CABINET ITEM COVERING SHEET PROFORMA
AGENDA ITEM
REPORT TO CABINET
1 December 2005
REPORT OF CORPORATE MANAGEMENT TEAM
COUNCIL DECISION/CABINET DECISION
Cabinet Member – Councillor David Coleman, Deputy Leader
STOCKTON/DARLINGTON PARTNERSHIP
1. Summary
The purpose of this report is to update Members on initial work that has been undertaken looking into the possibility of joint working between Stockton and Darlington Councils and to seek approval to progress to a detailed design stage.
2. Recommendations
1. That the approval of the initial feasibility work be noted.
2. That approval is given to progress to the detailed design stage of the project.
3. Reasons for the Recommendations/Decision(s)
Gershon and the CPA process are driving local authorities into considering alternative methods of service delivery. The report seeks approval to undertake a detailed analysis of a partnership approach to service delivery in a number of corporate and transactional service areas.
4. Members Interests
Members (including co-opted members with voting rights) should consider whether they have a personal interest in the item as defined in the Council’s code of conduct (paragraph 8) and, if so, declare the existence and nature of that interest in accordance with paragraph 9 of the code.
Where a Member regards him/herself as having a personal interest in the item, he/she must then consider whether that interest is one which a member of the public, with knowledge of the relevant facts, would reasonably regard as so significant that it is likely to prejudice the Member’s judgement of the public interest (paragraph 10 of the code of conduct).
A Member with a prejudicial interest in any matter must withdraw from the room where the meeting is being held, whilst the matter is being considered; not exercise executive functions in relation to the matter and not seek improperly to influence the decision about the matter (paragraph 12 of the Code).
Further to the above, it should be noted that any Member attending a meeting of Cabinet, Select Committee etc.; whether or not they are a member of the Cabinet or Select Committee concerned, must declare any personal interest which they have in the business being considered at the meeting, and if their interest is prejudicial, they must also leave the meeting room during consideration of the relevant item.
NOT FOR PUBLICATION
PARAGRAPHS ???? OF SCHEDULE 12A
LOCAL GOVERNMENT ACT 1972
AGENDA ITEM
REPORT TO CABINET
1 December 2005
REPORT OF CORPORATE MANAGEMENT TEAM
COUNCIL DECISION/CABINET DECISION/KEY DECISION
TITLE AND LEAD CABINET MEMBER
STOCKTON/DARLINGTON PARTNERSHIP
SUMMARY
The purpose of this report is to update Members on initial work that has been undertaken looking into the possibility of joint working between Stockton and Darlington Councils and to seek approval to progress to a detailed design stage.
RECOMMENDATIONS
1. That the approval of the initial feasibility work be noted.
2. That approval is given to progress to the detailed design stage of the project.
DETAIL
1. Members will recall that as a result of a report presented by Sir Peter Gershon the Spending Review 2004 placed a requirement on local authorities to achieve “efficiency gains” totalling £6.45 billion by 2007/08. This equated to 2.5% per annum, the efficiencies to be half cashable, half non-cashable. The main driver was to release more funds for priority services.
2. Detailed guidance was received which required all local authorities to produce forward and backward looking Annual Efficiency Statements each year (backward looking only for 2004/05). The statements and achievement against them are assessed as part of the newly introduced “Use of Resources Block” of the CPA process.
3. How efficiencies were to be achieved was left to each local authority. There was, however, some focus placed on cross-cutting areas such as:
Corporate Services
Corporate Services includes, but is not limited to, Finance, HR (in respect of training; only the function, not the spend), ICT, Procurement (the function, not the spend), Legal Services, Facilities Management, Travel Services, Security Services and Marketing & Communications.
Procurement
Procured goods and services include commodity goods and services – utilities, commodity IT, equipment and supplies, telecoms, vehicles etc – as well as professional services, temporary labour and construction. It also includes sector specific markets for areas such as roads, social housing, social care, environmental services and police.
Productive time
The focus for this workstream is on increasing the productivity of front line staff, for example teachers, police officers, consultants, GPs, nurses and those who support them.
Transactions
The focus for this workstream applies to those efficiencies that can be gained through such means as combining activities to produce more efficient ways of dealing with customers or streamlining processes, or making a major shift from manual to electronic processing. Transactions includes areas such as council tax collection, housing benefit administration and collection of non-domestic rates.
4. Efficiency is not about cuts, but about raising productivity and enhancing value:
- Reducing inputs for the same outputs
- Getting greater outputs for the same inputs
- Getting a proportion of outputs which is greater than the increased proportion of inputs.
5. The ODPM has played a co-ordinating role and sponsored the Regional Centres of Excellence to act as change agents to gather data and develop opportunities for shared working in the region. Pressure is gathering pace nationally for more joint working and it is only a matter of time before this is challenged specifically via the value for money criteria in the CPA Use of Resources Block. Stockton has produced both the backward looking efficiency statement for 2004/05 and forward one for 2005/06. Over the 3 years (to the end of 2007/08) Stockton is required to achieve efficiencies of £12m. To date £1.7m was achieved in 2004/05 and £6m is estimated for 2005/06. Stockton is therefore well on the way to achieving the 2007/08 target.
6. One aspect which has made a considerable contribution is the way in which the medium term financial plan is operated. The 1% increase in resource allocation to many services achieves an automatic efficiency which generates headroom to be used on priorities. We would argue that we have operated the Gershon rules well ahead of them being invented! The Resources Service Grouping, amongst many others, has operated within this regime since its inception and has seen considerable change during this time. Opportunities to challenge how services are delivered is commonplace and has allowed the services to continue to deliver good quality services within the available resource. Within the current medium term financial plan the Service Grouping faces considerable efficiency targets:
2005/06 £ 800,000 - On target to achieve
2006/07 £1,100,000
2007/08 £1,400,000
This is at a time when demands on services are increasing due to the various national initiatives the services face directly or in their support of other services.
7. With a view to ensuring value for money is maintained, Gershon efficiencies delivered and increasing demands accommodated, the Resources Service Grouping along with the Benefits Service and Legal Services have commenced the consideration of alternative options for service delivery.
Initial Consideration
8. The Government’s direction seems to favour some form of joint working or shared services. One solution is to enter into a strategic partnership arrangement as has been done by some Councils in the Tees Valley and elsewhere. Many agreements were however established at a time before the introduction of Prudential Borrowing when Councils faced problems with up front investment. Many have been established due to poor/costly service delivery or as a response to acute recruitment problems. There have, however, been a number of high profile issues with some of these arrangements and the inflexibility of many of these brings about quite considerable business risk particularly during a period of substantial change, as has been the case over recent years.
9. An option which is beginning to emerge is a public/public arrangement and this is something which is being supported by the Regional Centre of Excellence. The option is not without problems, some local authorities have attempted this approach for services such as taxation, benefits and payroll, however the size of the partnership has not been conducive to progress. Research shows that partnerships involving larger numbers of local authorities (or other public sector bodies) typically 6 or 8 fail to reach agreement. Several projects are being implemented across the country although due to the issues of size few have reached implementation at this stage.
10. The Government also seems keen to promote regional centres of service provision. In the North East area for example, this would involve approximately 30 Councils all of whom are at different stages in terms of computer systems and all of whom have differing capabilities and capacities. If research shows that 6 to 8 willing Councils fail to implement such a project, the ability of 30 Councils regionally embarking on a huge joint working initiative seems optimistic at least.
11. Nonetheless, for the purposes of ensuring value for money an alternative approach needs to be considered. It is felt appropriate that perhaps the sub-region were the place to start. The issue in the sub-region is that of the 5 unitaries, 3 have strategic partnering arrangements (with different partners) covering many of these services. The possibility for joint working is therefore limited. The remaining unitary however, Darlington Borough Council, like Stockton is a Council rated as ‘excellent’ via the CPA process, has similar financial issues and is keen to investigate the potential for joint working. The proposal has the potential to deliver significant benefits to Stockton including the ability to learn from such an approach and thereby extending it into other areas. With this in mind Deloittes were jointly appointed to carry out a piece of work which considered the possibility for joint working on Resources services, Benefits and Legal Services. The remit was to look at all avenues, not necessarily a one size fits all solution, and to report back initial findings.
Deloitte’s Initial Findings
12. The services to be considered were within the corporate and transactional work streams of Gershon as follows:
- Finance
- Internal Audit
- Human Resources
- Information & Communication Technology
- Procurement
- Taxation
- Customer Services
- Design & Print
- Benefits
- Legal
The process involved consideration of high level financial and statistical information as well as interviewing Heads of Service and key service providers.
13. In undertaking the exercise Deloittes were asked specifically to gauge cultural issues and potential barriers. The two Councils are rated as ‘excellent’ and both are keen to ensure that this is maintained. The consultants were also asked to consider options in the longer term as well as the more immediate. A summary report outlining the process, findings and conclusions is available on the intranet and in the Members’ Library.
14. It is pleasing to note that in interviewing senior managers from both organisations Deloittes found:
“These interviews have been particularly successful as a result of:
· The openness of interviewees to the concept of joint service delivery.
· The innovative ideas proposed by the interviewees as to areas of joint service delivery.
· The high degree of consensus across the interviewees. We noted that the joint interviews resulted in enhanced commitment to the concept of joint service delivery”.
15. The report concludes that financial benefits of between £0.9m and £1.5m per annum could be achieved. These are, however, high level estimates, no costs having been taken into account. The next stage, if approved, would be to undertake a detailed design at which point transitional costs, which may be considerable, would be taken into account. Indeed it is interesting to note that Deloittes felt some services would struggle to achieve even minimal efficiencies, suggesting that value for money was already being achieved in a number of areas.
16. The table at Appendix A provides a summary of the potential benefits for each service. A breakdown of the high level efficiencies per service is provided at Appendix B where it can be seen at this stage that Design & Print, Payroll, Finance, Procurement and ICT contribute the most to the efficiency gains.
17. The matrix at Appendix C provides a pictorial interpretation of the challenges and benefits, the services in the top left-hand quarter being the ones which Deloittes feel are the least challenging to implement whilst providing most benefit. Indeed, the computer systems and processes operated by these services could provide an opportunity for some form of combined support service centre and this needs to be investigated further.
Next Stage
18. The next stage in the process is to undertake a detailed design focusing, for phase one, on the five areas highlighted above. A key component of this will be to consider the effective governance arrangements. Members’ approval is sought to enter this stage. A further report will be presented to Cabinet once this work has been completed.
FINANCIAL AND LEGAL IMPLICATIONS
Financial
The detailed design stage will require an allocation of resources either to back-fill posts or to procure external advice (or both). The Regional Centre of Excellence is extremely interested in the work that has currently been done and has funds available. A bid for resources is to be made. Failing this, Resources managed surplus will be used to resource the work. The report highlights £0.9m to £1.5m efficiencies per annum, however, substantial transactional costs will be incurred. A more accurate prediction of efficiency will be produced as part of the detailed design stage.
Legal
There are no legal implications associated with this report. The next phase of the project will, however, have to consider the most appropriate and robust governance arrangements.
RISK ASSESSMENT
This report is categorised as low to medium risk. Existing management systems and daily routine activities are sufficient to control and reduce risk. Consideration of risk will need to be given in the next stage of the project.
COMMUNITY STRATEGY IMPLICATIONS
The project supports the CPA process and the Government’s efficiency agenda.
CONSULTATION
As with any change it is important that staff and trades unions are kept informed of progress. To that end the Deloitte reports are available on the intranet and Unison has been forwarded copies. Communications and consultation will continue throughout the process.