Agenda item

            The Committee considered the undernoted report:

 

“1.0  Relevant Background Information 

 

1.1    Members will be aware that the Department of Environment commissioned PricewaterhouseCoopers (PwC) to assess possible options for future local government service delivery within Northern Ireland (as a Phase I) and to undertake a ‘full Economic Appraisal of Local Government Service Delivery in its Entirety’ (as a Phase II).

 

1.2    PwC has just recently released its Phase II for initial consideration of relevant stakeholders (including councils), with comments requested in advance of the next Strategic Leadership Board meeting scheduled for 9th December 2009, at which the PwC report will be considered. 

 

1.3    A copy of the Executive Summary of the draft PwC Phase II report has been circulated.  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

 

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 comment.

 

2.0    Key Issues 

 

2.1    Whilst the PwC report considers 5 options in relation to a combination of both the level of transformation undertaken by councils as part of the RPA transition process as well as potential future service delivery models, Option 5 ‘Transformation with Regional Collaboration’ emerges as the preferred option within the report. The key characteristics of Option 5 include:

 

·         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 (comprising of Elected Members from across the 11 Councils) and be operated  by an executive officer team

 

·         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

 

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 recommendations are based

·         limited consideration given to the level of capacity required to bring affect to the transformation proposals alongside the complex transition /convergence process which councils will need to undertake

·         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 recommendations of the PwC report

·         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 as an Appendix, which will be amended to take account of Members’ discussions.

 

2.3    Given the shear complexity of the PwC report and in order to enable a more informed discussion to take place among elected Members, it is proposed that a presentation on the PwC Phase II report will be given to the Committee on 20th November setting out the key proposals contained within the report and the associated concerns and organisational consequences for the Council.  

 

         Emerging views of the Local Government Sector

 

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 which Council officers have inputted into and supported in its development.  The draft Council response attached concurs with and reinforces the key issues and concerns se out within the SOLACE response.

 

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. 

 

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.

 

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, 12.00am-1.30pm in ECOS Centre in Ballymena.  Correspondence has been received from NILGA inviting representatives of the Councils Transition Committee (i.e. Strategic Policy and Resources Committee) to attend this event. It is therefore recommended that consideration be given to approving the attendance of the Chairman, Deputy Chairman and Party Group Leaders (or their nominees) on the Council’s Transition Committee to the event on 27th November.

 

      Proposed Establishment of Business Services Organisation

 

2.8The 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.

 

2.9The 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.

 

2.10  In the draft response, 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.

 

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.

 

3.0Resource Implications

 

      There are no financial or human resource implications contained within this report.

 

4.0Recommendations

 

      Members are asked to:

 

a)   note that a presentation will be  given to the Committee at its meeting on 20^th 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 as an Appendix) 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; and

 

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.

 

Appendix

 

An Assessment of the Options for

Local Government Service Delivery

Phase II Draft Report (Economic Appraisal)

 

BelfastCity Council Initial Comments

 

1.   Overview

 

1.1BelfastCity Council welcomes the opportunity to comment on the PriceWaterhouseCoopers draft Phase II report ‘Economic Appraisal of options for local government service delivery’ commissioned by the Department of the Environment. 

 

1.2This economic appraisal is fit for purpose as a high level strategic document intended to provide advice on the overall direction of travel. However, as contained within the report, detailed design is needed before the costs of transition and transformation can be clearly established and savings properly assessed. Therefore, this high level analysis should not be used to determine the level of upfront investment required nor should the potential savings be set as a target at this stage.

 

1.3In reviewing the PwC report and the proposals contained therein, the Council would make the following observations.

 

2.   Vision for Local Government

 

      The Council would be fully supportive of the aspirations for local government as set out in the PriceWaterhouseCoopers report including the role of Councils in:

 

·         Providing strong local government with service performance and costs of delivery in line with national best practice;

 

·         Adding value for citizens with increased citizen confidence and increased participation in local democracy;

 

·         Attracting developing and retaining high quality and dedicated staff with increased satisfaction levels and reduced staff turnover;

 

·         Providing service excellence with increased citizen satisfaction with services and value for money; and

 

·         Providing value for money with minimum rate increases and decreased costs.

 

2.2The Council notes that the analysis set out within the PriceWaterhouseCoopers draft report recommends new councils which are citizen focused, organised to deliver services in line with best practice and seeking to deliver value for money through their internal processes and collaboration with each other.  This is a compelling vision and one which the Council would fully endorse.

 

3.   Deliverability

 

3.1It is important to recognise that the transition to 11 new councils with new services transferring from central government will be a challenging task for local government and will represent the most far reaching change faced by local government in Northern Ireland in more than thirty years.  It is important that this change is founded upon the support of key stakeholders in local government – local citizens, elected representatives, staff and managers.

 

3.2Trying to undertake transition and transformation simultaneously, in addition to any consideration given to the establishment of a Business Services Organisation shared service model (as suggested as option 5) is high risk and will be difficult to deliver given the time remaining and the level of resources and capacity that would be required.

 

3.3There is not adequate consideration given to the significant lead in time required to bring effect to the proposals put forward (particularly in relation to option 5); or any understanding of the necessary infrastructure required to maintain service continuity whilst going through a change process such as the RPA.

 

3.4The Council has previously stressed the importance of ensuring the continuity of service delivery in the transition to the new councils and during the local government reform process.  Services cannot start and stop once the new councils are well established or once transformation takes place.  Services are being delivered now and must continue to be delivered well throughout the transition period.  We do not believe that the PriceWaterhouseCoopers report reflects adequately the extent and complexity of the change that will be necessary in the transition to new councils and the maintenance of services during that period. 

 

3.5The potential disruption to service delivery in the initial transition period when there is likely to be a loss of significant numbers of experienced councillors and managers and when nearly 1,000 staff will be transferred to newly created employers needs to be planned for and managed carefully.

 

3.6While there is a lot of merit in stressing the importance of transformation as we move into RPA to generate efficiencies and improve customer service, to believe that local government could cope with this in the two years or less now available, may be unrealistic. 

 

3.7To take this on with an imperative of completion prior to introduction of the transferring functions in 2011 would be a mammoth task and it is difficult to see how Belfast City Council (notwithstanding the merging councils) would cope with this without losing a lot of ground in a number of the areas of improvement we have already embarked upon.

 

4.   Baseline Costs and Assessment of Costs and Savings

 

4.1We recognise that this report is intended as a high level strategic analysis. Clearly it is important that much more work is needed to verify all elements of the financial appraisal.

 

4.2For example, work is needed to ensure that the assumptions used to determine baseline costs are robust and transparent, as these baseline costs have been used to calculate the transformation costs and benefits to be realised under the various options considered within the PwC economic appraisal. In addition, costs relating to transferred services and capital expenditure have been included in the baseline from which the potential savings are then estimated. However, it is highly unlikely that the RPA process will be able to achieve savings on such expenditure in the short to medium term in all Councils and particularly in the case of Belfast. Indeed, it is highly likely that capital costs (and indeed other costs) may increase due to a need for equality across new boundaries.

 

4.3The report attempts to quantify the potential efficiency savings (or otherwise) for each of the proposed service delivery options The Council would have major concerns about the unspecified and unsupported nature of the costs and savings estimates presented within the report which are based on high level benchmarks and would seek further clarification and detailed work on the assumptions behind this analysis.

 

4.4The Council notes that both transformation costs and savings are simply presented as percentage figures of gross revenue expenditure and these percentages have been arrived at on the basis of unspecified English Council experience. There is no recognition of the different context and scale of operation of English councils and the associated difficulty in making any comparison.   Local government within NI will continue to deliver a limited suite of functions and be responsible for a minority share of the public purse in comparison to their English council counterparts and, therefore, it would not be viable to assume a direct read across.

 

4.5Furthermore, the Council would suggest that without a clear understanding of what systems and structures will result from the changes proposed by PwC, it is impossible to undertake any prudent assessment of potential costs and savings to be realised.  The PwC report itself acknowledges this very point when referring to Programme Delivery Costs at para 5.14 (page 78):

 

      ‘The key challenge in developing this section of the Economic Appraisal has been in relation to estimating the costs of future service delivery for newly formed organisations when the detailed design of those organisations (a process which we are also costing for) is not complete, and in many cases not even started. In order to meet this challenge, we have had to make a series of prudent assumptions in conjunction with the relevant impacted stakeholders’.

 

4.6It would be wrong to enter into a major re-organisation and remodelling of public services without a robust appraisal of potential costs and savings.  Funding arrangements and savings targets must be arrived at on the basis of a more comprehensive analysis taking into account the circumstances for each local council and all concerned need to be satisfied that the high level assumptions about costs and savings are robust within the context of Northern Ireland’s new councils.

 

4.7It is the Council’s view that it will take much more than a series of prudent assumptions to satisfy both elected members and the general public that the proposed cost of implementing option 5 is a) reliable and b) justifiable. 

 

5.   Cost vs. Outcomes

 

5.1The report seems to be focused on process as opposed to securing strong local government and improved service delivery.    The report does not reflect a real understanding of the role of local government especially with respect to its accountability to the citizen through electoral mandated politicians, the difference of place (localism) and the need to create public value.

 

5.2If gaining efficiencies is the key driver, there are alternative proven methods which would be more conducive to a focus on outcomes for the community e.g. securing target driven efficiencies through the introduction of Local Area Agreements or Multi-Area Agreements which also support service improvement.

 

5.3The Council would suggest that consideration should be given to the recent publication of the Government’s ‘Operational Efficiency Programme’ which seeks to secure greater efficiencies and provide value for money public services through setting efficiency related targets across a range of areas and ensuring that such targets are adhered with.

 

5.4Incidentally, there will be difficulties in regard to capturing any RPA related efficiencies on a sectoral basis given the current financial constraints of local government. This will clearly need to be considered further alongside the wider thinking around the future financial and performance management regimes to be put in place for local government.

 

6.   Need to build on the success of Local Government

 

6.1There is clearly an absence of any consideration or analysis of the current structures in place or of the performance of existing councils within Northern Ireland.   There is no analysis of the lessons learnt in terms of what has worked and what hasn’t, which should be surely the starting point for such an exercise.   There is no recognition of how councils have improved over recent years and delivered greater efficiencies and improved services with no additional resources.

 

6.2Whilst the RPA reform process will result in the establishment of 11 new councils, it is important to recognise that we are not working from a blank canvass.  All efforts should be made to identify and build upon the successes already achieved by particular councils /council clusters and build upon these as we move forward. Such an assessment would also highlight potential areas whereby greater collaboration by councils could be pursued.

 

      Belfast Experience

 

6.3It is important to recognise that enhancing efficiency whilst improving service delivery is not a new challenge for local authorities.  Belfast City Council has worked strenuously over the past 4 years to take forward its own comprehensive improvement (transformational) programme which has sought to put in place the foundations of a successful ‘fit for purpose’ organisation and to prepare itself for the outworking of the RPA process.  For example:

 

·         Revised governance arrangements to improve decision making processes, through the introduction of a streamlined committee structure and the establishment of a Strategic Policy and Resources Committee which has responsibility for overseeing strategy, policy, improvement and resources within the organisation.  We introduced an enhanced scheme of delegation for Chief Officers which reduced the amount of necessary council business.  The Strategic Policy and Resources Committee has seamlessly became the Council’s RPA Transition Committee 

 

·         Developed and implemented the necessary infrastructure (e.g. key strategic frameworks such as  Performance, Finance, HR, Communications, Customer Focus, ICT) which enables us to holistically consider any changes (including RPA), examine potential organisational consequences and identify what actions are required

 

·         Aligned the corporate planning, financial planning and performance management processes within the organisation

 

·         Moved away from a purely functional service delivery model to an approach whereby we  now deliver on a functional, area and thematic basis simultaneously

 

·         Introduced a new innovative performance management framework which supports continued service improvement and puts performance at heart of planning and demonstrates clear links between corporate strategy and delivery of council services.  This has been cascaded through individual performance improvement plans

 

6.4As a consequence, BelfastCity Council has continued to improve service delivery whilst securing efficiencies in excess of £7m from the baseline budget over the past 3 years.  This is particularly pertinent given the fact that BelfastCity Council would be more akin, in terms of both scale and structure, to the new local government arrangements which are to emerge from the RPA.  It is therefore difficult to ascertain why no consideration has been given to the Belfast situation or an analysis undertaken of the potential lessons to be learnt.

 

7.   Target Operating Model (TOM)

 

7.1The Council would have concerns with regard to the proposed Target Operating Model and would suggest that it is very much process driven, focusing on efficiency rather than the outcome based approach which councils pursue.  Limited recognition of the political dynamics within which local government operate.

 

7.2There is no recognition of the current drive by some councils to adopt a more cross-cutting, integrated and thematic based approach to delivering services and meeting the needs of citizens.

 

7.3Local government adapt to the organic nature of communities and the difference of place (urban vs. rural, major city vs. town), and aim to reprioritise and refocus efforts to deliver local priorities. Councils need to have the necessary flexibility and autonomy to address local needs and, therefore, a 'one-size fits all’ approach would be disconnected and undeliverable.   This is the essence of Community Planning which the report refers to but then fails to reflect in its recommendations.

 

7.4It could be argued that the TOM looks to build a solution to a problem that has not been articulated or proven and attempts to achieve transformation in advance of transition.

 

8.   Business Support Organisation (BSO)

 

8.1Whilst the Council would recognise the potential benefits to be gained through greater collaboration in the delivery of back office services where aggregation provides for potential efficiencies (e.g. through economies of scale), it would not support the proposed development of a Business Services Organisation as set out within the PwC report as the necessary business case is not clearly defined within the report and more robust analysis and detailed design is needed before establishing such an organisation.

 

8.2The Council would suggest that there are more innovative and effective solutions than the creation of a new quango with statutory powers which local government is obliged to fund, the services of which local government may be obliged to receive and to which 1000 or more staff are proposed to transfer. In addition, introducing such an organisation at a time of such major change and reform may put all organisations at significant risk of a breakdown in services, controls and governance arrangements. A delay to this particular aspect would also allow the robust analysis referred to above to be completed.

 

8.3The Council would also seek evidence of the success or otherwise of already established shared services models within Northern Ireland and would note a recent statement^[1] made by Sir Peter Gershon, leading expert on the Efficiency Review for the UK Government…

 

      ….’agencies should benchmark what they are currently doing, and improve themselves, before deciding whether it makes sense to enter into a shared service agreement.

 

      But while they do so, they may find out that externally sourcing some of their processes could be a good fit, irrespective of whether there are other agencies to share those services with. In other cases, they may discover that collaborating with each other (which ranges from buying together, to sharing processes and assets, to centralising them) is the way to go.

 

      The economic downturn will call for grater sharing and consolidation, but it is important to dispel the myth that shared services are the solution to most problems and recognize that – sometimes - they make problems even more complicated’

 

8.4The Council would recommend that a more appropriate model would be an enabling organisation created by the councils themselves which would adopt the most appropriate model of collaboration for particular services, be that lead council, centres of excellence, or commercial providers. Whilst some of these options are alluded to within the main body of the PwC report, they did not find expression in the final recommendations.

 

8.5Any collaborative approach to be considered must be subject to a robust ‘value for money’ test and a detailed assessment of the real benefits for the council(s) concerned.  If however, it can be demonstrated that an existing or alternative approach within a local council can provide optimum value for money and a better level of service, then it should be utilised rather than the BSO. 

 

8.6If a decision is taken to progress with the proposed establishment of a central Business Support Organisation, the Council would advocate that the transfer of functions to the BSO must be voluntary and if a Council can demonstrate VFM in other arrangements it will be allowed to continue those arrangements. Any move towards a back office shared service type model should only be undertaken on a very carefully selected and controlled basis. The Council would advocate that it would be the role of councils to negotiate the design arrangements of the BSO, if brought forward.  The Council would suggest that the design principles could include such elements as:

 

·         Strong effective governance model, fully accountable to councils

 

·         The collaborative services provided must be developed in partnership with councils and agreed by them.

 

·         The transfer of services should be voluntary and subject to a VFM test.

 

·         The decision for what is included in the BSO must be taken by councils and not by the BSO itself.

 

·         The accessibility to and responsiveness of services to the citizen needs to be paramount.

 

8.7    If there is a statutory compulsion for councils to use the services of the proposed Business Services Organisation, it will be difficult to ensure best value and innovation as there will be limitations on any recourse for poor performance

 

8.8    The rationale for grouping other functions (such as Training, Major Capital Projects, Parking Enforcement, Planning Specialists and Emergency Management) within the proposed Business Services Organisation seems to rest on the perceived difficulty of disaggregating small staff numbers to 11 Councils.  There is no business reason why these services should be brigaded together with back office services. Such services could readily be provided on the basis of a lead council or shared services between a number of councils rather than be provided by a separate organisation.   

 

B                              Strategic Policy and Resources Committee,

1544                                       Friday, 20th November, 2009

 

 

 

9.      Single Waste Disposal Authority

 

9.1    Belfast City Council would welcome the consideration being given to the potential establishment of a Single Waste Disposal Authority for Northern Ireland and would highlight that this has been a stated policy position endorsed by the Council.  Further clarification is sought however with regard to the governance and operating arrangements for the proposed Single Waste Authority.

 

9.2    The Council notes that the PwC report recommends that consideration be given to an option which includes waste collection and disposal in the remit of the Waste Disposal Authority.  The Council would recommend that any consideration given to the potential inclusion of waste collection within a Single Waste Authority needs to be based on a robust business case and a detailed examination of all potential consequences. Such an approach runs the risk of disconnecting the delivery of the service from the accountability for performance to the citizen and political process.  Councils should be afforded the opportunity to collaborate for waste collection purposes but on a voluntary basis and where there is a proven added value.

 

10.    Local Government Association

 

10.1  BelfastCity Council is fully supportive of the need for a Local Government Association and recognises its central role as a representative body and ‘voice’ for the sector. The Council would endorse the view that the role and priorities of the LGA needs to be reviewed within the context of the new 11 stronger council environment and would suggest that it should be the responsibility of the new member councils to agree.  The Council would furthermore support the proposal set out within the PwC that a new Local Government Association should be a voluntary organisation of the member councils.

 

11.    Delivery Options

 

11.1  Limited consideration is given to the effectiveness of service delivery from a customer perspective.  There is no reference within the report to key determinants of service delivery such as segmentation of customer requirements and therefore service delivery options. 

 

11.2  There is an emphasis on confusing customer services and information technology which is unhelpful. Technologies can help to facilitate customer identification and profiling, they cannot and should not drive it.  Delivering effective customer services is multi?faceted and is influence by cultural, process, policy and technological drivers.

 

11.3  There are assumptions contained within the report that some services cannot be delivered within councils whilst the thrust of the collaborative design workshops facilitated by PwC had suggested that all services could and should be delivered in house.  That said there is a citizen expectation and in some case a legal obligation to provide service at a sub-regional level. This raises the question of structures and co-terminosity which can be debated separately.

 

11.4  From a BCC Building Control practitioner's perspective, there are many examples of where it is essential that council have inter?working arrangements in order to be truly effective. This does not call for the need to delivery service outside the councils, which may disadvantaged the council in terms of control and exploring local initiatives and working. 

 

11.5  In the analysis of the delivery options the report does not make it clear what the role of DoE should be.  Should there be a scrutiny role for example?

 

11.6  With regards to Option 1, the Council understands that whilst this is in fact not an option (given the RPA announcement), it has been included to serve as a comparative figure against the other options.

 

11.7  The Council does not agree that Option 2 describes reorganisation without transformation - community planning alone will require transformation as will the integration of new functions and the building of new integrated cultures. 

 

11.8  With regards to Option 4, the Council would query why this option could not have included just the creation of a single waste authority without the need to group it with the BSO.  Is there no costing for one without the other?  With regards to Option 5, the Council does not necessarily agree that ‘regional collaboration’ equates to a BSO.

 

11.9  With regards to option 5 the Council would have major reservations in regards to its deliverability in terms of the capacity required to implement the level of transformation proposed alongside the  already complex process of transition which councils will need to undertaken.  The Council would not support the establishment of a Business Support Organisation as it is framed within the report and would wish to see the business case for collaboration in the delivery of services explore a wider range of options including lead councils, centres of excellence etc.  (I have referred to this above under the BSO section – you will wish to consider)

 

12.    Funding

 

12.1  Clearly securing the necessary level of resources to take forward local government transition and/or transformation remains an issue which needs to be addressed.  The Council notes the proposals set out within the report for a work package to be taken forward to produce a financial strategy which will detail the costs and funding of transition and transformation, savings targets and how they will be dealt with.  The Council would, however, stress the importance and urgency of this work and that this high level analysis should only be seen as the start of this process.

 

12.2  The PwC report identifies an option of transformation costs being funded by central government loan funding with repayment coming as a result of transformation savings. This appears to be a useful suggestion, although it does not find expression in the report recommendations.  If arrangements such as these are not put in place and local authorities are expected to fund the greatest part of transition and transformation funding, that is likely to place significant burdens on ratepayers at a time when there will be additional burdens from rate convergence, waste costs and water charges.  This impact needs to be examined, quantified and planned for. Therefore, the Council would support the recommendation that plans are produced for the convergence of district rates which takes account of impact of water charges and that transitional arrangements are needed for taxpayers who will see rate increases as a result of convergence.

 

12.3  The Council notes that the PwC report recommends funding for transferring services via grant aid prior to the redistribution (shift) from regional rate to district rate. Again, the Council would have concerns with regard to the robustness of the cost estimates for the transferring functions and would note that there does not appear to be a standard costs model used to capture this information.  Therefore, the Council would recommend that a more detailed due diligence review is required to identify and validate the full costs attached to the transfer of functions thus enabling more robust budget projections to be put forward and ensuring greater transparency in costs of service delivery and grant for transferring services.

 

12.4  The report recommends that local authorities seek agreement with HM Treasury on the refinancing of legacy debt. This represents good practice in treasury management and is something the Council would wish to support given its potential benefit to be gained by councils.

 

12.5  The Council notes that the PwC report recommends that there should be limits placed on the use of cash reserves, incurring additional debt and capital investment over certain levels in the period up to creation of new councils in May 2011. The Council would seek further clarification on the level and type of restrictions to be introduced and the proposed governance arrangements and process to bring these into effect.

 

13.    Conclusion

 

13.1  It would be hard to challenge the general principles set out within the report including applying a design based approach to establishing the Ideal Local Authority, the need for greater collaboration between councils and the potential to drive out efficiencies through economies of scale and transformation activities.  The Council would be concerned, however, of the potential risk of non-delivery given the scale of the challenge and the level of capacity and resources which exists within the sector to deliver such a significant change process in the timescale detailed and ensuring continuity of service delivery throughout.

 

13.2  Whilst the Council recognises that the PwC report is intended as a high level strategic analysis, clearly there remains a significant amount of detailed work needed to verify all elements and provide a robust assessment of both transition and transformation costs and savings. 

 

13.3  Notwithstanding, the Council would strongly advocate the need for urgent action to be taken across a number of fronts to ensure that the necessary momentum, capacity and resources required to bring effect to the reform of local government is secured.  Local government need to be directly involved in the process.

 

13.4  The Council would suggest that as a first step in considering the potential introduction of a shared service arrangement (i.e. BSO), it is important that a robust assessment is undertaken to quantify both the back office service levels within local government and the associated costs of their current provision arrangements, and this information should be used as the basis for determining what improvements can be realised through their own internal improvement efforts, such as process simplification and a reduction in manual interventions. This will help create a stronger foundation on which to assess the additional benefits that can be obtained from moving to a shared service in the future.”

 

            During discussion, a number of Members expressed concern that there might not be provided to Local Government sufficient long-term funding to allow those functions identified in the Review of Public Administration as suitable for transfer to the new Councils in 2011 to be undertaken to a satisfactory level.

 

            The Chief Executive agreed with the Members’ concern and recommended that the draft response set out in the report be forwarded to the Department of the Environment with an indication that the Council reserves the right to comment further as its consideration of the issues developed.  To that end he suggested that it might be useful if a further briefing were to be arranged for the Committee to allow more detailed discussions to take place.

 

            The Committee adopted the recommendation and agreed to the holding of a briefing in this regard.  In addition, the Committee approved the attendance of the Chairman, the Deputy Chairman and the Party Group Leaders on the Transition Committee (or their nominees), together with appropriate officers, at the Northern Ireland Local Government Association event to be held on 27th November.