Agenda item

Report of the Cabinet Member Corporate Services

The Cabinet Member Corporate Services, Councillor Whyborn, introduced the report.  He described the motions before council as simple and in themselves uncontroversial, namely to respectively appoint Paul Jones and Councillor Steve Jordan, both of whom he considered to be eminently suited to the roles, to the posts of continuing Section 151 Officer, and Member representative of Cheltenham Borough Council, to the planned Support Services Company. 

Recommendation 6 noted the retention of the Revenues and Benefits service by Cheltenham Borough Council consequent to the decision of Cabinet not to move it from the Joint Committee to the new company. 

The Cabinet Member explained how the project had originated as a result of Central Government’s aspiration to promote innovative and cost-effective solutions to delivering local authority services, and Cheltenham had first-hand experience of shared services in Gloucestershire and the use of a Teckal companies.  At the time, Ubico was unique in being a shared service and a company using the Teckal exemption, meaning the service ran largely as an in-house service and did not have to go out to EU-type tendering.  Government grant funding (TCA funding) was available and the 2020 project councils were able to secure £3.8m for business transformation and related costs.  Further financial advantage would result from the fact that new employees would be engaged on terms outside of the Local Government Pension Scheme (LGPS).

 The initial vision, which was largely the one which other partner authorities were still working to, was a group of companies which would employ all employees and include all in-house services including Democratic Services, etc.  Only Statutory Officers were to be outside of the scheme, with their services being seconded from the companies and not surprisingly this revolutionary approach has proved hugely controversial.  Though early pioneers in shared services and arms-length services, Cheltenham has always adopted a “one size does not fit all” approach and decided at an early stage that it would not include the following: Regulatory services; Wellbeing and Culture; Legal and Building Control; Property; Democratic Services; Media; Elections; Community; Customer Relations; Bereavement; Green Space and Client and Commissioning officers, as well as social housing services already in CBH. 

He had spoken at length on the issue of Customer Services (CS) and Revenues and Benefits (R&B) at a recent scrutiny meeting and Members seminar, to say, in short, that the relatively modest savings involved, compared to the potential reputational risk to the council, did not justify the change.  The administration considered these to be highly sensitive front-line services, which were best directly staffed by the Council and managed locally, unlike GO Shared Services and ICT. 

These services were already largely shared and the only question was whether to take further advantage of a Teckal Company.  There would be no immediate advantage to CBC as staff were already shared and on the payroll of other authorities, but there would be a long term gain and moreover, preliminary costings for reverting the services to CBC, were expensive in terms of both revenue and capital.  Cabinet’s conclusion was that these were precisely the back office services which benefited from being shared with other councils and indeed many economies of scale had already been realised.  There were a lot of governance and structural issues that needed to be worked through with the partner authorities, which he suggested stemmed from very different political perspectives, but after a great deal of negotiation, facilitated by LGA representatives, agreement was reached on the 34 points listed in the report.  Of particular importance had been the right to have a Members director; that Trade Unions would be recognised; that no changes would be made that would be detrimental to one or more of the partners, even if of benefit to others; and that the company would make information available to Councillors to enable them to do their jobs.

The proposal agreed at Council, was, he suggested, a logical extension of the Teckal company principle, which had been so successful for Ubico and as in the case of Ubico, the Teckal exemption, would provide opportunities to sell services to others, as well as allowing the council to run a company at the cost of services, in some respects, as an in-house service would be run rather than requiring competitive tendering as a full trading company would.  The inclusion of the ICT services would increase resilience, create opportunities for improved technology, including new telephony to replace the CBC exchange which had come to the end of its working life and this would result in better tools for officers, including the Customer Services  Team.  The Cabinet Member Corporate Services hoped that Members would be able to support the recommendations and moved the resolutions.

The Mayor invited questions from Members and details of these and the responses that were provided are detailed below:

·         In February 2016 Cabinet approved the business case for sharing CS and R&B with the 2020 partners and these documents showed the overall risk to the delivery of outcomes as ‘RED’ for the very option (keeping in-house) of what was being proposed today.  Paragraph 10.4 of the report being considered today, noted that as a result of the council’s more limited exposure to the partnership, the share of programme costs for this council had reduced, but this decision also resulted in a lost saving of £1.6m over the next 10 years. What were the financial implications of the decision to remove these services from 2020?

·         The Cabinet Member advised that the implication on the revenue savings was an annual reduction of £159K but the non-recurring costs would reduce substantially because the council would need to contribute less to the ongoing programme costs and he considered the council had got a good deal on this in their negotiations with the partnership.

·         A Member highlighted that in February the reputational risks of not putting these services into the partnership had scored highly on the risk assessment in terms of likelihood and impact. Why the change now?

·         The Cabinet Member acknowledged that these had not been included in the risk assessment. He felt that they would be difficult to score as essentially it was a question of whether partners would deliver these services to not only the same quality, but to the same ethos to which CBC currently delivers.  He also commented that risk assessments were subjective and based on someone’s interpretation.

·         Members had been told previously that the inclusion of CS would result in being able to provide an enhanced service, with extended opening hours and 24hr telephone support: by not including this service were residents of Cheltenham being disadvantaged? 

·         The Cabinet Member suggested that there were other means of providing an enhanced service and building resilience and this involved taking a holistic approach.  Various options were being considered and CBH were closely involved in this.

·         Why, when only 8 months ago were CS and R&B to be included because of all the associated benefits, were they no longer to be included? 

·         The Cabinet Member acknowledged that the decision in February, to include these two services, was the wrong one.  When the interim arrangements had been put in place it had always been made clear that they were subject to review. He acknowledged that a matter which had exercised many Councillors throughout this process was that collaboration could result in a loss of control or influence over important front-line services. He felt that this could not be addressed by contractual or structural arrangements but was instead a matter of political, ethical and practical judgement which only elected Members could take.  He had personally wrestled with this issue and despite reassurances from senior officers, he had not been satisfied.  He felt that Members needed to evaluate to what extent they believed that other partners were willing and able to deliver shared services to not only the quality, but also the ethos, to which CBC was currently delivering them.  It was his judgement that the sensitivities to the public in relation to CS and R&B were huge and the cost savings relatively modest in comparison.  Of the many people that visited CBC on a daily basis, many were from deprived communities and not IT literate and for them, face-to-face contact with officers and Members was important and the level of service expected in Cheltenham was arguably different to that expected of our partners.  Whilst this was not easily quantified, it was a fact that the partner councils were rural and with a different political party in control  and it should therefore be expected that they have a very different set of values in terms of the service that should be provided.  It was for these reasons collectively, that it was his judgement that such services were best provided directly by this administration and staffed and managed locally. 

A number of Members voiced concerns about the recommendations and these comments included:

·         Councillor Tim Harman, speaking as Leader of the Conservatives, said his group had been supportive of the principle of shared services for some time. The Overview and Scrutiny Committee, a group of cross party Members, had expressed concerns about the decision to retain CS and R&B given the £159k saving that would have been generated as well the enhanced service and resilience it would have created.  They felt that this was a missed opportunity and asked that the Cabinet Member revisit his decision and this had not happened.  

·         The Cabinet report in February had set out all the risks associated with such a decision and they were not confident that these issues had been mitigated. 

·         A Member highlighted that waste collection was a front-facing service which the council had shared as part of Ubico and there had been no adverse effects on the council’s reputation.  They also noted that the £159k saving that would not be realised as a result of this decision, could have helped enable the Cabinet Member Clean and Green in achieving his recycling ambitions and for these reasons alone, the recommendation should be rethought. 

·         A Member felt it was disingenuous to suggest that residents would not be able to access services in person at the council offices if they were included in 2020.  Improved technology would enable staff to provide a better service to customers however they chose to access Customer Services.

·         Realising the £159K savings could also have been used to avoid having to increase council tax by £5 next year.

·         A Member who had been an officer at Worcestershire County Council advised that Worcestershire had delivered everything that had been described in the Cabinet report of February 2016 back in 2004 and so their success should be looked at.

·         Part of the rationale for restructuring CBC and the subsequent retirement of the previous Chief Executive, was that we wanted to deliver savings and having gone through that process, 8 months on, £159k of the savings that were identified, would not be delivered.

Members speaking in support of the recommendations made the following comments:

·         Austerity meant that some residents were financially vulnerable and found the face-to-face advice and support that officers provided invaluable. 

·         Whilst shared services had proved broadly successful in the cases of CBH, Ubico and One Legal, they felt that 2020 posed a rural/urban issue, which was cultural in nature rather than entirely political.  The Member had asked the question of whether the pension problem would be solved by the inclusion of all services in 2020 and had been advised that it would not.  Whilst the other partners were planning to include all services within one organisation, it had never been this council’s intention to adopt such an approach, instead deciding to share services with a variety of partners.  

·         A Member referenced the Cabinet report from February, which did not include any assessment of risk associated with reduced collections if R&B went into 2020.  The £159k savings that had been identified were based on CIPFA guidance that 20% of staff costs could be saved, but could Members be assured that this would not affect collection rates.  He highlighted that CBC’s current collection rate was 98% compared to the national average of 97% and questioned how a 20% cut in staff would not have a negative impact on collection rates.  Based on the £45m received annually by this council, a 1% decrease represented £450k which in his view illustrated the scale of the risk of the potential loss. He also had concerns about accountability, given that the three other partners had nominated Officers to the Board, whereas this Council had nominated an elected Member.  Councillors were elected and were therefore politically accountable to residents, Officers were not and it was for these reasons that he would support the recommendations. 

The Cabinet Member Corporate Services assured Members of the Overview and that Scrutiny Committee that he had revisited the decision not to include the two services but that ultimately Cabinet’s decision had remained unchanged.  Resilience was something that would be addressed by adopting a holistic approach to extending the services across Cheltenham.  Members had cited Ubico as an example of a shared front-facing service, but waste was an area which benefitted greatly from economies of scale and Members were reminded that Customer Services for Ubico had remained within CBC.  He did not mean to suggest that revenues and benefits would cease to operate from Cheltenham if it moved into 2020 instead, what would change would be the management of the service.  In relation to new technology, ICT, which was already part of a shared service, would be merged with West Oxfordshire and Cotswolds, which would provide a platform across the 4 authorities and therefore Cheltenham would benefit from improved technology, starting with telephony.  In closing, he stated that this decision was about more than money, it was about the type of administration and the nature of the council that he was part of.   

Upon a vote it was

Voting (For 27 with 7 abstentions)

RESOLVED that:

1.    The continued designation of Paul Jones as s151 Officer in an interim seconded capacity until 27 March 2017 be approved and the inclusion of the management of revenues and benefits from the date of withdrawal from the 2020 Joint Committee be noted.

2.    The Leader of the Council be appointed as this Council’s Member representative of the support services company.