Hampshire Fire and Rescue Authority Item...

15/03/20054 October 2006

Hampshire Fire and Rescue Service and the Isle of Wight Fire and Rescue Services -

Option Review

Report by the Chief Officer

Contact: Chief Officer John Bonney Telephone: 02380 626830

1

Summary

This report provides a summary of the recently completed independent review of future arrangements between Hampshire and the Isle Of Wight Fire and Rescue Services. This independent review was commissioned jointly by the two authorities following an earlier report undertaken by the Island. The review has produced strong evidence that suggests full merger of the two Services has considerable benefits for both communities. Finally, the report (attached as appendix A) seeks the Authority's view on how it now wishes to proceed.

2

RecommendationError! Bookmark not defined.

2.1

That the report on the review of options is noted and the Authority considers whether it wishes to consult with the public on the option of merger and to do this in conjunction with its consultation on the Integrated Risk Management Plan (IRMP).

3

Introduction

3.1

Last year's comprehensive performance assessment for fire rated the Isle of Wight Service as `poor', the lowest category. As part of the response to this, the Isle of Wight agreed with the then ODPM to undertake a review of the options open to the Isle of Wight in order to address future capacity issues.

3.2

A first review was commissioned by the Isle of Wight through Robson Rhodes Consultants to examine strategic options for closer collaboration, and possibly merger, between Hampshire and the Isle of Wight. This original report was regarded by the ODPM as being insufficiently robust in its analysis. As a result, in February 2006 a further review was commissioned by the Isle of Wight, but on this occasion, it was undertaken jointly with Hampshire. Given the potential recommendations for this report, and the implication it could have for Hampshire, it was important to engage fully in the review and have co-ownership of its direction.

4

Report

4.1

Solace Enterprise Consultants were commissioned in February 2006 to lead the review. The terms of reference for the review were:

· To produce a strategic options appraisal of greater collaboration or full merger between the Isle of Wight and Hampshire Fire and Rescue Service

· To identify the most efficient and effective option that delivers value for money and best meets the needs of the Island community for the organisation, management and delivery of the service and present a comprehensive business case for that option to the Modernisation and Monitoring Boards

4.2

The original three month timescale by the ODPM was then extended to four months to allow more time for both data collation and analysis. A monitoring board which includes HFRA and Service representatives have overseen progress of the review and set direction. The board is chaired by a DCLG representative and includes the Audit Commission, IDeA and HM Inspectorate of Fire Services. There has been considerable activity by officers both on the island and in Hampshire to draw information together from every aspect of the Service, in order to allow a comprehensive analysis.

4.3

A timetable for the implementation of the chosen option, together with a full implementation plan, would then follow from any decision taken by the two Authorities about future direction. The approach taken by Hampshire so far has been to adopt no firm view on merger or greater collaboration but consider its position once a comprehensive and objective analysis has taken place.

4.4

The review was conducted on the basis of best value principles; seeking to challenge the existing arrangements whilst comparing performance between the two Authorities and elsewhere. It also sought to identify means of improving capacity through joint working.

4.5

The review has developed a business case for both the options of collaboration and merger based on strategic, operational and financial benefits and disbenefits.

4.6

The strategic element of the business case has considered benefit and disbenefit to the communities of Hampshire and Isle of Wight as well as the two Fire and Rescue Services.

Areas examined were:

· Operational Assurance

· Delivery of the Modernisation Agenda

· Improvement in performance of Isle of Wight Fire and Rescue Service

· Organisational Resilience

· Gershon Efficiency targets and value for money

· Impact on Council Tax.

4.7

Here a scoring matrix was used by which to evaluate the evidence collected. This matrix was identical to the methodology used by Devon and Somerset to gauge the strategic benefits of those two Authorities pursuing closer collaboration or merger.

4.8

The diagram below shows the relative scores for the options of no change, greater collaboration for each of the Services and merger for a combined organisation.

No Change

Objective

Option A

Isle of Wight

Option A

Hampshire

Weighted

Weighted

Objective 1

Operational Planning

20

20

Objective 2

Major Incident Planning

20

40

Objective 3

Incident Command & Control

60

60

Objective 4

Risk Assessment

75

75

Objective 5

Fires and Incidents of Special Interest

15

15

Objective 6

Operational Standards

30

45

Objective 7

Monitoring Performance

45

45

TOTAL

265

290

Greater Collaboration

Objective

Option B

Isle of Wight

Option B

Hampshire

Weighted

Weighted

Objective 1

Operational Planning

40

20

Objective 2

Major Incident Planning

40

40

Objective 3

Incident Command & Control

60

60

Objective 4

Risk Assessment

75

75

Objective 5

Fires and Incidents of Special Interest

15

15

Objective 6

Operational Standards

45

30

Objective 7

Monitoring Performance

45

45

TOTAL

320

285

Combination

Objective

Option C

(Joint)

Weighted

Objective 1

Operational Planning

50

Objective 2

Major Incident Planning

50

Objective 3

Incident Command & Control

100

Objective 4

Risk Assessment

100

Objective 5

Fires and Incidents of Special Interest

15

Objective 6

Operational Standards

60

Objective 7

Monitoring Performance

60

TOTAL

435

4.9

The results, which were the collective assessment of the Isle of Wight, Hampshire Officers, DCLG, HMI, Audit Commission and IDeA, shows benefit from collaboration, particularly for the Island and less so for Hampshire. Interestingly, the do nothing option scores almost the same for Hampshire as closer collaboration.

4.10

The reason for this is the result of the resources that would be required to be committed to achieve closer collaboration, from which Hampshire would derive virtually no benefit. Combination, however, shows a mutual benefit over collaboration for both Services. For Hampshire, the benefits flow only once the investment of effort and resource achieves greater economies of scale and operational alignment.

4.11

The operational evaluation revealed that prevention, protection and response activities are already aligned in some areas and no significant barriers exist to merging the two Services if that was the intention of both Authorities.

4.12

Once again, the scoring matrix applied by the Devon and Somerset brigades was used to evaluate the negative and positive impact on each organisation. Again, full merger scores the most positive impact with Hampshire more adversely affected by greater collaboration than from the status quo, because of the minimal beneficial return for Hampshire when set against the effort of greater collaboration.

4.13

Importantly a different view was held by Hampshire from the Isle of Wight on the level of officer that needs to oversee operations on the Island. Hampshire's position was that given the levels of risk, population and resources available an officer of Area Manager is sufficient with arrangements in place (as they are for any area of Hampshire) to support that officer with either on-scene or distant advice from a Brigade Manager. The view of the Island is that a Brigade Manager should be resident on the island to manage operations. There is a recognition that part of the logic for this is not an operational requirement but rather a political expectation.

5

Financial Appraisal

5.1

Considerable research has been undertaken to evaluate both the cost and benefits of the three options, with the summary of net saving shown in the table below.

Option A

Status Quo

£

Option B

Closer Collaboration

£

Option C

Merger

£

Cost

0

150,000

435,750

Benefit

0

(600,000)

(1,687,662)

Net Effect

0

(450,000)

(1,251,192)

Net Present Value

£0.313m

£1.11m

Note: The net present value (NPV) has been calculated over the agreed six year accounting period for the project using the Treasury Green Book advised discounted rate at 3.5%.

5.2

Inevitably there is considerable detail which underpins these figures but for simplicity only the bottom line figures are provided. Clearly a number of assumptions have been made, particularly around such costs that are incurred by the Isle of Wight Fire and Rescue Service being absorbed by the Isle of Wight Authority as a whole. Similarly, a staffing structure has not been finalised and hence more work would be needed to refine the accuracy of these figures.

5.3

Significantly, these figures do not include the costs and savings of merging the two fire controls prior to the wider merger required as part of the Regional Control Project. The technical and financial implications of this earlier merger are being examined by a dedicated joint team. The report however suggests some indicative figures of between £300-£350k savings, based on the assumption that the RCC project rolls out on time. Clearly delays would increase the savings by up to 30-40k per month. Although not insignificant in terms of financial savings, the project to merge control centres earlier would have a significant drain on current resources.

5.4

Of great importance is the impact on council tax, here there would need to be an equalisation of sums currently being paid.

5.5

Assuming no efficiency saving, the analysis show a national council tax at band D of £55.80 per annum. This amounts to a reduction £24.77 per annum on the Isle of Wight and an increase in Hampshire of £2.16. However, these figures alter according to any efficiency savings realised.

New CFA with no savings 2006-07

£

New CFA with £250k saving

2006-07

£

New CFA with £500k saving

2006-07

£

New CFA with £750 saving

2006-07

£

New CFA with £1m

Saving

2006-07

£

Cost to Hampshire Tax Payers

2.16

1.78

1.41

1.03

0.65

Saving to Isle of Wight Taxpayers

-24.77

-25.14

-25.52

-25.90

-26.27

These figures do not incorporate any savings that would be derived from a combination of control rooms prior to the movement to a regional control centre in 2009.

5.6

Table B - Costs and Benefits of Full Combination - shows a more detailed breakdown of cost and benefits of full combination.

Costs/

Savings

2007-8

2008-9

2009-10

2010-11

2011-12

2012-13

Total

Staffing

0

(100,000)

(200,000)

(200,000)

(200,000)

(200,000

(900,000)

Support Service Charges

(34,012)

(150,730)

(150,730)

(150,730)

(150,730)

(150,730)

(787,662)

ICT Costs

28950

53360

53360

53360

53360

53360

295,750

Branding

20,000

20,000

---

---

---

---

40,000

Change Management

50,000

50,000

---

---

---

---

100,000

Total

64,938

(127,370)

(297,370)

(297,370)

(297,370)

(297,370)

(1,251,192)

Note:

1

Savings are shown in brackets

2

Service charge savings exclude £0.083m per annum of fixed costs to the Council

3

ICT figures are based on the minimum initial investment and annual charge required for convergence

4

Change Management provides for a fund for two years to help manage the transition

6

Consultation

6.1

Clearly the report has only provided a high level analysis of the three strategic options but there is a clear indication that full merger has significant operational, strategic and financial advantages for the Island and smaller but nevertheless important benefits operationally and strategically for Hampshire.

6.2

Given the significance of the implications of pursuing the merger option, it may be considered appropriate before the Authority considers its next steps for the public to be consulted. In order to ensure consistency and transparency the proposal would be to engage the services of a consultation specialist (the Service already uses a organisation which specialises in the fire industry) to manage the process. To minimise costs, the consultation exercise would run in conjunction with, but separate from, our IRMP consultation commencing in December. The intention being that both Authorities could consider the public response to the options review before making a formal decisions on the matter in February 2007.

7

Contribution to Corporate Aims and Objectives

7.1

The Authority has committed itself to expose all elements of the Service to Best Value scrutiny. Considering innovative ways of improving service to the public and capitalising on economies of scale is key to driving improved performance.

8

Risk Analysis

8.1

If both Authorities committed to merging, there would be a considerable workload to deliver the project. There would also be a risk of declining service quality and associated reputational damage if the project was poorly managed and under resourced.

9

Resource Implications

9.1

Human Resources

None directly other than some assistance provided during consultation by officers from our Performance Improvement team.

9.2

Physical Resources

None.

9.3

Information and Communications Technology Resources

None.

9.4

Financial Implications

Approximately up to £20,000 to commission an independent consultant to manage and deliver the consultation process.

10

Equality Impact Assessment

10.1

No Equality Impact Assessment has been completed but one would be undertaken as part of a full project appraisal.

10.2

Views on the proposal would be sought from minority groups as part of the wider consultation process.

10.3

The proposals within this report are considered compatible with the provisions of the European Convention on Human Rights, the Human Rights Act 1998, and the Race Relations (Amendment) Act 2000.

11

Conclusion

11.1

The independent review demonstrates some clear advantages of a merger option. However, notwithstanding the financial, strategic and operational aspects, members need to consider the political ramifications of such a step. To assist in making a decision on pursuing further this merger option, it may be appropriate to consider the views of the public and therefore to undertake a consistent and co-ordinated consultation exercise on both the Island and in Hampshire.

Background Information (Section 100D of Local Government Act 1972)

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

"None"

Note: The list excludes: (1) published works; and (2) documents that disclose exempt or confidential information defined in the Act.