Transformation Exchange: HCC Draft Response

Transformation Exchange: HCC draft response

Strategy and overall approach

What is the Council's overall approach to service transformation (including innovative approaches to service delivery, demand management, early intervention, etc.)?

The themes, activities and workstreams set out below are being developed by the summer of 2015 as part of a coherent strategy alongside a set of financial targets equivalent to a further 14% reduction on revenue spending. In short, reducing our cash limits by £100 million by 31st March 2017.

Private Sector Partner (2)

This mixture of public and private capacity by partnering with Deloitte has proven to be a potent weapon in our spending reduction activity.

Building a Strategy – Opportunity Assessments

Use Deloitte and our own capacity to do an Opportunity Assessment of where we could find further efficiencies and cost reductions. These Opportunity

Assessments build on the success we have had with our own internal Peer

Review processes and the earlier iteration of Corporate Workstreams that we began in 2010. Tied into our budget preparation for 2016/17 this would mean that the same internal business process would be used for both the budget and assessment exercise. This makes best use of staff resources and leaves Cabinet in a position to ultimately decide on political priorities through the budget each year in the normal way, but remain committed to a longer term view of change.

Digital Strategy

See below.

External Spend and Supply Chain Management

Recognising that the vast majority of our budgeted spending is in services we commission or buy from the private sector, almost £600 million per annum, as we look for digital strategies and people reduction programmes to reduce the cost of in-house services, at the same time we expect a major contribution to come from those services and products we buy by further questioning and challenging the need for external procurement.

Innovation

Inherent within the proposed Opportunity Assessments is the need to ensure that we innovate, adapt and create a business culture fit for the future. That requires blending a strong ‘Hampshire brand’ with a creative focus on future partnerships, trading and income opportunities.

Internal Shared Services and the Extended Organisation

The review of central services abolished the three central services departments (e.g. Chief Executive’s, HR and Treasury) and led to a significant reduction in management costs. At the same time new business models in Finance and HR were introduced involving a wider span of controls with fewer senior roles. It is proposed, much as we have developed a leading position in external shared services, to review how well such a model could be applied internally as a future development. This would require a further review of central functions, administrative support and services in all departments and specialist areas of activity.

At the same time it is proposed to accelerate the work associated with trading services and evaluate further how best it can play a part in the future and the issues and implications.

Demand Management and the Voluntary Sector

Part of the financial issue is of course not caused solely by grant reductions but more particularly by increases in demand for services particularly in Adult and Children’s Services. It is therefore important that both services review their strategies for demand management into the future. In this connection it is proposed to accelerate the work relating to the voluntary sector to specifically identify the part they can play in providing early help and slowing down access to more expensive Council based services.

Health Related Issues: Charting a Course

Discussions around BCF have confirmed the difficulty of making progress but the importance of not being deflected from the real opportunities that could be gained. They will make a financial contribution, which otherwise would have increased our savings targets.

Housekeeping – A step further

Explore opportunities to join our services with others, pool budgets, share staff, management and assets and pursue value for money and new ways of working where it is economically advantageous to do so. This will require a further look at the balance of in-house, direct and contracted provision to establish potential benefits of alternative models.

Workforce Transformation

A final round of enhanced voluntary redundancies on the existing enhanced terms and conditions, time limited to the end of March 2015. This helps to capitalise more easily on the turnover and age profile of the staff to provide flexibility across the whole workforce as the transformation programmes and workstreams are worked out. The use of turnover and redundancies also provides (potentially) a significant contribution to the financial targets mentioned above. This also creates space for internal capacity and staff development.

How the elements work together:

If you have adopted any alternative models of delivery (e.g. mutuals, collaborative working with other sectors, or joint initiatives) with other public bodies, could you give us examples?

In February 2014, following three years of extensive work, a pioneering joint working partnership was officially formed between Hampshire County Council, Hampshire Fire and Rescue Service and Hampshire Constabulary - the first example of its kind between three such public sector organisations in England. The partnership is projected to deliver combined savings of up to £4 million each year.

The legal model involves an unincorporated public/public partnership between HCC, HFRS and HC which is a ‘co-operation arrangement’ between public bodies only, aimed at jointly ensuring the delivery of public tasks that all partners have a responsibility to perform. Oxfordshire County Council will be joining the partnership from July 2015.

Key features of the partnership:

·  cost sharing arrangement

·  joint governance

·  joint commitment to grow and attract new partners

·  single employing organisation

·  some joint appointments.

At the heart of the partnership is the Integrated Business Centre (IBC), delivering transactional and business support services to HCC, HFRS and HC. The IBC will roll-out to Oxfordshire County Council during July 2015.

What benefits/issues have you encountered?

The IBC now represents one of the largest transaction operations in the country. The success of the IBC model is based upon delivering modern intuitive systems and processes which will support 85,000 – 90,000 employees by July 2015, when Oxfordshire County Council comes on-board.

By setting up the new IBC to deliver shared services, partners are able to reduce back office overheads, and increase resilience in service provision – making better use of limited public funds. The IBC has already delivered approximately 20% savings for partners.

Critical success factors:

•  Strong political and corporate leadership and management

•  Clarity of shared vision and ambition and an unwillingness to compromise on this

•  A holistic design that clearly defines the inter-relationships between processes, the operating model and technology

•  Commitment to a new and standardised design - managing the change implications in the business

•  Willingness to give up sovereignty and old ways of working

•  Focussing on the IBC users

•  Hampshire’s position:

-  Internal capacity to deliver

-  Ability to invest in IT platform and large scale implementation (165 on project team at one point)

-  Having a private sector partner to provide challenge, capacity and experience

Challenges:

•  Staying true to the design

•  Accepting that some things will not be as good as the old operating model

•  Working in joint teams:

-  Blending different cultures, skills, and approaches

-  Everyone can’t be involved in every decision

-  Adjusting to working in the discipline of a project

•  Accepting that there will be periods of uncertainty

•  Getting the business ready for the change:

-  From bespoke to standard

-  Process discipline

Self-service responsibility

Have you carried out or will you be carrying out any cumulative impact assessments across all proposed changes?

Yes – individual EIAs on proposals will inform cumulative impact assessments both at the departmental and corporate levels in support of budget decision making report to Executive Members, Cabinet and County Council. Further impact assessments will be carried out in relation to implementation of the agreed proposals.

Finance

What is your medium-term financial strategy, including your budget assumptions for 2015/2016 and beyond?

A high level medium term forecast to 2017/18 has been produced with the

following key assumptions:-

 No council tax increases for the period to 2017/18;

 Decreases of 10% per annum in all forms of Government grants;

 Annual inflation of around £19m per annum;

 Full compensation for past CTFG’s built into the baseline grant figures

from 2016/17 (equivalent to around £28m);

 No allowance for social care growth other than the Children’s base

budget adjustment in 2015/16 outlined in paragraph 5.5;

 No allowance for the potential additional cost of the Care Act; and

 A £6m increase in national insurance contributions as a result of

proposed changes to national pension arrangements in respect of public

sector employers who opt out of SERPS.

Taking all of these factors into account and assuming that the Council delivers

on the savings plans for Transformation to 2015, the net gap by the 2017/18

financial year is £98m. As in previous years, these savings will be targeted

through Corporate Workstreams and Departmental Budgets. This would equate

to further cash limit reductions of around 14% in Departmental budgets over the

two years.

Given this position, it would be prudent at this stage to proceed on the basis

that a further £98m of savings is required across the County Council by

2017/18, this is predicated on the Council’s ability to meet on a one-off basis a

very significant gap in funding in 2016/17 in order to give the longer lead in time

for delivery. Even over a two year period, this is clearly a very challenging

prospect given the value of savings that have already been taken out of the

system and the additional effort and levels of transformation activity that are

required to achieve further phases of savings.

In the past, the County Council has tackled the savings programmes by:

 Planning early and ensuring that everyone understands and is focused

on what needs to be achieved;

 Giving itself the time and capacity to achieve the changes in services

and structures required;

 Supplementing capacity and driving out savings through Corporate

Workstream Programmes; and

 Providing investment for change by allowing Departments to keep

underspends and providing other targeted funding where appropriate.

This strategy has served the County Council well throughout the period of

austerity and there is no overriding argument to change the formula at this

stage, other than to recognise that the time, capacity and investment required

to achieve the next phase of transformation may be greater than before.

What reductions in spend has your authority achieved so far?

What are your targets for planned spending reductions beyond 2015?

See above

What is your council tax policy?

For 2015/6 – no Council Tax increase. For 16/17 onwards - part of public consultation on the budget but an assumption in the MTFS of no increase.

Digital

What progress have you made in implementing a digital strategy? Are you able to share at this stage?
We have run a number of workshops over recent months, supported by Deloitte, to bring together experiences from the private sector and technology industry and identify over 100+ initiatives where digital tools and capabilities can support and enable us to transform the way we work andthe services we deliver. These were grouped and prioritised into six key areas, as part of the first wave of our Digital Strategy.These are shown below, together with how each area feeds into our future position.
The next stage is to prioritise the digital requirements aligned to the outcomes of the opportunity assessments that have been undertaken as part of the overall transformation programme.This is ensure that we have the necessary tools and capabilities in place to deliver our transformation plans.
For us to achieve our vision, we cannot focus solely on implementing digital solutions, or just redesign the way we deliver public services.However, as those aspects start to come together, and to ensure that we are all ready to embrace the different way of working, we will be running Workforce Development (culture change, behaviours and skills) programmes alongside these changes.

Consultation

What approach are you taking regarding consultations with partners and the public on your transformation strategy, as well as the service changes?

Full public consultation planned for March-April 2015 to inform transformation plans and budget setting in June 2015.

Departmental sessions are to be held with stakeholders and partners on specific transformation proposals.

Update reporting to key partnership groups including the Hampshire Partnership and Hampshire & Isle of Wight Local Government Association during May2015. [To be confirmed]