Contact: Share D'All (x 6634), Bevis Ingram (x 7508);

With the concurrence of the Chairman under Section 100(B)(4)(a) of the Local Government Act 1972, this matter is included on the agenda in order to allow the Committee to comment given the absence of another scheduled meeting before the Cabinet and County Council consider the proposals.

1 Purpose of report

1.1 This report is being submitted to Governance Committee for comment for submission to Cabinet on 26 February and thence to County Council on 29 March for implementation in the financial year 2007/08, starting in April 2007.

2 Summary of decision sought:

2.1 In line with the Council's desire to reduce bureaucracy this report is to seek approval to changes to the processes for decision making and delegation and the financial limits which govern them.

· The intention of these proposals is to streamline the decision process and tighten up internal controls whilst at the same time clarifying the role of Executive Members and ensuring they are more consistently and comprehensively included in all decisions taken at a high level in the organisation. This report outlines the issues and proposed changes.

· These decisions do not directly relate to the three new Corporate Strategy priorities however they are important in relation to acheiveing the objectives of the Democratic Review and continuing to make efficiencies in the organisation which will support effective prioritisation of time and resources.

3 Context and Issue Identification:

The Need to Streamline Decisions:

3.1 Since the move to Cabinet style governance there has been a continued increase in the numbers of Decision Days required by Executive Members. Consultation with Executive Members and Senior Officers and an analysis of the decisions undertaken in a sample nine month period have shown that a significant number of these decisions:

· Were not really decisions but officers wanting the opportunity to keep Executive Members informed or aware of issues.

· Were the same decision returning round the loop several times due to unclear delegation and/or mis-aligned financial standing orders.

· Could, under the scheme of delegation, have been taken by officers but needed the awareness of the Executive Member.

3.2 It has been apparent from both Members and Officers that full adjustment to the new way of working and the new role of Executive Members has not taken place. Officers are still seeing the formal decision process as the only method of ensuring Executive Members are included in or informed about decisions. Consequently they are not taking the opportunities available to them to work with Members in new ways or realising the implications of individual Executive Member accountability. This is resulting in two polarised outcomes: escalating numbers of formal decisions and, paradoxically, many Executive Members feeling ill informed about issues for which they were now accountable as individuals under Executive delegation.

Feedback from CPA:

3.3 Despite our continued high performance in the Comprehensive Performance Assessment we have not achieved top marks for scores for internal control and financial management. A balance needs to be struck between the costs of changing processes to ensure top scores in these areas, but the process of producing the flowcharts (attached as an appendix to this report) has highlighted some areas for improvement that should be addressed, including:

· A failure of many officers to understand the practical implications of the standing orders and financial regulations in the Constitution. This is the reason for taking a `flowchart approach' which is clear and easy to understand.

· A lack of ownership across departments of the processes laid out in the Constitution partly brought about by a perception that:

- they had historically been imposed without consultation;

- they did not take into account the diversity of businesses which the different departments represent.

The need to update:

3.4 There is a need to review and update many of our processes or Financial Limits. Although Financial Regulations have been reviewed regularly to reflect changes in the Constitution, many of the limits within them have not changed for many years.

3.5 The lack of review of processes has been due to our tendency to adjust and add to processes rather than fundamentally review. Whilst this is a practical approach, which is successful in the short term and medium term, it has sometimes resulted in the longer term in our developing rather unweildy and unnecessarily long processes which do not necessarily deliver all the outcomes we may want to achieve. Accepting that as a public sector body do have different reporting requirements, there are elements which now have become standard practice in businesses outside the public sector and could usefully be applied such as:

- Short, business or recipient focused report formats

- A tendency to a `one size fits all' approach to decision processes which, for smaller processes, are too bureaucratic whilst for some larger projects they are not always sufficiently robust. Examples of situations where the process needs to fit the level of the project include:

i) Early business cases for projects with financial implications;

ii) Establishing success criteria early in a project to enable effective evaulation.

- Effective delegation

3.6 The lack of updating of our financial limits has meant that some limits have become mis-aligned, creating loops in the system whilst in other cases we are putting in place lengthy processes to make decisions on projects which are no longer financially significant in terms of our overall budget or the market as a whole. For example, some limits on project appraisals have not changed for more than 25 years.

How we propose to overcome these problems:

4 The proposed changes, and our process for developing them have been designed to overcome the above mentioned barriers in the following ways:

4.1 The flowcharts:

· are designed to make the need to keep members (Executive and non-executive) informed and `in the loop' clear and consistent when the actual decision is not being made by them;

· will make it possible to train Managers and prompt them whenever they need to undertake any of the activities covered. It is our intention to develop a flowchart approach to HR processes as well and any others which require managers to carry them out in a consistent way across the organisation;

· reflect an approach where `one size does not fit all' so, along with the proposed changes ot financial limits, lower level decisions can be dealt with more speedily without losing rigour or accountability.

4.2 The process by which we have developed the flowcharts has been inclusive and so all departments have been able to contribute to ensuring the processes will fit their diverse business needs and cultures.

4.3 The proposed revision of financial limits will:

· simplify the number of different financial limits;

· remove mis-alignment in the Standing Orders which was having impact on building projects and tenders, causing them to go around the decision making loop several times. It will reduce the need for duplicate decisions whilst providing different decision focus at different stages of the project;

· focus attention appropriately on decisions whose cost is significant in financial terms;

· decisions of low financial significance can be delegated without risking Members being left out of the loop .

5 Detail of proposed changes to Financial Limits

5.1 The proposals enshrined in the flowcharts are summarised in the table below. The intention is to update the limits in line with more efficient business practice and ojectives in 3 iii) above. (Note : further work will be done on the applicability of these limits to schools).

Area covered	Current	Proposed
Maximum virement on any one budget (*) in any one year before member approval required	Executive Member and County Treasurer if more then £250,000 or 1.25% of the budget (*). Cabinet if more than £0.5m or 25% of the budget (*), whichever is lower	· Executive Member if more than £250,000 in total. · Cabinet if more than £0.5m or 25% of the budget (*), whichever is lower
Debt write-off	· Chief Officer up to £1,000 · Chief Officer in consultation with County Treasurer for over £1,000 · Executive Member approval above £5,000	· County Treasurer up to £1,000 · Chief Officer and County Treasurer up to £10,000, · Joint report from Chief Officer and County Treasurer for approval by Executive Member up to £50,000 · Leader above £50,000 ·
Grants	In line with current authorised purchasing limits	· Officer up to £5,000 · Executive member over £5,000 · Grants not part of service budgets to remain a member decision
Tenders (#)	· At or below £15,000 - three quotes required · Over £15,000 but at or below £75,000 - at least three tenders must be invited · Over £75,000 - full formal tender procedure required · Above EU procurement limits - compliance with EU procurement directives	· Below £25,000 - three quotes required · At or above £25,000 but below EU procurement limits - three tenders required · Above EU procurement limits - full formal EU tendering process required
Major Projects specified in capital programme	· Under £50,000 - officer · Over £50,000 but below £250,000 - Executive Member · Over £250,000 but below £500,000 - Executive Member in prescribed format · Over £500,000 Executive Member and Leader	· Under £250,000 - Chief Officer approval with Executive Member in the loop · Over £250,000 to £1 million - Design Report (précis project appraisal) to Executive Member (with Leader in the loop); project outcome report to Executive Member · Over £1 million - full business case to Leader (with Executive Member in the loop), followed by Design Report to Executive Member at the appropriate stage (with the Leader in the loop); project outcome report to Executive Member (with Leader in the loop).

(*) Budget in the above is defined as "any individual budget item in the budget book"

(#) Where an established call off contract or framework arrangement is in place, this should be used instead of undertaking a new tendering exercise.

5.2 It is also proposed that the financial limit for Key Decisions is raised to £1m which is in line with many other Councils. The fact that the Decision Programme will mean all decisions, not just Key Decisions as at present, will be published in advance will mean the public and non-executive members will in no way be disadvantaged due to this change.

6 Detail of proposed changes to Decision Processes:

6.1 The flowcharts are attached in Appendix 1. They cover

i) Officer Delegation

ii) Financial Limits

iii) Procurement

6.2 The intention would be to make these available to officers on the intranet and launch them with briefings for officers. Work is also going on to extend the flowchart approach to other processes such as those linked to HR.

7 Impact & Implications:

7.1 Legal implications:

These flowcharts and financial limits have been checked with the legal section and completely comply with legal and statutory requirements.

7.2 Financial implications:

There are no financial implications with the exception of minimal costs in briefing staff of the new arrangements. The cost of publishing them on the web should be able to be covered within existing resources.

7.3 Personnel implications:

None other than that staff will need to be trained as mentioned above

7.4 Impact assessment:

No adverse implications are anticipated for any group of individual.

8 Future work

It is proposed that further work should include:

a) Discussions with Cabinet about clarifying delegation within the Executive by use of the flowchart approach to assist officers to make accurate and consistent assessment of which route to take decisions (a suggested starting point for discussion is found in Appendix 3).

b) Revisiting the possibilites to streamline the decision process and increase public participation which may be provided when the Decision Programme comes on line in late Autumn 2006.

c) Assessment of where and how the limits should translate to schools

9 Summary of Recommendations:

The Goverenance Committee are asked to consider the following recommendations to Cabinet :

a) That the proposed changes to the processes laid out in Appendix 1 are agreed

b) That the financial limits outlined in the table in Appendix 2 (also in 5a) are agreed

c) That the financial element of the criteria for a Key Decision be raised from £500,000 to £1m

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

FLOWCHARTS

6a i) Delegation to Officers

6a ii) Glossary of Terms

6a iii) Financial Limits

6a iv) Procurement

SUMMARY OF PROPOSED CHANGES TO FINANCIAL LIMITS:

Area covered	Current	Proposed
Maximum virement on any one budget (*) in any one year before member approval required	Executive Member and County Treasurer if more then £250,000 or 1.25% of the budget.	· Executive Member if more than £250,000 in total. · Cabinet if more than £0.5m or 25% of the budget (*) , whichever is lower
Debt write-off	· Chief Officer up to £1,000 · Chief Officer in consultation with County Treasurer for over £1,000 · Executive Member approval for over £5,000	· County Treasurer up to £1,000 · Chief Officer and County Treasurer up to £10,000, · Joint report from Chief Officer and County Treasurer for approval by Executive Member up to £50,000 · Leader more than £50,000
Grants	In line with current authorised purchasing limits	· Officer up to £5,000 · Executive member up to £100,000 · Grants not part of service budgets to remain a member decision.
Tenders (#)	· At or below £15,000 - three quotes required · Over £15,000 but at or below £75,000 - at least three tenders must be invited · Over £75,000 - full formal tender procedure required · Above EU procurement limits - compliance with EU procurement directives	· Below £25,000 - three quotes required · At or above £25,000 but below EU procurement limits - three tenders required · Above EU procurement limits - full formal EU tendering process required

(*) Budget in the above is defined as "any individual budget item in the budget book"

(#) Where an established call off contract or framework arrangement is in place, this should be used instead of undertaking a new tendering exercise.

CABINET DELEGATION