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ITEM CG10 - ANNEX 3

CORPORATE GOVERNANCE SCRUTINY COMMITTEE – 27 JULY 2006

EFFICIENCY SAVINGS

Changing the role of the Efficiency Savings Steering Group

Introduction

The Efficiency Savings Steering Group (ESSG) was established to drive and support the Efficiency Savings Strategy (ESS), delivery of the Annual Efficiency Statement (AES) and Value for Money aspects of the Comprehensive Performance Assessment.

Proposal

This paper proposes that the Steering Group should be discontinued in its current form as a reflection of recent organisational change, such as the revised Service and Budget planning arrangements, experience gained implementing initiatives such as the business process re-engineering programme and to avoid duplication of activity between various governance models and programme boards.

Rationale

Within the Efficiency Savings Strategy there are the following work streams, shared services, procurement, income and productivity (BPR). Some of these are already governed by bodies other than ESSG.

  • Shared Services reports to a dedicated Programme Board, reporting to ESSG represents duplication of effort and should cease.

  • Procurement reports to three Programme Boards, Strategic Procurement, SAP Revitatlisation and as part of Shared Services. Between them, the strategic, structural and systems aspects of procurement are effectively being taken forward and monitored. This work does not need to be monitored by ESSG. The savings generated as a result of improved purchasing contracts, the strategic aspect of procurement, are currently monitored by ESSG. At a recent Business Managers Group meeting the decision was taken for Directorates to allocate their own procurement efficiency savings as part of a pro-rata savings target. This suggests a fragmented approach, and appears to operate outside of the Service and Budget Planning arrangements. The strategic aspect of procurement is managed by the County Procurement Manager and that work could be broadened, as part of the work programme of Finance and Procurement, to setting corporate and directorate targets for spend in specific areas where beneficial arrangements have been negotiated, ensuring compliance with corporate procurement policy and use of contracts. The information obtained could be used to inform the budget setting process and provide challenge during the ‘star chamber’ exercises.

  • Income generation is in a similar position. The work stream currently reports to ESSG alone, and is managed by Sean Collins – Assistant Head of Finance with limited input from other teams. The strategic aspect of income generation could become part of the responsibilities of the Assistant Head of Finance, as part of the overall work programme of Finance and Procurement. The strategy would cover, the overall development and management of income strategy, including corporate and directorate income generation targets, ensuring that directorates and services are fully aware of charging regulation and opportunities, that Heads of Service seek new income initiatives such as sponsorship and obtaining comparator information to provide a reasonability check and identify best practice. This work would be used to support development of budget strategy, the annual planning round and provide an informed challenge to the ‘star chamber’ exercise. There is scope to report income initiatives to the Corporate Governance Scrutiny Committee to ensure continued Member involvement.

  • BPR currently reports to both ESSG and Business Managers. Proposals to develop a productivity work stream supported by an organisational wide capacity and expertise in BPR have achieved little progress. It is the view of the Business Development Team, following advice from the Said Business School that Directorates will need to own both the programmes of BPR activity and the individuals trained in BPR, for this approach to be successful. Alternative proposals to promote the achievement of efficiency savings from BPR are being developed, see annex 2. The incentive for directorates to utilise BPR should flow from budget pressures, developed by the annual Service and Budget Planning round and/or the need to identify internal resources for investment to further directorate strategic plans. Under the new proposals being developed for BPR there is a presumption that efficiencies achieved through BPR would be available to and under the sole control of the directorates where they were generated. As a result directorates would be free to allocate efficiencies to resolve budgetary pressures or for investment elsewhere in the directorate.
    The BPR programme would become a development programme for managers and senior staff, form part of the HR strategy and be monitored by the HR Programme Board. Business Development would support the overall programme, monitor activity to ensure consistency of approach with the disciplines advocated by Said BS and efficiency savings calculated and reported to satisfy AES requirements.

Work to produce the Annual Efficiency Statement is overseen by ESSG and delivered jointly by Finance and Business Development. The recent Value for Money inspection (part of the Comprehensive Performance Assessment process) commented favourably upon these arrangements.

If ESSG is disbanded and a central working group does not oversee the work around AES there is a risk that it will not be effectively managed and become a reactive process. There is scope to give greater attention to AES and use it as a springboard to drive and monitor improvements within the organisation.

It is proposed that a small AES steering group is formed to manage and monitor AES with fewer members than ESSG and perhaps meeting quarterly. The role of this group would be to ensure AES requirements are met and an effective interface between efficiency saving activity and the Budget and Service Planning process

It is proposed that Finance and Business Development continue to work together on AES. The existing monitoring and reporting arrangements should be developed in the light of our recent experience.

‘Value for Money’ falls within the scope of arrangements to prepare for the Comprehensive Performance Assessment (CPA). Whilst details of the recent self-assessment were presented to ESSG, they were effectively managed and monitored by the Business Manager Group. A proposal has already been made to transfer support for this work from Business Development to the Corporate Performance Team, who manage the overall approach to CPA.

Summary

The Efficiency Savings Steering Group duplicates work in some areas and covers work that could be more usefully integrated into other existing activity and structures. ESSG is a group consisting of several senior managers and Cabinet members and an expensive meeting to run. Disbanding this group will therefore limit waste and duplication and will be a measure undertaken in the spirit of efficiency.

Recommendations

ESSG is recommended to disband and make arrangements for its current activities taken forward as follows:

  • Shared Services and Procurement continue to report their own respective programme boards

  • Income and (strategic) Procurement are integrated into the annual budget setting process via the Service and Financial Planning arrangements and managed by Finance.

  • A small AES steering group should be formed meet quarterly to continue to steer this work strategically.

  • Value for Money activity is managed by the Corporate Performance Team as part of the CPA arrangements.

  • BPR and productivity work is assumed within the HR strategy, overseen by the HR programme Board. See Annex 1

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