Contact: Jenny Heath, ext 7402

1 Background

1.1 The Government has maintained its focus on public service performance through a number of mechanisms:

· The publication of performance league tables in respect of performance indicator (PI) results.

· The introduction of Best Value with its duty to publish an annual performance plan and to undertake a programme of fundamental service reviews across all services.

· The introduction of the Comprehensive Performance Assessment (CPA), with its potential threat of intervention or promise of additional freedoms and flexibilities.

· The development of audit and inspection regimes and consequent recommendations for improvement.

1.2 The legislative background for these initiatives is covered by the Local Government Act 1999 and 2002.

1.3 This report summarises the costs of responding to these initiatives and the benefits that the Council has derived by developing its own approach to corporate performance management. This in turn supports the Corporate Strategy aim 5: improving services, specifically in relation to the priority area: `ensure the County Council is judged as high performing'.

1.4 The elements of the Council's response are examined under the following headings which update the analysis contained in two earlier reportsⁱto this committee:

· The Corporate Performance Team

· The Performance Plan

· Fundamental service reviews

· Support for departments

· Audit and inspection

· Member involvement

2 The Corporate Performance Team

2.1 It is no longer useful or desirable to separate out the time spent by the Corporate Performance Team on Best Value alone, as it is now well integrated with other performance related activities. While all of the Corporate Performance Team's activities respond to the Government's performance agenda, they equally provide support for the Council's own ambitions for improving local public services.

2.2 The following table sets out the staffing costs of the central team:

Last year's report excluded costs related to work on CPA, estimated at£40,000 in 2002/03. These have been added back in to this report to provide a consistent basis for comparing activities related to performance management, not just Best Value.

2.3 One additional full-time Policy and Performance Officer was recruited to the Corporate Performance Team during 2003/04. With this additional resource the team has been able to address concerns raised through audit about the data quality of performance indicators and the lack of consistent approaches to service planning , as well as providing some initial support for setting up health review processes.

2.4 There have been significant staff changes within the team during 04/05, resulting in periods when the team has been operating at less than full strength. While this has reduced costs for the current year, it has impacted adversely on the project to integrate service, budget and workforce planning and delayed the compilation of the performance management framework, which will be needed as part of the evidence base for the next corporate assessment in 2005/06.

3 The Performance Plan

3.1 The costs of producing the Performance Plan fall between two financial years as the key production deadlines are 31 March and 30 June. Therefore costs are shown in relation to the calendar year in which the plan is produced.

3.2 There are now two elements to the total costs :

· The web version of the full Performance Plan, with costs relating to web design. While these were anticipated to reduce significantly in 2004, further work to integrate the performance plan website with the web version of the Corporate Strategy and the cost of converting to the new corporate content management system has resulted in continuing expenditure of approximately £4000.

· The summary version produced as an eight-page pullout in the spring edition of Hampshire Now. The costs shown are the additional costs of producing the summary, reflecting the economies of scale that are achieved by integrating publication in this way, rather than producing a stand-alone publication. In 2004/05, the additional costs are no longer significant enough to be identified separately.

3.3 There have been no bound copies of the full performance plan since 2003 as the web version is now the main vehicle for information. All councillors are alerted to major changes to the website as it is updated for the 30 June deadline, through an annual report to full council. Libraries and information centres are provided with a similar script to enable them to assist callers resolve their queries using the web version.

4 Fundamental Service Reviews

4.1 For some time now the Council has pursued a policy of focusing the (Best Value) review programme on cross-cutting services or thematic issues. These reviews are more complex to address and consequently the Council has considerably reduced the number of reviews in its programme. This approach has been discussed with the district auditor and is based on the Council's service planning regime being sufficiently rigorous to ensure there is continuous improvement in the development and delivery of existing services.

4.2 Costs are outlined in the table below. A breakdown of costs per review is given in the appendix. A significant proportion of early costs are estimated.

4.3 Two reviews: Early Years Childcare and Development and Older Persons, were removed from the 03/04 programme by Cabinet in December 2003. Some 03/04 review costs, estimated in last year's report, have now been finalised.

4.4 The direct costs associated with reviews are usually consultation costs, expenses paid to encourage external people to participate in the Council's reviews, or the costs of visiting other organisations to gather information.

4.5 Indirect costs comprise the opportunity cost relating to staff time spent on review activity, when they could be engaged in other work.

4.6 Review outcomes

Each year the Performance Plan summarises the outcomes of (best value) reviews and contains reports on progress with each improvement plan until it is completed.

4.7 The review process

Following the CHIMPS ⁱⁱworkshop on 7 May 2004, it is proposed to streamline the review process still further. The current process requires formal reporting to the Policy Review Committee at three stages of the review. While this has the benefit of keeping the committee briefed on the review, it has the dual disadvantages of disturbing a review's momentum because of the timetable for preparing papers and of undervaluing the representative role of the Members nominated to participate in the review.

It is, therefore, proposed that formal reporting is reduced to the final outcome stage. Learning from the health review process, it is also proposed that the final outcomes are a matter of joint presentation between the officers leading the review and the Members nominated to participate.

5 Support for departments

5.1 The Corporate Performance Team provides support to staff and managers in departments in all aspects of performance management, including reviews or service planning. Hampshire Learning Centre has played an increasing role in facilitating workshop events and the use of `quality tools'. This has decreased direct costs against the corporate training budget, although it has increased the demand on training officer time. As a result costs were not separately identifiable in 2003/04. More robust recording systems have been put in place for 2004/05, and the table below includes a realistic budget of £3,000 for facilitation time.

	99/00 £'000	00/01 £'000	01/02 £'000	02/03 £'000	03/04 £'000	04/05 £'000
Training and development (budget)	31	41	40	35	2	5
Guidance / IT	32	21	9	1.5	0	0

5.2 Performance management processes are continually under review. While costs for written guidance are now insignificant, especially since the website provides the main reference material, some costs continue to ensure lessons are learnt from the way we approach performance management. These include for example the `CHIMPS' workshop, to which members were invited on 7 May 2004 and these have been added to the training / development costs.

5.3 IT systems are being developed to support performance monitoring, so that performance results can be manipulated and used to support decision making. The costs of developing the initial performance indicator system cannot be separately identified as they are being borne by the Enterprise Project as the Council seeks to exploit its existing investment in Systems Applications and Products (SAP).

6 Audit and inspection

6.1 The Government adjusted the Standard Spending Assessment in 2000/01 to allow for Best Value audit and inspection costs. While this ODPM grant has covered the amount of the additional fees, this is against a background of other unavoidable pressures that were not similarly resourced.

6.2 The Audit Commission has recently been pursuing a policy of `Strategic Regulation', which means the amount of audit and inspection work carried out at an authority should be commensurate with the risk of poor performance. The Council has recently responded to an Audit Commission consultation on its inspection processes and is currently engaging with the Local Government Association (LGA) to develop a local government perspective on the extent and added value of regulatory activity.

6.3 Both as an excellent council in the current year and on account of an assessment as a `low risk' authority in previous years, the Council's inspection burden has been reduced by the local auditor. Keeping sound management information relating to performance will be key in maintaining this position.

6.4 The following table provides audit charges for recent years, net of ODPM grant. These fees represent the full range of audit activity, including the audit of financial accounts, so have not been included in the total costs of performance management.

7 Member involvement

7.1 Members have been involved in (best value) reviews since they first began in 2000. Generally between 3 and 5 members are nominated to join each review team and their key role has been to ensure there is challenge in the process. Indicative costs are not currently available for Member involvement. However, Members participating in the equality and diversity review in the current year have just decided it would be beneficial to record the time they spend on this review.

8 Conclusions

8.1 The previous report on the costs and benefits of Best Value identified the costs and benefits of the separate elements of activity. However, 2003/04 has seen the start of their amalgamation into a single integrated framework and while the main driver for this work is to maintain excellent status under CPA, there is also recognition that joining up what are currently separate activities will ultimately lead to greater efficiency, economy and effectiveness.

8.2 As one of only two statutory plans an excellent council has to publish, the Performance Plan has a growing significance in providing evidence of the Council's ability and level of performance. The plan itself must become the end product of a process to monitor progress against key targets at all levels of the organisation. Analysis of these results and extracting key issues or significant variations from original targets will result in the form of self-assessment that is fundamental to the CPA. In addition it must be underpinned by a sound performance management framework, which provides evidence of how performance information is being used to drive forward improvement, take remedial action and ensure accountability and ownership for delivering service improvements.

8.3 Realistically there will be an initial increase in workload for managers as they create plans and develop mechanisms to monitor progress. There are no plans to measure and cost this demand as it is anticipated to be a matter of refocusing resources that are currently used to deliver service plans, budgets, workforce plans and develop other key documents, such as departmental training, IT, health and safety plans, for example.

8.4 The overall cost of responding to the Government's performance initiatives is reducing, due to the Council's efforts in integrating this activity with its own ambitions for service improvement and performance management. With costs for the first four years, since the introduction of Best Value, standing at £2.4m, it is encouraging to note that the combination of measures to streamline approaches has resulted in cost for 2003/04 at less than £.25m. This seems to be a likely level of costs for future years, although current predictions suggest that 2004/05 may show actual costs as low as £200,000.

8.5 The first two reports on the costs and benefits of responding to CPA and Best Value have established a useful protocol in identifying and reporting on the elements which comprise the Council's approach to performance management. However, it is suggested that while Members should continue to be provided with this information in a format which supports year-on-year comparison, there is no useful purpose in continuing to bring a report for debate at the scrutiny and select committee. It is, therefore, proposed that future updates should be provided to all Scrutiny and Select Committee Members outside of the committee process. The timing of the update should ideally be around May / June, when data for the preceding financial year is available.

Recommendations

1 That the Committee notes the costs and benefits of corporate performance management highlighted in this report and considers the mechanism for providing future annual updates.

2 That the (Best Value) review process is streamlined so that formal reporting is confined to the outcome report, and that there should be a joint presentation of the findings at the end of the review by officers and members engaged in the review.