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ITEM EX7

EXECUTIVE – 29 APRIL 2003

MAXIMISING OUR RESOURCES

Report by the Leader of the Council and the Deputy Leader of the Council

Introduction

1. Oxfordshire County Council is the most significant economic entity in the County. The Council employs over 16,000 people. The gross spend in 2003/04 is £631 million. The net budget, as recommended to Council, is £508 million. This budget will set a Council Tax increase of 13.4% against the previous year.
2. The Council has a Capital Programme for 2003/04 with a gross value of £73 million. The Council owns 600 properties around Oxfordshire with an estimated value of £1 billion and with an accumulated property maintenance backlog of £70 million.
3. In setting the 2003/04 budget, the Executive has increasingly felt locked into a rigid cycle in which the budget process starts in the Autumn with the previous year’s base budget. The Executive then considers the impact of inflation and financing costs to determine a restated base budget. Directorates then put in estimates of spending pressures for their service areas. Treasurers make a best estimate of the likely Local Government Financial Settlement. When this is announced in December, it is possible to consider various "what-if" scenarios against the likely level of final settlement. The Executive is concerned that this is "too little - too late" and is determined to start the 2004/05 budget review process in April 2003. The rest of this paper is a discussion around how such a review might be achieved.
4. It should be seen as a continuation of work already undertaken by the Executive. In particular:

1. The Star Chamber exercise last summer yielded over £2 million cash savings that helped reduce the council tax in 2003/04.
2. That exercise also helped to identify a number of promising areas for review – most notably related to procurement (of vehicles, telephone contracts, stationery etc).
3. The combination of an invitation to a Cabinet Office manager to review procurement and the Star Chamber exercise led the Executive to set aside funds in the budget for 2003/04 to recruit a procurement officer. This recruitment is now underway.
4. The Executive also identified property as a fertile area for review. The Best Value Review was prompted by this perception.

5. As well as accelerating the budget process and getting "inside" the base budget, we also need to review our budget monitoring and accounts closedown processes. Monitoring and reporting should be in financial and output terms and enable officers and members to understand the base budget better and to inform the ongoing budget setting process. Accounts closedown should include a more informed review of variations and outputs, again informing the budget setting cycle. Proposed changes to the layout of the budget book should assist these changes.
6. The Council has five significant types of assets to deploy:
   
   

1. a gross revenue budget of some £631 million in 2002/03 (see Table 1);
   
   Tables (download as .xls files)
   
2. a capital programme spending a gross sum of £73 million in 2003/04. The Council owns 600 properties with an estimated market value of £1 billion;
3. over 16,000 staff;
4. a corporate database of important service, corporate and strategic "knowledge";
5. a substantial ICT infrastructure.
   
   

This paper discusses how the Executive can review the effective use of all of these asset types. Subject to approval by the Executive, views will be sought from Corporate Governance Scrutiny Committee, Best Value Committee, CCMT, external consultants and the political groups. The Executive wishes to move forward rapidly on the issues contained herein and an early response would be appreciated.

Revenue Base Budget Review

7. The Executive wishes to see the base budget for each service area "opened up" and an explanation for the service inputs/outputs given and how the Strategic Director and Business Manager can demonstrate cost efficiency and value for money. This will include challenging the need for each service area, the level of resource applied and whether alternative working methods could deliver the service for lower cost.
8. The management structure and the budget structure should coincide. At present, they do not. The Executive would like early work to be carried out to bring about such coincidence, with a named individual holding responsibility for each Cost Centre and the political responsibility equally clear.
9. There are presently 50 Cost Centres. They vary hugely in size. Table 2 shows these Cost Centres by Directorate/Portfolio Area. Table 3 shows the Cost Centres ranked by size within Directorate. Table 4 shows that just seven Cost Centres account for 63% of the gross budget.
10. It would be helpful to have a budget book that provided in a common format for each of these 50 Cost Centres:
    
    

1. details of the base budget and what it buys;
2. an organisation chart showing how staff in the Cost Centre are organised and showing grades and WTE numbers;
3. a description of the customers/outputs of the Cost Centre;
4. suggested performance indicators by which the performance of the Cost Centre might be judged;
5. comparative information comparing the Cost Centre with similar ones in similar authorities.

Work is under way on re-formatting the budget book to provide this information.

11. Once presented with this information, there needs to be an initial trawl through the 50 Cost Centres to decide how to review each one. There will not be a common template and it is doubtful whether a single approach would enable the whole base budget to be examined in the first year. Examples of potential approaches are:
    
    

1. Executive leads will have intuitive views about where probing will be most effective and may wish to prioritise some areas on this basis.
2. A particular approach may be needed for schools where financial delegation means we do not have direct managerial responsibility. Work here might revolve around:

1. agreeing a small set of performance indicators that test the efficient use of resources by schools;
2. work around rolling out best practice to less well performing schools;
3. a key role for advisers to use financial and output measures with performance indicators to identify areas for support and intervention.
3. In some areas of service external consultants might bring a new perspective.
4. Use of Best Value to examine areas where this might prove beneficial or where recent or ongoing reviews suggest it.
5. Desk top review by members of Performance and Review Unit, working as consultants to the Executive.
6. The new Business Managers have a key role in this process as soon as they are in place. There is a wealth of data from previous review work and Business Managers should look to the Performance and Review Unit as a consultancy to support their role. Business Managers could also draw on Audit and Risk Management Service expertise, as a complementary consultancy source - particularly to validate the robustness of performance management information systems;
7. Each Scrutiny Committee should be invited to identify/include some positive review topics in their developing work plans.
   
   
12. This work should be preceded by a high level exercise comparing total spend on the major service blocks (Learning & Culture, Social & Health Care, Environment & Economy, Community Safety, Corporate Governance) with the amount the Government thinks should be spent on them and spending levels in comparable councils. The purpose of the exercise would be twofold: firstly, to provide background information which should inform the cost centre review. Secondly, to answer some key questions about the total level of spending on those service blocks and thus determine whether there is scope for transferring resources between blocks or limiting the exercise to using resources more efficiently and effectively within the blocks.
13. It should also be accompanied by a review of selected expenditure headings across the Authority. This should be limited to a number of significant running expense headings where there is potential for making efficiency savings without impacting on service delivery. A key area for examination will be income. This targeted review should inform our procurement strategy. Recruitment of a Procurement Officer is underway, a Procurement Strategy should be in place by November 2003 and a programme of procurement reviews initiated by then.
14. In all this work it will be necessary to ensure that all key parties are engaged: Executive key managers and employees, customers. It will also be necessary to ensure that effective challenge is provided by Scrutiny so that all issues are actively considered. We will need to be clear about how this work relates to Best Value reviews that have been completed or are due to take place.
15. The Executive needs to develop a timetable for carrying out these reviews. The intention would be to complete the first phase of reviews between April to August 2003, with a view to working on proposals in September and October to bring to the November Council and to feed into the budget process for 2004/05. Other reviews would be completed from January 2004 through to August 2004.
16. The Leader of the Council will be the lead Executive member together with the Deputy Leader. The Head of Service (Finance) will lead on the CCMT side. An Implementation Plan is attached as Annex 1 (download as .doc file). As a parallel exercise, proposals for Improving Member Access to Information have been developed and are described in Annex 2 (download as .doc file).

Property Review

17. The Executive has put in place a new structure for property management. The key features of this are:
    
    

1. properties are held centrally;
2. the central property service will reside in the Resources Directorate and will be strengthened;
3. property sections in service Directorate will specify property requirements, reflecting their business needs both now and in the future; the central property function will deliver them;
4. the use of external consultants will be modified with a balance between external and in-house provision.
   
   
18. The Executive wishes to institute a wholesale review of its property holdings with a view to:
    
    

1. identifying and realising surplus property;
2. making better use of property, with greater sharing of properties across service directorates;
3. providing a better match in property terms between the needs of an area and the property in that area.
   
   
19. The process will not be easy and will present difficult options requiring strong political support. The benefit from a wholesale review is expected to be realisation of capital to re-invest in high priority needs including the property maintenance backlog.
20. It will be necessary to identify appropriate areas within the County and to establish a priority order for reviewing them. The review should comprise an audit of current activities across the Council and the property holdings in the area. The review should aim to match present and future needs against the available property and still leave a surplus for realisation and re-investment.
21. A realistic timescale for completing the review of the whole County and target levels of realisation should be determined at an early stage.
22. The Leader of the Council will be the lead Executive member together with the Deputy Leader. The Head of Service (Property) will lead on the CCMT side.

Personnel Review

23. The County Council employs more than 16,000 staff. They are the single most important key to continuous improvement. The Council’s central Personnel/Human Resources function is very small and there is a split between more traditional personnel functions and Organisational Development. There needs to be a stronger central resource which should be about Human Resource Management as well as Personnel and Training.
24. Initially much staffing information should be considered alongside the budget review process but a longer term strategy is required for Human Resources. However, a Human Resources Strategy needs to be developed, following a wholesale review of how best to support the Council’s staff. Implicit in this is consideration of the split between central and devolved support. A timetable for this review and for development of the Strategy should be drawn up and presented to an early Executive.
25. The Deputy Leader of the Council will be the lead Executive member together with the Leader. The Director for Resources or a nominated Head of Service will lead on the CCMT side.

Review of ICT and Corporate "Knowledge"

26. Central to the delivery of more joined-up and more cost-effective government is the better use of ICT and management of our corporate knowledge. The Head of Service (ICT) has only been in place for a relatively short time but has already instilled confidence in Executive members around the opportunity for substantial improvement by taking a more corporate approach.
27. The Executive looks for an ICT and Corporate Knowledge Strategy for the next 10 years to join together the needs for cost effectiveness, e-accessibility to services, joint working with partners and to secure an Excellent rating in the Corporate Performance Assessment.
28. There is a need for improved data collection systems for critical management information e.g. BVPIs local performance indicators etc. Collating and portraying performance data is a similar issue to the need for improved financial data systems. The absence of such systems has a significant impact on performance management, is wasteful of resources which have to be dedicated to data collection, lends itself to inaccuracies between pieces of similar data and inhibits useful analysis by systems such as balanced score cards
29. The Oxfordshire Community Network needs firm and clear management to support the County’s goals and objectives. It needs to do this within a robust financial framework and to a clear timescale.
30. The Deputy Leader of the Council will be the lead Executive member together with the Leader. The Director for Resources or a nominated Head of Service will lead on the CCMT side. An Implementation Plan has been drafted and is attached as Annex 1 (download as .doc file)..

Support to the Executive

31. The above sets out a substantial task for the Leader of the Council and the Deputy Leader of the Council as the lead members for the newly formed Resources Directorate. They will look for support in this work to:
    
    

1. Heads of Service in the Resources Directorate; and
2. The Performance and Review Unit and other internal review agencies.
   
   

Additionally, greater continuity and more speed could be achieved by the appointment or secondment of a policy officer working full or part-time to the Leader and Deputy.

Conclusion

32. It is the Executive’s intention to have the initial planning work completed early in 2003/04, with:
    
    

1. a substantial review of the revenue budget in place for a report to Council in November 2003;
2. the property review well under way by the end of 2003/04 and the first realisations achieved;
3. a Procurement Strategy in place by November 2003;
4. a Human Resources Strategy in place by November 2003;
5. an ICT and Corporate Knowledge Strategy similarly in place by November 2003.
   
   
33. In dealing separately with revenue spending, capital spending, property, human resources and ICT/knowledge, it is important to emphasise the importance of joining up the management of these resources to ensure they are employed in furthering the organisation’s strategic objectives. It is the role of the political leadership, the Chief Executive and the Director for Resources to promote this "joined-up" approach.

Consultation

34. This paper is issued as a basis for consultation with members. Corporate Governance Scrutiny Committee is particularly invited to respond.

Recommendations

35. We RECOMMEND the Executive to:

Keith R Mitchell
Leader of the Council

Margaret Godden
Deputy Leader of the Council

Background Papers: Nil

April 2003

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