HERTFORDSHIRE COUNTY COUNCIL

CABINET

MONDAY, 20 JUNE2011 AT 2.00PM

INVEST TO TRANSFORM FUND

Report of Director Resources Performance

Authors:Claire Cook (Tel: 01992 555737)

Stuart Campbell (Tel. 01992 588397)

Executive Members:David Lloyd, Resources & Economic Well-Being

Derek Ashley, Transformation, Performance and Waste Management

1.Purpose Of Report

1.1To enable Cabinet to decide whether to approve the investment proposals set out in section 5 of the reportfrom the Invest to Transform Fund (ITT).

2.Summary

2.1As part of the Integrated Plan Proposals, in February 2010, the County Council created an Invest to Transform Fund of £4.5 million to provide the capacity to invest in programmes which would release efficiency savings. This is in the context of the significant financial challenges facing the Authority. The fund currently totals £15.7 million, taking account of the proposal to transfer £8 million of the 2010/11 underspend into the fund which is set out elsewhere on this agenda.

2.2This report provides details of four investment business cases:-

  • one-off implementation costs for Changes to Terms & Conditions for non school staff
  • three linked investment business cases flowing from the transformation of customer services work undertaken in partnership with Serco:

(a) Health and Communities - Information, assessment, intake and review

(b) Health and Communities - Disabled Facilities Grant

(c) Highways Customer Contact

2.3The County Council endorsed the collective agreement with Unison relating to changes to Terms and Conditions for National Joint Council (NJC) Local Government Employees effective from 1 April 2012at its meeting on 17 May 2011. The one-off costs of £8.5 million are estimated to generate ongoing full-year efficiencies of an £6.8 million per annum.The Serco transformation projects require a total investment of £2.5m, and would generate ongoing gross full-year efficiencies of between £1.5 and £1.7m p.a. for the remaining 7 years of the SMS contract. It should be noted that the Council expects to enter into further business cases with Serco on the basis of this investment which will further improve the level of efficiencies delivered for this investment. The above range is for the first 3 business cases only.

3.Recommendations

3.1The Policy, Resources & Performance Cabinet Panel will be considering a report on this item of business at its meeting on 15 June 2011. The recommendation being made to the Panel is that:-

“The Panel considers the information in the report and recommendsthat Cabinetapproves the proposed investments set out in section 5 of thereport.”

3.2The Panel’s recommendations will be reported orally at the meeting and circulated to Members in the Order Sheet.

4.Background

4.1The Invest to Transform (ITT) Fund is a specific earmarked reserve of £15.7 million set aside to support innovative projects across Hertfordshire County Council that will underpin service transformation and deliver future efficiencies.

4.2In view of the financial challenges facing the Council in the short to medium-term, the Fund was launched in 2010 to help meet the challenge of delivering cash-releasing efficiency targets.

4.3 The objective of the Invest to Transform Fund is to invest for Council-wide projects to:

  • improve the cost effectiveness and value for money of services;
  • deliver quantifiable improvements in performance; and
  • achieve long-term savings and efficiencies.

4.4Bids are considered by departmental management boards and the Strategic Management Board. The Director Resources Performance, in consultation with the Executive Member for Resources Economic Well-being, has delegated authority to approve all bids below £150,000. All bids above this level, or where the payback is in excess of 3 years, are approved by Cabinet.

4.5This report concerns four business cases:

  • Implementation of Changes to Terms and Conditions for non-school staff
  • three linked investment business cases flowing from the transformation of customer services workundertaken in partnership with Serco:

(a) Health and Communities - Information, assessment, intake and review

(b) Health and Communities - Disabled Facilities Grant

(c) Highways Customer Contact

The investment from County Council funds is in excess of £150,000 and is, therefore, presented to Cabinet for Member consideration and approval.

5.Investment Business Cases

5.1Implementation of Changes to Terms and Conditions for non-schools staff

5.1.1At its meeting on17 May 2011,County Council endorsed the Collective Agreement with UNISON for changes to terms and conditions for National Joint Council (NJC) Local Government Employees effective from 1 April 2012, and agreed to make amendments to the Council’s current redundancy pay policy.

5.1.2 The collective agreement covers changes to:-

  • Sick pay entitlement
  • Fringe allowances
  • Probationary periods
  • Excess travel (disturbance) allowances
  • Premium payments
  • Sleep in payments

The agreement also provides for an extension of 30% enhancement to redundancy pay for voluntary redundancy between June 2011 to 31 March 2012 (applies to those aged 54 and under).

5.1.3There is a one-off lump sum to help off set the impact of changes which will be payable in April 2012. It is proposed to meet the costs of this, estimated at £8.5 million, from the Invest to Transform Fund. The ongoing savings for non-schools staff are estimated to be £6.8 million per annum as shown in the table below.

2012/13 / 2013/14 / 2014/15
Non schools
  • costs
  • savings
NET / -£8.5m
£7.2m
-£1.3m / £6.8m / £6.8m

5.1.4Payback of the capital investment would be achieved before the end of 2013/14, within a year and a half of the original investment.

5.2Serco transformation of customer service work

5.1.1A great deal of work has been undertaken by Serco alongside staff from Environment and Commercial Services (ECS) and Health and Community Services (HCS) departments, as well as with district councils.

5.1.2The business cases and guaranteed savings are projected over the 8 year time frame of the contract. The proposed investment in technology would support not only the business cases currently under consideration, but would also be expected to underpin further business cases as well as supporting the Council’s day to day business and, in particular, its Channel Shift strategy. Theestimated savings of between £1.5 to 1.7 million per annum are the resultant of an investment of £2.5 million for the Council’s share of investment in technology and organisational change.

5.1.3The three business cases under consideration at this meeting propose a transfer of servicesfrom Health and Community Services and the Environmentand Commercial Services departments. Associated with this transfer are Serco guaranteed savings. It is anticipated that further savings within the County Council could be made as a result of this work and other related activity e.g. HCS Lean Review.

5.1.4 Further work is needed on all three propositions to ensure there is absolute clarity about what staff and functions are to be transferred and that realistic assumptions are being made about channel shift, the impact of changing systems and working practices and about savings and how these are to be achieved. These points will be systematically worked through with the objective of reaching final agreement in the next few weeks.

5.1.5 Payback of the capital investment would be achieved before the end of 2013/14.

6.Financial Implications

6.1The financial implications of the proposals set out in the report are summarised in the table below. The overall balance remaining on the fund following the business cases set out in section 5 of this report and the transfer from underspend proposed elsewhere on this agenda would be £13.541 million at the end of 2011/12. This would be available for investment in further cash releasing efficiencies.

ITT Fund

2011/12 / 2012/13 / 2013/14
£’000 / £’000 / £’000
Balance of Fund b/f / 7,740 / 13,541 / 13,995
Add proposed transfer from underspend / 8,000
Add payback from existing schemes / 301 / 254 / 0
Fund available for use / 16,041 / 13,795 / 13,995
Less proposed investments:
Terms and conditions / (8,500) / 0
Serco transformation of customer services work / (2,500) / 0 / 0
13,541 / 5,295 / 13,995
Payback
Terms and conditions / 7,200 / 1,300
Serco transformation of customer services work / * 1,500 / 1,000
-
Balance of Fund c/f / 13,541 / 13,995 / 16,295

* £1.5m of efficiencies is “worst case” scenario for the Serco investment for the existing 3 business cases only. HCC expects to better this position moving forwards.

Background Information

County Council Integrated Plan 20010/11 to 2013/14, Agenda Item 7, 23 February 2010

County Council Proposals For Changes To Terms And Conditions Of Employment By Collective Agreement With Unison And Amendments To Redundancy Pay Policy, 17 May 2011

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