Hampshire Fire and Rescue Authority Item 13

13 December 2006

Regional Control Centre: Local Authority Controlled Company Governance Arrangements

Report by the Chief Officer

Contact: Chief Officer John Bonney Tel: 02380 626830 Email: [email protected]

1

Summary

This report explains the requirement for Fire and Rescue Authorities to collaborate in the establishment of a regionally based Local Authority company to run the Regional Control Centre. Additionally, it seeks the Authority's view on the preferred governance arrangements and associated funding model.

2

Recommendations

2.1

That this report is noted.

2.2

The Authority endorses the "hybrid" cost apportionment model for Regional Control Centre costs based on a 50:50 population: call rate ratio and seek assurances from the RMB that the LACC, once established, will produce its own business efficiency plan.

2.3

The Authority agrees in principle the Members' Agreement attached to this report, but as essential clauses are yet to be agreed between the constituent Authorities of the proposed Regional Control Centre Company, final approval be delegated to the Clerk in consultation with the Chairman, Vice Chairmen, Leaders of the two opposition parties and the Chief Officer.

2.4

The Authority agrees the Articles and Memorandum of Association for the proposed Regional Control Centre Company as attached to this report, subject to any subsequent minor amendments considered necessary by the Clerk, and to the establishment of this Company with the Authority becoming a Member.

3

Introduction

3.1

The National Framework 2006-2008 section requires Regional Management Boards to establish regional control centres "as an operational priority..." In order to do this, Fire & Rescue Authorities, through Regional Management Boards, are required to establish local authority companies, in the case of the South East, by 1 January 2007.

3.2

In preparation for the establishment of a suitable vehicle to run Regional Control Centres (RCCs), DCLG undertook a consultation exercise early this year on governance arrangements for RCCs. This Authority contributed both individually and through the region to this process. In July 2006, the results of that consultation were published. A key element within the Circular was the requirement to use a Local Authority Controlled Company (LACC) as the means by which to run RCCs. The guidance, however, allowed considerable discretion to Authorities on a whole range of issues, including the naming of the company, its composition and means of apportioning funding.

4

Regional Management meeting on 18^th October 2006

4.1

The establishment of the LACC requires the drawing up and acceptance of a Company Memorandum and Articles by all of the Authorities within the region. (See RMB 18 10 2006 - Item 7, Appendices C and D) http://www.hantsfire.gov.uk/theservice/organisation/regionalmanagement/rmbcalendar/rmboct06.htm These are attached in Appendix A. Whilst there is a whole range of issues to be agreed, many of these are procedural. There are, however, two issues which are of considerable importance, voting rights within the new company and the mechanism to apportion costs. In light of this, a paper was considered by the RMB on 18 October 2006 (see RMB 18 10 2006 - Item 7 plus Appendices A to E). This includes the minutes of the Chief and Chairs meeting on 25 September 2006 where various options were considered.

5

Options for Voting

5.1

It is made clear in DCLG guidance that Regional Management Boards and LACC's are separate and unrelated entities and as such, are not constrained by the voting arrangements of the other body.

5.2

As you aware, the RMB operates a non-proportional voting arrangement of one Authority, one vote. This was an option available to the LACC, but, of course, given the level of service (and potential cost) provided to each Authority by the RCC would vary, non-proportional voting might appear to be inequitable. Although not mandatory, guidance issued by the DCLG favoured a proportional voting arrangement. The RMB endorsed this approach and certainly for larger Authorities, such as Kent and Hampshire, this arrangement is favourable. The preferred criteria for apportioning those votes was population, using 500,000 bands. Using such a methodology, the following voting arrangement would exist.

Voting - principles

Number of Votes

Population

Berkshire

= 2

815,000

Buckinghamshire

= 2

693,700

East Sussex

= 2

755,058

Hampshire

= 4

1,675,100

Kent

= 4

1,599,900

Isle of Wight

= 1

139,000

Oxfordshire

= 2

625,600

Surrey

= 3

1,064,600

West Sussex

= 2

766,200

In this arrangement, the Chairman would have a casting vote.

5.3

Importantly, the RMB was of the view that whilst it was satisfied that larger Fire and Rescue Authorities should have a larger proportion of the votes, they were keen that the number of members should not increase from nine. Clearly it would be for each Authority to determine locally how it would seek to cast its votes.

6

Sharing of Costs

6.1

Whilst it is still unclear what the detailed cost will be for the SE RCC, DCLG continue to insist there will be net savings for the region of 30%. This has been recently confirmed in the published draft full business case (16 October 2006). However, until the full business case is available in the Spring 2007, this figure remains subject to change. Based on current costs, the Service provided across the South East totals some £10.52 million, however this includes a considerable range of activities which are "out of scope" of the remit of the RCC and would not be provided by that facility.

6.2

Included in these figures would be an element of shared costs for national functions and for the mechanism will would allow fall back to other control centres in times of excessive demand or failure of the local facility.

6.3

The RMB was presented with a number of options for sharing costs based on; population, tax base, number of calls, voting structure and equal shares. These are listed in the tables below.

Options I, II and III

Population

Tax Base

Number of calls

Berkshire

£645k

£636k

£680k

Buckinghamshire

£549k

£568k

£520k

East Sussex

£598k

£593k

£692k

Hampshire

£1,326k

£1,230k

£1,281k

Kent

£1,267k

£1,224k

£1,366k

Isle of Wight

£110k

£106k

£89k

Oxfordshire

£495k

£471k

£330k

Surrey

£842k

£970k

£815k

West Sussex

£606k

£641k

£666k

Options IV and V

Pro-rata to Votes

Equal Shares

Berkshire

(2 votes - £716k)

£716k

Buckinghamshire

(1 votes - £358k)

£716k

East Sussex

(2 votes - £716k)

£716k

Hampshire

(3 votes - £1,073k)

£716k

Kent

(3 votes - £1,073k)

£716k

Isle of Wight

(1 votes - £358k)

£716k

Oxfordshire

(2 votes - £716k)

£716k

Surrey

(2 votes - £716k)

£716k

West Sussex

(2 votes - £716k)

£716k

6.4

Although DCLG's preference is a model based purely on population, this has no incentive either for Authorities to drive down calls (which is a major part of FRAs' Integrated Risk Management Plan) or, in turn, for the RCC to drive down costs. Such a driver for change would complement well organisational goals and the duty to deliver best value. In light of this, a hybrid model was offered based on population and number of calls. Three different versions are shown below based on varying proportions of the two factors.

Hybrids

Population: Calls

50:50

75:25

90:10

Berkshire

£663k

£654k

£649k

Buckinghamshire

£535k

£542k

£546k

East Sussex

£645k

£621k

£607k

Hampshire

£1,304k

£1,315k

£1,322k

Kent

£1,316k

£1,292k

£1,277k

Isle of Wight

£100k

£105k

£108k

Oxfordshire

£413k

£454k

£479k

Surrey

£829k

£836k

£840k

West Sussex

£636k

£621k

£613k

6.5

In comparison, apart from equal shares, and to a lesser extent pro rata to votes, the differences in costs across the various options is minimal, although more important is the validity and logic of the applied factors. For this reason, the hybrid model seems the most appropriate and in order to represent a genuine incentive, then it is felt that the 50:50 ratio would be preferable. Quite correctly, the expectation for financial efficiency which is placed on the Authority, should also extend to any partner bodies which seek to help it discharge its function.

7

Memoranda, Articles of Association and Members' Agreement

7.1

The documents (see RMB 18 10 2006 - Item 7 Appendices C, D and E) set the framework, structure and function for the LACC and establish the working protocols for its operation. These have been drawn up after considerable consultation both nationally and regionally by the Fire Lawyers Network. In particular, the Regional Fire Lawyers Network, which consists of lawyers representing all authorities forming the South East Regional Control Centre, has considered the customising of these documents to the needs of the South East.

7.2

The Memorandum of Association (Appendix 1 - attached) identifies the key aims and objectives of the proposed Company which are to operate a regional control centre for the region and, for resilience purposes, to link into the national arrangements as necessary. The Articles of Association (Appendix 2 - attached) on the other hand cover the internal arrangements of the Company such as who the members will be, arrangements for the holding and procedure of meetings, voting, members and powers of directors etc. The final document is the Members' Agreement (Appendix 3 - attached) which essentially sets out how the constituent Fire Authorities will manage the Regional Control Company.

7.3

None of these documents have been finally agreed and endorsed by the Fire Lawyers Network, although it is anticipated that this will take place very soon. It is obviously essential that all Fire Authorities approve the content of each of these documents.

8

Contribution to Corporate Aims and Objectives

8.1

Many elements in delivery of an effective IRMP are underpinned by a Control Centre capable of despatching our resources according to the risk. Ensuring we have influence in the operation of that control centre and that it is appropriately funded is therefore vital. Similarly, we have a duty to ensure we obtain best value for the Authority and therefore an appropriate and fair funding model for the RCC is of critical importance.

9

Risk Analysis

9.1

The Government's National Framework 2006-08 places an absolute obligation on Authorities through the RMB to establish regional control centres. Failure to do so would threaten both the reputation of the Authority and expose it to likely government intervention.

10

Resource Implications

10.1

Human Resources

None directly from the decision being requested here.

10.2

Physical Resources

None directly from the decision being requested here.

10.3

Information and Communications Technology Resources

None directly from the decision being requested here.

10.4

Financial Implications

There are financial implication for the Authority more generally as a result of the RCC project which will be considered elsewhere. Agreeing the appropriate funding model does have funding implications of between £716,000 and £1,326,000, however these figures are not yet confirmed.

11

Equality Impact Assessment

11.1

In relation to the specific decision in this report, there is deemed to be no adverse equality impact assessment.

11.2

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.

12

Consultation

12.1

This is a matter for decision by the Authority, although consultation has taken place at the South East Chief and Chairs meeting.

13

Conclusion

13.1

The establishment of a Local Authority Controlled Company is the vehicle by which to run the Regional Control Centre and is a requirement within the National Framework. Beyond that, central government has sought to leave the detailed constitution, form and operation of the LACC to the discretion of the constituent Authorities. For those Authorities, two of the key elements are governance and control of the company and the means of fairly funding the joint facility. This report provides a review of the options and a suggested way forward which protects the interests of this Authority.

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:

· RMB Meeting 18 October 2006 - Item 7 - Local Authority Controlled Company Governance arrangements

http://www.hantsfire.gov.uk/theservice/organisation/regionalmanagement/rmbcalendar/rmboct06.htm

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