Contact: Paul Carey-Kent, (01962) 847525 [email protected]

Gary Smith, (01962) 847691 [email protected]

1 Introduction

1.1 Members will be aware that the new framework for the Comprehensive Performance Assessment (CPA) incorporates in its use of resources block a new emphasis on value for money. The Council is required by the end of July to produce a self-assessment of its performance in obtaining value for money, and this report summarises the approach being taken to this. In practice the Council will also need to provide a self assessment of its performance on the other components as well to assist the Audit Commission in making its judgement.

2 Background

2.1 By way of background the Audit Commission's criteria for value for money assessment are attached at Appendix 1. This forms a component of the use of resources assessment, an area in which the Council currently scores a maximum of four and for which a score of at least three will be a requirement of excellent status under the new framework. Current performance is therefore good, but:

· the requirements under the regularity and governance areas for use of resources have been made more difficult - indeed they are badged as a "harder test" by the Audit Commission. In broad terms, a performance scoring 4/4 in the old framework equates to a score of 2/4 in the new framework, which is assessed as `at only minimum requirements - adequate performance'. Improvement is therefore required to move from an `old 4/4' to a `new 3/4', which is `consistently above minimum requirements - performing well'

· the new requirements to demonstrate value for money are also demanding. For example, achieving the Gershon efficiency targets of 2.5% improvement per year achieves 2/4, with councils expected to go beyond that to achieve the higher scores

2.2 The Audit Commission's approach to implementing this new requirement follows two familiar tendencies:

· imposition of unreasonable timetables: guidance on the value for money self-assessment was not received until June, and some elements of the guidance were a month late and not received until July. Nonetheless, councils were required to complete the self assessment for return by the end of July

· transfer of the work involved from the Audit Commission to local authorities: a thorough self assessment must be completed, including links to evidence, in order to simplify the auditors' task.

2.3 In view of these factors, it is not possible to provide a copy of the completed self assessment in time for the papers for this meeting. Instead, this report sets out the rules to be applied and an overview of the likely results.

3 CPA 2005 framework and rules

3.1 The CPA system has undergone a major review which has resulted in significant change to the 2005 regime. The diagram attached in Appendix 2 illustrates the new framework. Overall, as noted above, the changes will make it more difficult to achieve or maintain excellent status. This `raising of the bar' is a key principle of the Audit Commission's approach to ensuring continuous improvement.

3.2 Headline changes to the framework include:

· an explicit assessment of value for money requiring a self-assessment, which forms part of the much tougher criteria for the use of resources block - this also incorporates the annual efficiency statements

· introduction of the rule-based categorisation, ensuring minimum standards across the board but increasing the risk of failure because of a single poor-performing element within the framework

· the principle of continuous improvement is supported by the introduction of a `direction of travel' statement, requiring a self-assessment, which will assess the likelihood for improvement

· corporate assessments are to be conducted alongside joint area reviews (JARs), with shared outputs, with all councils to be assessed at least once between 2005-08. As a transitional measure the new (harder) corporate assessment score will be published alongside the previous score with the highest used to determine the overall category, until all councils have gone through the process. Similar transitional arrangements have been put in place so that in practice the value for money score will not specifically influence the rating which the Council achieves in December 2005, but a score of at least 3/4 in this component will be a necessary condition of excellent status in the 2006 assessment. However 3/4 will be necessary on all the other use of resources components to retain excellent status in 2005

· services for children and young people combined into a single service block (including education and social services) to reflect changes in service provision following the Children Act 2004.

3.3 In addition, the Audit Commission has launched two further pieces of consultation on direction of travel statements and the service assessment frameworks.

4 Use of resources and value for money

4.1 The reworked use of resources block, which now includes an explicit assessment of value for money, is one of the biggest challenges in CPA 2005 and contains much tougher criteria. Use of resources is a level one block which means the council must achieve a score of three to be in with a chance of retaining excellent status.

4.2 The criteria within the block are cumulative, for example a council meeting criteria at level three could not be given a score of three unless it also met the criteria for level two. More than this, to achieve level three more extensive evidence of the outcomes achieved at level two is necessary - for a score of three, level two criteria should be `embedded' and `operating effectively'.

4.3 Use of resources is split into five sections:

· financial reporting

· financial management

· financial standing

· internal control

· value for money

4.4 Value for money is defined as the relationship between the 3Es:

· Economy - price paid for what goes into providing a service

· Efficiency - measures of productivity, how much you get out in relation to what is put in

· Effectiveness - measure of the impact achieved and can be quantitative or qualitative.

4.5 Value for money is high when there is an optimum balance between all three: relatively low costs; high productivity; and successful outcomes.

4.6 The use of resources block requires a self-assessment of the extent to which value for money is achieved and how the Council manages and improves value for money:

· value for money achieved - this will draw on evidence of how well costs compare with others, whether costs are commensurate with service delivery, performance and outcomes achieved, and whether costs reflect policy decisions

· value for money managed and improved - this will draw on evidence that each council monitors and reviews value for money, has improved value for money and achieved efficiency gains over the last three years, and whether procurement and other spending decisions take account of full long term costs.

4.7 Value for money was due to be subject to extra weighting, through rules limiting the overall score of the block, but this prioritising of value for money will now not be introduced until 2006 in recognition of the challenge presented.

4.8 To assist in this self-assessment, the Audit Commission provided a delayed toolkit to facilitate comparison with other authorities. Analysis of this will form a key part of the self-assessment. It should also be noted that the use of resources block incorporates Gershon efficiency targets and the value for money self-assessment links with the annual efficiency statements, which have to be attached.

5 Summary of approach and likely factors in the self-assessment

5.1 Evidence is being brought together for the self-assessment through a working group made up of the County Treasurer's and Policy Unit staff.

5.2 In summary the Council can show that it has a council tax in the lower quartile of comparable county councils, but provides services at an upper quartile level of performance (as indicated most simply by its excellent status). That simple theme can be demonstrated in more detail through the evidence set out in the comparative profiles provided by the Audit Commission, various submissions made to inspectorates, the Council's annual performance plan and the range of best value performance indicators covered by that plan - trends in which are also set out in the quality cross-check indicators used for the efficiency statements. This type of evidence should indicate that the Council has provided and continues to provide good value for money.

5.3 However it is also necessary to demonstrate:

· that new value for money improvements are occurring - albeit from a relatively strong starting point, which makes the process more difficult. Here the backward look efficiency statement for 2004/05 and the forward plans for 2005/06 onwards can be cited. Achievements in the local public service agreement will also be relevant

· it is necessary to demonstrate not just that value for money is achieved, but that the right processes are in place to enable this: the overall framework linking policy development, budgets and workforce planning through service plans is important here; together with use of review mechanisms such as best value, consultancy reviews and project appraisals

· it is also important to show that the areas on which the Council chooses to spend are linked to informed political choices which are in turn linked to assessments of local opinion. The Council can show such links to Mori survey evidence and other consultation processes, with a clear path through to informed political choices as reflected in the corporate strategy. The introduction of accredited community safety officers and additional investment in highways maintenance are good examples. The four short-term Cabinet priorities also provide supporting evidence

· there is also scope to illustrate good practice through a range of initiatives taken to improve value for money. Good examples include Project Integra (especially if the whole life costing approach is taken); the Enterprise Project replacement of systems, with its associated cash benefits realisation built into the budget; a well-developed procurement strategy; and the Enhance project to build extra nursing care capacity.

5.4 Pulling all this together, a score of three will be claimed, and if this is confirmed it is hoped that similar outcomes can be maintained in the other areas of the use of resources assessment so that an overall score of three is achieved, commensurate with retaining an excellent status. However, a score of four is unlikely to be achievable, whereas slipping down to two is a definite danger, and could lead to the loss of excellent status in the 2005 CPA.

5.5 A further report will be made after the self assessment and the Audit Commission's rating on the scale of 1-4, showing the extent of change necessary to improve the rating further, subject to those changes being affordable and value for money in their own right.

6 Equality Impact Assessment

6.1 An impact assessment has been made on the proposals within this paper and shown that they are not discriminatory.

Section 100 D - Local Government Act 1972 - background documents

The following documents discuss facts or matters on which this report, or an important part of it, is based and have been relied upon to a material extent in the preparation of this report.

NB the list excludes:

Published works.

Documents which disclose exempt or confidential information as defined in the Act.

None