To provide information and obtain comments from the Overview and Scrutiny Committee to be fed back to Cabinet by the Chairman at the Cabinet meeting on 21 October 2010. 

(Councillor PJ Edwards declared a personal interest.)

Further to its consideration of the Shared Services Programme in September the Committee was invited to submit comments to Cabinet on the developed proposals.

The report to Cabinet for consideration on 21 October had been circulated separately.

The Interim Transformation Director (Shared Services) (ITDSS) and the Corporate Programmes and Shared Services Lead Officer (CPSSLO) gave a presentation.  This summarised work being undertaken on the development of the shared services programme, the original business case,  the review of the business case, the resultant assessment of costs and benefits, the outcome of a review of delivery models, the reaffirmation of the desired outcomes by the Business Transformation Board (modern streamlined support services, reduced cost of support services, a platform for Integrated Herefordshire Public Services and the best for Herefordshire’s economy), updated evaluation criteria to evaluate models of service delivery, the outcome of that evaluation, and the conclusion that while some of the services within the Shared Services Programme would be best delivered through a Joint Venture Company (JVC) a multi-sourcing approach may be more appropriate to others, describing the options available.  The presentation also outlined measures to keep the costs of the Joint Venture Company down (financial control, benchmarking, transparent charging, fostering innovation, streamlined processes, standardisation and embedding a cost conscious culture), and the next steps for delivering the programme including the timeline

The CPSSLO highlighted that the revised business case, which had been reviewed by Capita PLC, and now included the costs and benefits of the Agresso project (a software package for managing HR, payroll, finance and procurement), would deliver £4.3 m in recurring savings from 2016/17 and £33m over 10 years of the programme.  The Council’s share of future savings was expected to be in excess of 70% (£3.01m per year). Savings of 1.02m (of the projected £4.3m) had already been secured as a result of implementing some of the recommendations in the 2009 Shared Services business case.

The ITDSS concluded by saying that the proposals were affordable, not overly complex and contained a number of measures to ensure that there was good financial control.  The timetable for implementing the programme was tight but considered achievable.

In discussion the following principal points were made:

·         It was stated that a number of other programmes introduced by the Council had not delivered the level of savings predicted at their inception.  Members questioned whether the projected savings of the shared services programme would be secured. 

Members also questioned whether the approach had become over complex, moving from the basic starting position of joining up services with Health, and what effect the proposed abolition of Primary Care Trusts would have on the arrangements. It was asked what control the Council would retain over the various services. 

The Leader of the Council commented that the principle underlying the shared services programme remained, irrespective of what happened to Primary Care Trusts.  The key point was the drive towards the integrated commissioning of services which the shared services programme would continue to support.

He added that the County’s size in terms of population meant that some services were very small, necessitating consideration of alternative forms of delivery, rather than direct provision by the Council.  It remained an aim to retain employment within the County as far as possible.

The ITDSS commented that there would be a strong performance management system in place that would control costs through service level agreements.  This strong commitment to cost control would be assisted by the Agresso system.

The Council and partners had experience of managing complex arrangements.  The current powers and responsibilities of the Council and health partners in themselves created complexity. 

Whilst there would be some complexity inherent in the new arrangements the aim would be that all the services under the shared services programme would be managed under a common, standard framework that provided clarity.

·         It was confirmed that the expenditure on the next stages of the shared services programme on consultants, the management of the shared services programme, legal and Human Resources advice and redundancy costs were taken into account in the summary of the financial position as reported.

·         Implementing the full shared services programme (including combining the finance, ICT and payroll services of the three partners) was expected to result in a reduction of staff (full time equivalents) from 550 to 410.

·         There was specific discussion of the payroll function noting that many private sector firms outsourced this particular function.  The ITDSS commented that the implementation of the Agresso system meant that a separate procurement of a payroll service would not generate savings to justify the cost of that exercise.

·         It was requested that in any communication the Council should avoid any confusion between the Shared Services Programme for back Office functions and the programme to integrate health and social care provider services within an Integrated Care Organisation.  The ITDSS acknowledged this point commenting that as the shared services programme was principally about back office functions there would be limited external communication.

·         The importance of ensuring that services were of the appropriate quality was emphasised.  Assurance was provided that this was recognised.

·         That the shared services programme would lead to a noticeable change in the way services were delivered, providing a self-service automated approach.  This would require cultural change.  Members observed that the importance of managing this change should not be underestimated in the light of the experience of the implementation of the Frameworki social care programme.

·         The proposal was that a JVC to deliver Human Resources, Payroll and Expenses, Finance, Procurement, ICT, Revenues and Benefits would be established by April 2011.  The further evaluation now proposed for the delivery of asset management and property services and for transport services would include determination of the timetable for implementing arrangements for these services.

·         It was noted that once within the JVC the scope to undertake procurement as part of larger consortia would be retained.

·         It was asked how the benefits from the shared services programme would accrue to the partners.  In reply it was reiterated that the Council’s share of future savings was expected to be in excess of 70%.  The JVC would be liable to corporation tax on any profits.  However, the expectation was that because costs to partners forming the JVC should be controlled, retained profits should therefore be minimal, although the company would need to demonstrate that it was a going concern.    The VAT implications were being assessed to ensure efficient arrangements were made.

RESOLVED:  That Cabinet be advised of the issues raised by the Committee and the responses received.