Archived decisions

HAMPSHIRE COUNTY COUNCIL

Decision Report :

Decision Maker:			Cabinet
Date of Decision:			27 October 2008
Decision Title:			Corporate Efficiency
Decision Reference:			294
Report From:			Chief Executive
Contact name:		Andrew Smith
Tel:	01962 8473000			Email:	[email protected]

EXECUTIVE SUMMARY

1) Summary of Decision Area:

1.1. The County Council has for some time been successful at generating efficiency savings for redeployment to meet service spending pressures, to deliver a balanced budget and to meet central government requirements for cashable and non-cashable efficiencies associated with spending settlement and wider government reviews such as Gershon. Appendix 1 identifies £51.9 million of cumulative cashable savings over the Gershon review period (2004/5 to 2007/08).

1.2. The government has established a target of 3% cashable efficiency savings for 2008/09 to 2010/11. The County Council is on target to meet what is undoubtedly a stretching target. Budgeted efficiency savings of 2.2% were built into the budget planning for this year. The main purpose of this report is to look at how the County Council should develop an approach to embed further efficiency savings particularly recognising the difficult economic climate emerging within the UK and the rest of the world. This report is being brought forward in advance of the 2009/10 budget planning so that suitable protocols can be included in our budget preparation.

2) Issues Covered in Report:

2.1. The report identifies how to further embed efficiency savings into the management of the Council.

2.2. The report identifies both the business processes involved and potential areas of activity, subject to Member agreement.

3) Recommendations:

It is recommended that Cabinet:

3.1. Approve the development of a three year efficiency programme related to the planned corporate reviews and medium-term financial strategy.

3.2. Authorise the Chief Executive to identify with Chief Officers those areas of activity for 2009/10.

3.3. Approve the outline activity identified in Appendix 2 and request the Chief Executive to bring forward proposals for 2009/10 as part of the budget process.

3.4. Approve the establishment of a corporate efficiency fund.

MAIN REPORT

1) Purpose of the Report:

1.1. The purpose of the report is to develop a strategic approach to further embed efficiency activity into the management of the Council.

2) Contextual Information:

2.1. There is a growing demand on Local Authority services as the demographic profile of the County changes. Government policies and best practice promote personalisation and more universal services, earlier intervention and prevention in service delivery, well-being responsibilities and higher public expectations.

2.2. The Council will be, rightly, under increasing pressure to demonstrate that it provides good value in how it organises, manages and delivers services across the span of the Council's responsibilities (and increasingly with partners).

2.3. The efficiencies that might be made through the actions outlined in this report will contribute to managing the overall spend and resources of the Council as we promote service improvements in the context of rising demands and national economic difficulties.

3) Key Issues:

3.1. Further work on efficiency needs to be aligned with the planned corporate reviews and the medium term financial strategy and embedded into the strategic management of the Council. Inevitably, the difficulty of the task grows over time when earlier efficiencies have been taken.

3.2. Sustaining a medium term efficiency programme is essential in maintaining low council tax and best value for services. Member support to a strategic response will be crucial.

4) A Strategic Approach to Efficiency

4.1. The purpose of this report is not to set out detailed efficiency targets - this will be done to the extent required in the budget preparation process for 2009/10 and beyond - but to develop a direction of travel for the Council in relation to efficiency, recognising that this will be more of a marathon than a sprint. The report also identifies how further efficiencies could come about, the processes to be followed and the potential areas for activity.

4.2. Developing a strategic approach to efficiency builds upon the success of the past and looks across the organisation in a corporate sense and where efficiencies will arise A significant thread will be the relationship between the planned corporate reviews, a corporate and departmental efficiency programme and their alignment with our medium-term finance strategy for the next three years. Many issues will mitigate against success: service based inflation, rising fuel and energy prices, declining revenues and asset values and expectations for improved service levels. However, without a new policy focus and management and Member infrastructure little progress is likely. The report therefore explains different approaches which have different impacts.

5) Corporate Reviews

5.1 The planned corporate reviews (reported to Cabinet: July 2008) will include:

· Making more effective use of Hantsdirect (including a contact and channel strategy)

· Hampshire Workstyle (including the strategic property review, facilities management, mobile and flexible working) to reduce accommodation costs and improve utilisation.

· Transformation-Through-Technology (particularly to improve service and reduce costs).

· Review of Corporate Services (including IT Services, Legal, HR and Economic Development)

· Review support services (possible centralisation)

· Review the organisation and management of procurement across the Council

· Review the opportunity for shared services

· Modernisation of Democratic Services

The efficiency gains expected from these projects should be clearly defined and integrated within a single efficiency programme for the Council as a whole. Each of the above reviews will be preceded by a benchmarking exercise.

6) Efficiency and Business Processes

6.1 As part of the review process mentioned above, other measures require consideration for further efficiencies particularly those relating to business processes and attempts to shape markets and services. These relate to:

· Reshaping services (eg as personalisation develops with an impact on both care market purchasing and in-house services)

· Restrictions on spending (external venues, agency staff, travel costs and mileage rates)

· Income generation

· Improved utilisation of assets and reducing occupancy costs (eg energy)

· Procurement initiatives (benefits of further aggregation, contract management and price and demand management)

· Innovation in service delivery (eg reablement rather than long term care)

· Headcount reductions (eg sickness absence management, temporary contracts, levels of management)

A corporate programme should be developed from these types of initiatives.

Business Change

6.2 In addition Cabinet has already agreed to the following themes as part of the Corporate Review (following earlier consultancy work):

· Increased self-service

· Better use of help desk/Contact Centre

· Shared services

· Management of transactional services

· Implementation of Facilities Management approach

· Greater centralisation of procurement

· Centralisation of support services

· Cost reduction exercises

A further range of measures could relate to:

· Reduce the number of offices (in advance of Hampshire Workstyle)

· Energy management (on an invest to save basis)

· Further development of self-services initiatives (through exploring IT initiatives)

· Improved procurement and commissioning skills

6.3 There are therefore a range of fairly well developed processes and reviews that will generate opportunities for further efficiencies. These should be organised and branded into a corporate and departmental programme over the next three years. Each of the processes, changes and activities mentioned above would be developed into a Council-wide programme.

6.4 The recent Audit Commission report "Back to Front - Efficiency of Back Office functions in Local Government" endorses many of the proposals in this report. Importantly the report recognises:

"There is no single answer. Successful councils use a variety of established and innovative techniques. They have managerial and political consensus on the need to make efficiency gains."

The County Council's approach recognises these elements for success but goes beyond the report to ensure there is adequate integration across all the Council's major change programmes and resources.

7) Management of Activity

7.1 It is obvious that taking together the reviews, business changes and processes identified above, provide the scope and content at least in part for a County-wide programme. The remaining building block would be to identify specific departmental activity and corporate activity which is set out in Appendix 2 to provide the final shape of the overall work programme. Members are requested to endorse the workstreams in Appendix 2 in relation to a County-wide programme of efficiency reviews.

7.2 The Chief Executive proposes to lead this work through a small Board of senior officers and a group of senior managers. The Leader has suggested that a small Member Panel would also be helpful in putting together the work programme and meeting on a quarterly basis to review progress throughout the next financial year. This approach is to be welcomed and would provide clear political leadership and endorsement for the activity.

7.3 The Council has been successful in providing incentives for departmental and other efficiencies to be retained in service department budgets to meet spending priorities and pressures. It is recommended that this approach continues. However, in some of the activity the work would be organised corporately and in some of the reviews we would be looking at arrangements that work across the whole Council or have benefits to most of our services. In such cases it seems sensible to balance the departmental position by the development of a Corporate Efficiency Fund that could be redeployed to meet frontline service pressures and help invest to save activity as the review programme is rolled out over succeeding years. This would give the County Council an opportunity to exploit strong departmental and corporate leadership on the issue but the relevant incentives remaining strong to achieve maximum efficiencies. The next stage would be to identify from these areas potential efficiencies and targets, recognising in some cases the efficiency saving may be less than the inflation increase.

8) Conclusions:

8.1 In an organisation of our size it is inevitable that there will be potential for efficiencies. The important issue is to build management capacity to release the potential and to ensure that we do not destroy capacity that improves services and outcomes. One size will not always fit all by way of a solution. However, looking across the Council will often give a different perspective to a departmental one. Finding efficiency gains is an activity which will never be completed.

8.2 Members are requested to endorse the approach being taken, indicate any further areas of activity and request the Chief Executive to bring forward proposals to producing a programme of corporate efficiencies as part of the 2009/10 budget preparations.

9) Recommendations:

Please see Executive Summary for recommendations.

Appendix 1

	Estimated cumulative Cashable Gershon savings (2004/05-2007/08)	Pro rata share of 3% VfM 2008/09 target	Cashable Efficiency improvements identified in Cabinet 8 Feb 08 report	Variance compared with target
	£m	£m	£m	£m
Revenue:
Adult Services	18.7	8.3	7.4	-0.9
Children's Services	5.7	3.6	0.8	-2.8
Environment	11.8	3.3	1.8	-1.5
R & H	1.8	1.0	1.1	+0.1
P & R/unallocated*	13.7	1.7	2.0	+0.3
Total Revenue	51.7	17.9	13.1	-4.8
Capital:
Highways		1.7
Other		1.0
Capital financing			1.5
Total Capital		2.7	1.5	-1.2
Total		20.6	14.6	-6.0
Estimated carry forward				8.2
Total				2.2

*=Procurement 2005/06 not split across services

Appendix 2

Draft Savings and Efficiency Programme - Area of Activity

Efficiency / Review Area

Service expenditure : Adult Services

Residential & Nursing Care - further review of in-house provision

Continuing price and quality negotiation on High Cost placements in learning disability services

Framework contracts

Development of alternative provision particularly in regard to orthodox day services

Children in Transition (procurement Adult Services & Children's Services)

Service expenditure : Children's Services

Home to School Transport (procurement - further framework contracts/alternative approaches - taxis, coaches and minibuses)

High cost placements - negotiation / reprovision

Fostering services (procurement)

Service expenditure : Environment

Disposal contract renegotiation

Future infrastructure provision

Corporate reviews

Cross-Cutting Issues:

Management structures, levels and costs across all Departments

Headcount / recruitment freeze/ use of temporary staff

Good housekeeping

Improved Two Tier Working

Shared Services - internal and external

Reduction / release of professional time/staff proactivity

Appointment of consultants / interims

Further review of Grants

Hampshire Workstyle/Strategic Property Review

Efficiency / Review Area

Training and Development - policy and costs

BPI / internal shared services / centralisation (finance & admin (invoice processing, reports, project approvals), IT, electronic tendering)

Review boundaries of mixed economy (incl. in-sourcing)

SEIEP projects

Procurement (collaboration/ contract management/ inflation awards in contracts)

Sickness absence reduction

Use of benchmarking data to target improvement

Energy Management

Income generation

Transforming through Technology programme -exploiting IT

Hantsdirect

Expenditure on Members

All Services

Reduction in business miles (or cost per mile)

Removal of subsidised car leasing scheme

CORPORATE OR LEGAL INFORMATION:

LINKS TO THE CORPORATE STRATEGY
			Yes	No
Hampshire safer and more secure for all				X
Corporate Business plan link no (if appropriate)
Maximising well-being				X
Corporate Business plan link no (if appropriate)
Enhancing our quality of place				X
Corporate Business plan link no (if appropriate)

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 and any documents which disclose exempt or confidential information as defined in the Act.)
Document	Location
None.