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Report to: |
Strategic
Policy and Resources (Transition) Committee |
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Subject: |
PriceWaterhouseCoopers
Phase II report (Economic Appraisal) |
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Date: |
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Reporting Officer: |
Mr |
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Contact Officer: |
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1.0 |
Relevant Background Information |
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1.1 |
Members will be
aware that the Department of Environment |
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1.2 |
PwC has just
recently released its Phase II for initial consideration of relevant
stakeholders (including councils), with |
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1.3 |
A copy of the
Executive Summary of the draft PwC Phase II report is attached at Annex
1. A copy of the full detailed report
has been placed in the Members’ Library for reference and can be accessed at the following link: http://www.doeni.gov.uk/index/local_government/local_government_service_delivery-2.htm |
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1.4 |
Over the past
number of weeks PwC has been undertaking a series of Party Group briefings,
at a regional level, on the emerging proposals contained within their report
and providing an opportunity for elected Members to |
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2.0 |
Key Issues |
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2.1 |
Whilst the PwC
report considers 5 options in relation to a §
the establishment of a Targeting Operating Model
(i.e. structure) for the new councils §
the establishment of a Business Support
Organisation (i.e. Shared Service) which will deliver a range of functions
including, for example, ICT, Procurement (by 2011); Legal Services , Finance, Property Services
(by 2015) §
the BSO will be established as a Joint Committee ( §
the BSO will
house a number of the central government functions proposed to transfer to
local government which, as the report suggest, cannot be disaggregated
e.g. DSD Large Capital Projects;
Parking enforcement; Planning specialists §
the creation of a single Waste Disposal Authority
(WDA) §
the creation of a new Local Government Association
(LGA) §
will cost £118m to implement §
will realise a reduction in Net Present Cost of
£438m over a 25year period |
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2.2 |
In reviewing
the draft PwC Phase II report, the following key areas of concern are
highlighted for Members consideration: §
the unspecified and unsupported nature of the cost
and saving estimates and assumptions presented within the report upon which
the re §
limited consideration given to the level of
capacity required to bring affect to the transformation proposals alongside
the §
detailed consideration needs to be given to the potential
impact upon the Council of the proposed establishment of the Business Support
Organisation (BSO) and, in particular, the future of ISB §
clarity required as to the governance arrangements
and legal status of the BSO – will it be statutory §
the absence of a robust business case for the
establishment of the BSO §
limited consideration given to alternative models
of securing collaboration between councils (e.g. lead council, centres of
excellence) within the re §
no certainty around securing the necessary funding
to deliver the proposals set out within the PwC and the associated
implications for councils (e.g. impact on the rate) Further detail on each of these issues is set in the
proposed draft Council response attached at Annex 2, which will be amended to take account of Members’
discussions. |
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2.3 |
Given the
shear |
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Emerging views of the Local Government Sector |
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2.4 |
The Society of
Local Authority Chief Executives (from a professional and managerial
perspective) has prepared an initial draft response to the PwC Phase II
report (copy attached at Annex 3)
which Council officers have inputted into and supported in its
development. The draft Council
response attached at Annex 2 concurs with and reinforces the key issues and
concerns se out within the SOLACE response. |
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2.5 |
Given the degree
of concern within the local government sector with regard to the assumptions
and baseline financial information which underpins the PwC report, the Association
of Local Government Finance Officers (ALGFO) has set out a detailed appraisal
of the transition and transformation costs and savings set out in the PwC
report. The ALGFO appraisal is
attached at Annex 4. |
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2.6 |
Clearly there remains a significant amount of detailed
financial information outstanding which prevents any due diligent assessment
to be undertaken of the real transition costs and savings, transformation
costs and savings and funding arrangements attached to each of the options
explored within the PwC report, or to enable any decision to be taken on the
preferred way forward. |
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2.7 |
The
Northern Ireland Local Government Association (NILGA) is currently in the
process of developing a response to the PwC report and has arranged a
discussions session for 27th November, |
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Proposed Establishment of Business
Services Organisation |
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2.8 |
The
proposals contained within the PwC report with regard to the establishment of
the Business Services Organisation represents a potential significant change
to the way in which the Council currently manages a range of services e.g.
ICT, procurement, legal services etc.
Whilst PwC report purports that the BSO would only house back-office
(non-strategic) transactional related services and that the transfer of
services to the BSO would be on a voluntary basis, the Council needs to
consider what are the potential risks and opportunities which such a model
may provide and take a corporate position on how it intends to move forward. |
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2.9 |
The proposed model also represents a high risk course of
action, transferring key support services to a new, untried organisation with
no fallback position. Experience of
other local government reorganisations shows that support services,
especially HR, Finance and ICT, play a key role in securing a smooth
transition to new organisations. It
may pose significant problems for the transition process if the focus of these
services is on establishing a new Business Services Organisation rather than
on the core task of establishing the new councils. We believe that it is unrealistic and
undesirable to consider implementing a Business Support Organisation by May
2011. |
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2.10 |
In the draft
response attached at Annex 2, it is proposed that the Council notes that it
is unconvinced of the business case as currently set out within the PwC
report with regard to the establishment of the proposed BSO and that there is
a significant amount of detail outstanding in regard to the projected costs
and savings (efficiencies) to be realised. It is proposed further that the
Council advocate the need for other collaborative service delivery models to
be explored including, for example, a lead council approach for particular
functions. |
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2.11 |
The reality
is that the Council already has a critical mass in terms of key services such
as ICT procurement/legal etc, and that in itself raises the possibility that a
business case could be made for Belfast to be the BSO agent for the delivery
of such services. It is
important to note that the SOLACE draft response to the PwC report also
advocates the need to explore more innovative models of collaboration between
councils including, for example, lead
councils, centres of excellence etc. |
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3.0 Resource Implications |
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There are no financial or Human Resource implications
contained within this report. |
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4.0 Re |
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Members are
asked to: a)
note that a presentation will be given to the Committee at its meeting on 20th
November setting out the detail of the PwC Phase II report and articulating the
key issues set out within the Council’s draft response (attached at Annex 2)
for Members consideration b)
approve that the
draft response, taking into account the discussions at the Committee meeting
on 20th November, be submitted to the DoE and Strategic Leadership
Board in advance of 9th December. c)
approve the
attendance of the Chairman, Deputy Chairman and Party Group Leaders (or their
nominees) on the Council’s Transition Committee to the NILGA event on 27th
November. |
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5.0 Appendices |
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§
Appendix 1: Executive Summary of PwC Phase II report |
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§
Appendix 2: |
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Appendix 3: Draft SOLACE response to the PwC Phase II
report |
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§
Appendix 4: ALGFO initial issues paper on the PwC Phase
II report |
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