Agenda item

Councillor Dan Levy, Cabinet Member for Finance, Lorna Baxter, Executive Director (Resources), and Ian Dyson, Director of Finance Services have been invited to present the report submitted to and agreed by Cabinet on 19 March 2024.

 

The Committee is recommended to NOTE the report having raised any questions on its contents, and to AGREE any recommendations it wishes to make to Cabinet arising therefrom.

 

NB The Committee is being provided the same report as Cabinet; there is no additional Scrutiny report.

Councillor Dan Levy, Cabinet Member for Finance, Lorna Baxter, Executive Director (Resources), and Ian Dyson, Director of Finance Services were invited to present the Commercial Strategy report submitted to and agreed by Cabinet on 19 March 2024.

 

The Cabinet Minister for Finance introduced the report and argued that while the Commercial strategy was in its early stages, Oxfordshire County Council (OCC) should not pass up sensible opportunities to be more commercial, at a time when many councils across the country faced financial difficulties. The Cabinet member of Finance emphasised that being more commercial would underpin the Council’s prime function of supporting residents, businesses, and visitors. Challenges were expected but it was seen as important to get into a commercial mindset.

 

The Director of Finance Services wanted to ensure the ‘business as usual’ activity was tight and strong by focusing, for the upcoming year, on upskilling staff, processes, and contracts to ensure they were done right. This was to maximise the organisation’s assets, driving productivity and value for money, and allowing more ambitious commercial thinking and projects. An example of the work that had already been done was the digitisation of the business case process where good management practises were being developed. Other good opportunities to think commercially had already been taken, such as with the international market being engaged over the sale of County Hall.

 

The Committee raised a number of issues and questions about the strategy:

 

·       Where had the figure of 3-10% of total expenditure through typical efficiencies of a more commercially minded organisation come from?

 

PwC and Arcadis had both been used to consult on the strategy, in relation to assessing the Council’s commercial maturity. Both companies had independently suggested that figures were expected to be in this range having benchmarked the progress of other organisations who had gone through a similar process.

 

·       In relation to the risk appetite, how did Officers expect to manage risk if they did not know the risks? Could Officers define the risk appetite?

 

It was seen as suitable to define the risk appetite on a case-by-case basis. The risk would be looked at along with the feasibility of each opportunity as it was presented and balanced against the potential benefits of the opportunity. Each project would have its own risk management.

 

·       How was the new commercial mindset to be embedded throughout the organisation? Additionally, what funding had been made available for this in relation to consultants and staff training?

 

Arcadis had reported on the commercial maturity of the organisation. This report was designed to help provide a road map of how the commercial strategy would be implemented and embedded across the organisation. There was to be a focus on training and upskilling existing staff, in addition to changes to governance which aligned to the wider transformation process. Individualised training would improve value attained and would link with the transformation piece to ensure coherent training across the organisation. It was seen that all officers should have a level of commercial thinking about everything they do to ensure they were thinking about getting the best value for money possible. Improving the productivity of the organisation was seen as the main objective of the process.

 

Concerning funding, there had been an initial investment of £100k to look at the Council’s commercial maturity and to provide the road map. An appraisal of the report from Arcadis would follow to determine what the next steps were and if further investment was required. It was emphasised that as much work would be done internally as possible, reducing the level of investment required on external consultants.

 

·       The Committee suggested that the use of the term ‘commercial’ was misleading and unhelpful. The stated remit of the strategy indicated that it would extend beyond direct commercial relationships. The word ‘commercial’ suggested a narrow bottom-line focused approach, while the strategy suggested a broader set of values the Council hoped to change through this culture change. There were also concerns that the term ‘commercial’ suggested that the strategy was concerned about attempts to get more money out of Oxfordshire residents.

 

The term ‘commercial’ had been used following research into the areas it was hoped the strategy would improve. The research consistently came back to commercial thinking, which was why the term was used as the strategy title. Notwithstanding this, officers did acknowledge the points made concerning the connotations of the term.

 

Officers emphasised the Commercial strategy was not about making money from residents. The strategy was about changing the way the organisation thought about itself and changing its mindset. The strategy would change the way the organisation thought about its relationships with residents and other partners and how it generated funds to support residents and do what the Council needed to do.

 

Officers acknowledged that the term ‘commercial’ could be looked at to make the objectives of the strategy immediately clearer.

 

·       Whether there was an intended hierarchy is the Startagy’s commercial priorities. Also, whether there was a juxtaposition between community focus and a commercial strategy with one focused on the community and the other or maximum revenue.

 

There was no designed hierarchy for the commercial priorities, with all stated priorities intended to be delivered with the same level of importance. The strategy was about finding the right balance in what the organisation wanted to achieve. The priorities would help the Council achieve the best value for money allowing for services to be as efficient and productive as possible for residents. This did not mean making the services profitable.

 

·       Members suggested that it would have been helpful to distil the categories of actions suggested in the commercial strategy. It was felt that these different categories of actions would require different levels of scrutiny. Activities seen as driving maximum returns from assets or generating revenue would require greater scrutiny and governance. In relation to this it was questioned whether the Commercial Board – wholly staffed by officers - was the best arrangement and whether other forms of governance were considered.

 

Following the report from Arcadis, officers would start to form a full action plan which would include different sections/categories of activities the organisation could consider. Natural political governance would then take place, and real thinking would be given as to what the board would look like and deliver.

 

Various options for governance were to be investigated. With the Local Enterprise Partnership (LEP) now under Council responsibility, Officers were considering how it wanted the company to be run, which included appropriate governance arrangements. The outcome of LEP governance determinations would help determine how governance would look for other commercial opportunities.

 

·       It was stressed, by Members, that the result of this strategy had to be a better service for the residents of Oxfordshire. While the intent to become more commercial was praised, it should not distract the Council from performing its day job to supply the services needed across the County.

 

The Committee was assured that the intention of the Commercial Strategy was to generate efficiencies and additional money. These outcomes would allow the Council to do what it must do to support residents, and what is wanted to do to in creating better services for residents. The strategy was to allow the organisation to do things better by being focused, efficient, and, where appropriate, commercial.

 

·       The Committee expressed a desire for the Commercial Strategy to be consulted on with the district and city councils, owing to their responsibilities for economic regeneration. Similarly, the core responsibilities of the LEP had to be weaved through the Commercial Strategy. It was hoped the CEO of the LEP would look at the strategy to see how the inherited work would inform the Strategy.

 

The Leader of the Council agreed with Committee that District Councils needed to be included is these strategic discussions. Assurances were also made that District Councils would continue to be represented on the LEP Board and Future Oxfordshire Partnership.

 

·       There was also interest in seeing a line concerning the prospect of joint procurement, as was exampled by the Fire and Rescue joint procurement practices with Buckinghamshire and Berkshire.

 

The Committee was informed of the development of a separate procurement strategy, which would supplement the Commercial Strategy. This included the work done by the Oxfordshire Inclusive Economic Partnership (OIEP). Work had been undertaken to investigate any common procurement opportunities. A significant benefit of the work was the sharing of best practices across services and Districts. Appropriate procurements had been carried out jointly with Districts.

 

·       What did the administration mean by an inclusive economy, did this include reducing inequalities and was it being ambitious enough in this area? What were the social value outcomes intended from this strategy which went beyond the bottom line or commercial revenue maximisation? How was the Commercial Strategy linked to the social value and community wealth building strategy which had been agreed as part of the most recent budget?

 

The Leader pointed to examples of community benefit companies who work for the community and turn a small profit which is reinvest that in the community. This was the sort of mindset the Commercial Strategy hoped to achieve.

 

Pockets of deprivation within the county were being addressed, and the Strategy was to ensure that all people were included in the county’s economy, reaching out to those who had previously been excluded. The strategy was about delivering services in a way that would benefit the community while taking advantage of commercial opportunities. Although they did not feature in the Commercial Strategy, community hubs were highlighted, by the Leader, as a means to include more people, who has previously been excluded, in the economy. The objective of the OIEP was to involve local businesses, helping the organisation find local suppliers and connecting local businesses with the communities around them.

 

The Leader emphasised that the strategy was not a finished piece work. It was a statement on the direction of travel the Council wanted to go in. The Strategy would stop a simple reliance on government funding but also generate its own funding to benefit the residents the Council serves. There would be projects that the Council would want feedback from the Committee on.

 

 

·       The Committee questioned what data and KPI’s would be used throughout the Commercial Strategy.

 

The maturity assessment which had been carried out included an analysis of the quality of data the organisation held and what types of data should be looked at. It was seen as important that the data informed commercial decision, especially around suppliers and contracts. However, the data maturity at this stage was not strong but would develop alongside the Transformation of the Organisation, which related to the following agenda item for Committee.