils and the councils had been supportive of the proposals: the opportunities for enhanced co-operation would be progressed through discussions with Chief Finance Officers.
6.4 / In relation to schools it was noted that there is a requirement for schools to have an ongoing property support contract, and those schools wishing to move away from Mouchel would need to give a year’s notice under the existing contract. Following the re-procurement process schools could either look to contract elsewhere, or stay with Mouchel if they wished: it was noted that a clear communications strategy with schools would be needed to inform them of the changes and potential benefits, and the Director Resources and Performance advised that work on this was already underway.
Conclusion:
The Panel:
6.5 / endorsed the outline of the new Hertfordshire Property Partnership model, and noted the target savings included within the Council’s transformation programme.
7. / PROPERTY DISPOSALS PROGRAMME
[Officer Contact: Angela Bucksey, Assistant Director Property and Technology]
7.1 / The Panel received a report which provided information on the ongoing progress of properties currently being progressed for disposal; activities under development and completed to promote asset sales; cost of vacant properties; general issues in managing the disposal portfolio; and comparative statistics for the Hertfordshire, Cambridgeshire and Kent property portfolios. The report had been brought to the Panel in response to a request for further information made at the 12 January meeting.
7.2 / Members were updated with the latest information in relation to disposal activity: the Panel heard that Watton-at-Stone is expected to complete shortly, and planning permission has now been received in respect of the former WestburySchool site. It was noted that around £30million of potential sales exist in 2011/12; however, inevitably not all will proceed. The Integrated Plan assumes £23million of sales will be achieved, but even this will be challenging in the current climate.
7.3 / It was noted that uncertainty remains inrelation to early years provision at Watton-at-Stone, and the Assistant Director Property and Technology undertook to provide further information on the current position to the Executive Member for Childrens’ Services. / Assistant Director Property and Technology
7.4 / In debate, a point was made that the cost of retaining redundant properties is high and should as far as possible be avoided, especially in light of current economic conditions. However, it was also highlighted that a rapid ‘fire sale’ disposal could equally be detrimental if the authority fails to secure optimum values. It was recommended that a rigorous analysis of the property estate and potential for disposals be undertaken: the Panel heard that a review of the asset management strategy will be undertaken as part of Workstream 6 (‘Best Use of Assets’) of ‘Council for the Future’ and officers’ commitment to the strengthening of asset management was noted.
7.5 / It was also noted that particular issues can arise in relation to assets such as schools where demographic changes can have an impact: a pragmatic approach is therefore needed in relation to some sites, which may need to be brought back into service at a later date. The Panel also heard about a property owned by the authority in St Albans which had been sold with a leaseback arrangement to enable completion with vacant possession later in the year: it was noted that such arrangements may facilitate the disposal of properties where the authority has permitted the use of its buildings by other organisations.
Conclusion:
The Panel:
7.6 / noted the update, and noted that a review of the asset management strategy will be undertaken as part of the ‘Best Use of Assets’ workstream of the transformation programme.
Kathryn Pettitt