Contact: Jenny Heath, ext: 7402 Email: [email protected].

1 Summary

1.1 This report updates the Cabinet on changes to the model of assessment for the Use of Resources block in the Comprehensive Performance Assessment (CPA) and the audit processes which evaluate the Council's performance in this area. It also reports progress in addressing the recommendations made following the assessment in 2005.

1.2 In addition the opportunity is taken to confirm the Council's approach to publishing information previously contained in an annual report and currently integrated within the annual Performance Plan.

2 2005 assessment and scores

2.1 The CPA model was revised last year to provide a `harder test' of council ability. The use of resources block in particular employed more rigorous criteria, as well as receiving a greater weighting within the overall model and a Value for Money self-assessment was introduced as a key element within the Use of Resources block.

2.2 Last year the Council achieved a score of three out of four for the Use of Resources, compared to four out of four in the former model. However, this compared favourably with other councils, with only three nationally achieving the top score of four for use of resources: City of London, East Riding of Yorkshire and Wandsworth. This was widely recognised as the effect of the changing CPA model (`The Harder Test').

2.3 The Council also scored three out of a possible four for the Value for Money element. The self assessment drew on:

· information provided internally through normal performance reporting processes, which monitor the Council's progress against its own and national targets.

· the Annual Efficiency Statements, completed in April (forward look to gains planned in 2005/06 and beyond) and July (backward look to gains made 2004/05). The Council is on target to exceed the 2.5% efficiency gains required under Gershon - a positive factor for the VfM assessment overall.

· commentaries on data profiles which compare cost and performance information both across all county councils and across our nearest CIPFA neighbours¹. The data is provided by the Audit Commission and commented on by Departmental Finance Managers.

2.4 The auditors made the following recommendations related to the key lines of enquiry which the Council should address to move to a score of four:

Improvement areas to demonstrate achieving value for money:

· Develop the benchmarking of service costs

· Integrate the monitoring and management of performance and cost information

· Ensure greater consistency across services in making explicit the links between quality, cost and value for money

· Address the relatively high cost areas

· Gain an understanding of whether the relatively poor performance in some aspects of social services is linked to low spend.

Improvement areas to demonstrate managing and improving value for money:

· Ensure that information comparing cost and quality is available consistently across all services, that links between cost and quality are understood and that results are challenged.

· Ensure that ambitious targets to improve efficiency and value for money are set and achieved consistently across all services

· Complete the development of performance management of procurement

· Ensure that service planning and performance management are consistent across services and fully linked to value for money and related targets.

These recommendations were reflected in the Annual Audit and Inspection Letter reported to Cabinet on 23 January 2006.

3 2006 Value for Money self-assessment

3.1 It was originally intended to update the Council's self-assessment from last year's baseline. However, the Audit Commission have recently confirmed a significant delay in the production of the profile data - now due mid-July. As a result they have extended the deadline for updating or drafting new self-assessments from 28 July 2006 to 25 August 2006. Having scored three in 2005, the Council is only required to update the self-assessment with significant local changes.

3.2 The local auditors have also confirmed their intention to focus their audit on progress with the recommendations made last year, rather than the self-assessment document. As a result it is proposed to identify the significant changes and progress with the recommendations as a separate document, without putting effort into revising the value for money self-assessment. Appendix One provides a matrix of progress with last year's recommendations.

4 Use of Resources 2006

4.1 Other aspects of the use of resources assessment include:

· Updating the self-assessment relating to the non-VfM aspects of the Use of Resources block - by 31 August 2006. This is a largely technical document supporting the traditional financial audit and will be drafted by the County Treasurer.

· Providing a data quality self-assessment by 10 July 2006. This is another technical report focusing on the processes in place to assure data quality. As this is a new area of work, it will be supported by a small number of interviews with officers over the summer, to provide evidence that the Council has appropriate management arrangements in place. It is being drafted by the Corporate Performance Team, keeping the Executive Member for Performance Efficiency and Communications informed.

· The data quality assessment will determine the level of risk and consequent level of audit needed in relation to the annual exercise with Best Value Performance Indicators and the compliance audit of the Performance Plan.

· A specific review of `communication with service users' which will test the arrangements in place. It will primarily be addressed by pointing to a small number of relevant documents - already in existence- and holding interviews with a few key people.

Due to the largely technical nature of these other aspects of the audit and the fact that they will be reflected in the Annual Audit and Inspection Letter, it is not proposed to bring them separately to Cabinet. However, the Leader and the Executive Member for Performance, Efficiency and Communications will be kept informed of progress through their regular meetings with the corporate performance team.

5 Annual report

5.1 There is a new key line of enquiry in the 2006 Use of Resources assessment, relating to the decision on whether to publish an annual report. The County Council publishes an annual statement of accounts but has not produced a separate annual report since the requirement to publish an annual (Best Value) Performance Plan, covering similar ground, was introduced in the Local Government Act 1999. Financial and performance information in a less technical format has been incorporated in Hampshire Now in response to views expressed in resident surveys, which have given no indication that residents wish to read more formal reports. Government, the Audit Commission and the accounting profession are also considering whether the Reporting Standard relating to an 'Operating and Financial review', intended to apply to listed companies, should apply in the public sector, also covering very similar ground.

5.2 Publication of an annual report in addition to the Performance Plan  (and possibly in future an Operating and Financial review) would increase costs and lead to duplication, and it is proposed that the County Council should continue its existing policy, pending a clearer view emerging from Government and key regulatory stakeholders.

Recommendations

1 That the Leader and the Executive Member for Performance, Efficiency and Communications continue to be kept informed of progress with the Use of Resources assessment for 2006.

2 That the County Council continue its current policy of not publishing a separate annual report  pending a clearer stakeholder view emerging on the future form of financial and performance reporting

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:

1. Published works.

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

None.