To seek the views of the Committee on the draft recommendations from the Service Delivery Review of the Council’s Service Delivery Partnership with Amey.

The Committee’s views were invited on the draft recommendations from the Service Delivery Review of the Council’s Service Delivery Partnership with Amey Wye Valley Ltd.

A draft report on Phase 2 of the review had been circulated separately to the Committee.

The Director of Environment and Culture introduced the report.  He said that a great deal of work had gone into the review, reflecting the importance attached to addressing the Partnership’s shortcomings in delivering services that were highly visible to the public.  The future emphasis needed to be on addressing issues as they arose, quickly and efficiently.

The Acting Head of Highways and Transportation presented the detail of the report.  The two stated objectives of the review were to review alternative forms of delivery with a view to securing annual savings to the Council of £1 million and to improve the current level and quality of service.  He explained how the review had been conducted and how 18 possible delivery options had been reduced to 3: the improved business as usual model; the managing agent model, which would give greater responsibility for planning to Amey; and the integrated services model, with services delivered by an integrated organisation staffed by employees of both Amey and Herefordshire Council and managed by a single manager reporting to both organisations.

The aim was to develop a model tailored to meeting the needs of Herefordshire.  It had been concluded that the improved business as usual model would not achieve the degree of improvement or level of savings required.  The other two models offered a potential basis for negotiation.

He emphasised the extent to which the financial savings were estimates and dependent on successful implementation of the model and could not be guaranteed.

He also drew attention to the appendices to the report setting out the scope of the contract, a description of the 3 shortlisted service models, a summary of the methods used in estimating potential staff savings and the Amey capability statement.

In the course of discussion the following principal points were made:

·         In response to a question, the principle of the “watchman” scheme it was proposed to include in the Herefordshire service model was explained.  The scheme was in place in Bedfordshire and had improved links with local communities, providing a single local contact with a delegated budget and a remit to target resources.

·         A number of examples were given of where service was not currently being delivered to the required standard by Amey.

·         There was discussion of how savings could be achieved without an adverse effect on service delivery.  The Director said that the savings were to be achieved without reducing service.  There was considerable duplication of effort at the moment with an unnecessary degree of checking.  Where there was a clear outcome to be achieved, as in the emergency response to the 2007 summer flooding, the partnership worked well.  That was the approach that needed to be fostered.

·         It was noted that Bedfordshire, where the managing agent model, involving Amey, was used, had invested £4 million to generate improvement in its services.  This approach seemed to contrast with the reduction in costs envisaged by the Council in Herefordshire in circumstances where services were not being provided to an appropriate standard with the existing level of resources.  The Director replied that the relevant Council Services had a higher Comprehensive Performance Assessment rating than Bedfordshire’s had had at the time.  He reiterated that the aim of the review was to deliver better value for money, both reducing cost and increasing quality.  It was highlighted that if the potential savings could be realised this would provide the Council with an opportunity to consider reinvesting in additional service provision.

·         It was stated that Members had evidence of schemes carried out by Amey costing far in excess of what they would cost in the market place.  In this context the apparent intention to achieve savings by reducing the level of challenge of contract costs was questioned.

·         The Director said that challenge by the client side was critical to the delivery of any future service model.  A key part of the negotiations would centre on market rates.  He considered that comparative information on schemes could be obtained to ensure that there could be appropriate challenge of costs.

·         A Member observed that the fundamental problem with the Partnership’s operation appeared to be the interface between the Council and Amey.  This suggested that the managing agent model might offer the best way forward. 

·         It was noted that the report referred to the need to correct examples of poor relationships between Council staff and Amey staff.  This had been commented on in the Committee’s scrutiny review of the Partnership completed in 2006.  It was disappointing to see that this issue remained unresolved.  The Director said that the review acknowledged the need to effect change in working relationships to deliver service improvement in the next five years of the contract’s life.

It was suggested that it was important that action was taken now to seek to improve relationships and not just await the outcome of the review.  In reply it was said that the review had provided an opportunity to explain the type of behaviours that were expected and a number of quick wins had been identified and acted upon.  Anomalies in the current contract would be removed and robust action taken to counter inappropriate behaviour. 

·         Members highlighted that the need for senior management commitment to partnership working should not be singled out as a requirement because it was clear that commitment by all was required.

·         Reference was made to the comment in the Audit Commission’s report on value for money in strategic partnerships that, “very few strategic partnerships have achieved financial benefits.”

·         Concern was expressed at the late delivery of invoices in relation to the street lighting service and the impact on the Council’s final accounts.

·         That the views of Councillors should have been sought as part of the process.  Attention was drawn to the examples of poor service by Amey that Members found in their wards.  The Director said that he would welcome Member input into the review.  Members proposed that the views of all Members should be invited.

·         It was suggested that the Committee should have been provided with more detail on how the estimated savings were to be achieved.  The Director said that a large part of any savings would be a result of a reductions in staff costs because this currently accounted for a large proportion of expenditure.  It was premature at this stage to speculate on the detail.  This would emerge during the negotiations.

·         That whilst the phase 2 review report was good it did not address sufficiently the commercial environment and the fact that in entering negotiations Amey would not accept a reduction in their profit.

·         A further question was asked about Bedfordshire’s contract with Amey.  The Director said that the contract was not seen as a blueprint but suggested some possible approaches.  He acknowledged Amey’s motive was to make profit.  The key was to ensure that profit was dependent on delivery.  The Bedfordshire contract focused on outcomes. There was provision in their agreement for a series of one year extensions to be added the original 10 year contract  as an incentive for Amey to deliver on target.  Any such extension awarded by Bedfordshire was dependent on satisfactory yearly performance outturns.  The Director indicated that such a framework could encourage capital investment by Amey as they would then be able to plan for recouping their outlay in the medium and long term.

·         An interpolation of the information on the projected savings suggested a 50% chance of £800k being achieved and a 10% chance of £1million.

·         The Cabinet Member (Corporate and Customer Services and Human Resources)  commented that the eventual solution needed to be robust to meet the challenges that lay ahead.  She emphasised the need to insist on staff complying with the Council’s requirements in seeking to develop partnership working.

The Chief Executive summed up the position, emphasising the need for an effective partnership relationship in which there could be confidence in service delivery.  This would involve the Council as client undertaking some benchmarking against market rates.  However, excessive supervision would not work.  The contractor should be judged on outcome and price.

The Committee considered its further involvement in consideration of this issue, agreeing that it would wish to have a further opportunity to comment prior to a decision being made by Cabinet.

RESOLVED:

That          (a)  the depth and breadth of the preliminary stage of the review and the involvement of the Committee be welcomed;

(b)    reassurance be provided that any watchman scheme will include Local Member views as a matter of course;

(b)    it be recognised that relationships between the two organisations and unity of culture are key and that where bad practice is identified this should be remedied on an ongoing basis;

(c)      all Members be invited to comment on the review; and

(d)    that the Committee should be provided with a further opportunity to comment on the review prior to recommendations being considered by Cabinet.