Barrow Borough Council s Efficiency Support Grant Business Case

Transcription

1 1 Barrow Borough Council s Efficiency Support Grant Business Case About Barrow 1.1: Barrow Borough is a relatively small community at the end of the Furness peninsula. It has land borders with one other local authority. The key factors that affect service delivery are: Remote location and transport links. We are surrounded by sea on three sides; 70% of the Borough s borders are with the Irish Sea. 59% of properties are Council Tax Band A. Only 11% of properties are Council tax Band D or above. 13 super output areas are in the most deprived 10% in the country. 1.2: The local economy is dominated by BAE systems who construct submarines for the Ministry of Defence. In the last 20 years significant progress has been made in delivering the Council s long-term objective of diversifying the base of the local economy by increasing the number of small and medium size enterprises. Marine technology, civil nuclear industry, servicing local and international hydrocarbon sectors and renewable energy particularly offshore wind are strong growth sectors in the area. Further large scale gas storage and wind farm developments are consented. 1.3: Currently rental levels achieved for commercial and industrial floor space are insufficient to support speculative private sector development though the development gap is reducing.

2 2 2. Deficit Reduction Strategy 2.1: In October 2011 it was estimated that unless corrective action was taken the Council would face a deficit of 5m by 2015/ : The Council is a second tier authority with a net revenue budget of 11.2m. 1 The objectives of this business case are: To achieve a sustainable level of funding by 2015/16 To reduce the General Fund budget to 10.2m or lower by 2015/ : The Council began preparation of a Budget Deficit Reduction Strategy in May This was approved by the Executive Committee in October 2011 and endorsed by Council in January : It is a clear strategy to eliminate the deficit using a combination of efficiency and cost cutting measures, increasing discretionary income and short-term prudent use of reserves as shown in figure 1. Figure 1: Savings to deliver Budget Deficit Reduction Strategy 1 Executive report January 2013 item 8 2 Executive report October 2011 item 8

3 3 2.5: The Council started to implement the Budget Deficit Reduction Strategy immediately to maximise savings and has already delivered budget savings of 3.31m and increased income by 385k. 2.6: A successful Efficiency Support Grant bid would allow the Council to accelerate the pace of change and secure key cost saving measures ahead of schedule. 3. Efficiency Support Grant Business Case. 3.1: This Efficiency Support Grant business case builds on the substantial progress the Council has made to reduce its revenue budget to a sustainable level by 2015/ : The business case shows the level of savings achieved from the current Budget Deficit Reduction Strategy (figure 2) and the additional savings projected from the key elements of the Efficiency Support grant proposal (figure 3) which includes: Shared Chief Executive, senior management and staff costs 375k Shared service delivery, contracts and outsourcing 449k Joint procurement with various organisations delivering savings compared to previous suppliers this is estimated to be 20k. Strategic asset management 1,275k Additional cost saving initiatives and increasing discretionary income 415k This is summarised in figures 2 and 3 below.

4 4 Figure 2 Savings already made: Figure 3 Additional projected savings by 2015/16:

5 5 4. Shared Chief Executive and shared Senior Management Function 4.1: The Council s Executive Committee has made a commitment to consider moving to a shared Chief Executive function and share a Senior Management Function over the two year period of the Efficiency Support Grant : The Council s Budget Deficit Reduction Strategy aims to deliver 375k in efficiency and cost savings by restructuring service delivery. 4.3: Savings already made by 2012/13 Deletion of the Chief Executive post and re-designating the post of Director of Regeneration and Community Services to Executive Director taking additional strategic responsibilities whilst retaining some operational responsibilities. Deletion of five senior management posts and reallocating their strategic responsibilities to the remaining five senior managers. Reduced staff costs whilst retaining the capacity and capability to carry out statutory duties. 4.4: Additional savings The Council s voluntary redundancy scheme is still open and the Council will continue to explore opportunities for restructuring service delivery to make additional sustainable staff savings of 375k by 2015/16. The Council has commissioned auditors to prepare an independent evaluation of the savings from a shared Chief Executive and Senior Management Function this will include the costs associated with departing staff. The evaluation will be complete by mid The Council has opened dialogue with other local authorities to explore the potential for sharing a Chief Executive and Senior Management Function. These savings together with the projected savings are detailed in table 1. In all table the values are shown in the year the saving was first made, similar savings will be made in subsequent years but these are not repeated in the table. Savings of > 50k are reported in the narrative and the tables, lower saving are only reported in the tables. 3 Executive report February 2013 item 7

6 6 Table 1: Savings from restructuring service delivery Proposal Savings expressed as 000 Achieved Projected Restructuring service delivery 2011/ / / / /16 Replace CEO with re-designated Executive Director Reduce the rest of the Senior Management Team from 9 to 5 and re-allocate responsibilities to remaining managers Staff savings through redundancies and reduced working Total Shared service delivery including contracts and outsourcing Shared Services 5.1: The Council s Executive Committee has given a commitment to explore the potential for shared services with other organisations. They have delegated authority to the Executive Director, Borough Treasurer and Chair of the Executive Committee. 4 Existing arrangements 5.2: The Council carries out a number of functions for other organisations which provide additional income. The Council offers a comprehensive Geographic Information System which it shares with neighbouring authorities. This currently provides a small income for the council but there is scope for this to expand. The Council provides on street car parking management for County Council. The Council provides on street verge maintenance for County Council. The Council operates an arrangement whereby private sector companies sponsor the floral displays on roundabouts. The Council hosts CCTV operations in the neighbouring town of Ulverston on behalf of South Lakeland District Council. 4 Executive report February 2013 item 7

7 7 5.3: The Council already shares a number of public building assets with other organisations including: Cumbria County Council Cumbria Police Her Majesty s Revenues and Customs Citizens Advice Bureau Private sector social housing providers A private sector Enterprise Company The Crime and Disorder Reduction Partnership 5.4: Projected savings from additional shared services from The Council has opened dialogue with other local authorities to explore expanding shared services and has identified waste services and leisure services as offering the greatest potential for sharing service delivery. The Council is currently in discussions with the University Hospitals of Morecambe Bay Trust to provide management of a number of non-health related services. This will deliver savings for the health trust and provide an additional income for the Council. The Council offers a comprehensive Geographic Information System which it shares with other local authorities and is in discussions to expand this with other local authorities. The Council is establishing an all-weather soccer centre in partnership with a private sector leisure organisation. Sharing the delivery of this service provides an excellent facility for local residents and boosts income for the Council. Outsourced Services 5.5: The Council has already outsourced four principal functions and outsourced services account for 59% of the net revenue budget. Revenue collection service and benefits administration are provided by Liberata through a contract with an annual value of 2.67m (expiry date September 2018). Refuse, recycling and street cleansing services are provided by Biffa through a contract with an annual value of 2.58m (expiry date March 2017).

8 8 Grounds maintenance services are provided by Continental Landscapes through a contract with an annual value of 829k (expiry date March 2017). Internal Audit services are provided by Furness Audit through a contract with an annual value of 143k (expiry date March 2015). 5.6: The Council is currently renegotiating the contracts for these functions and aims to deliver 449k in efficiency and cost savings by rationalising the contracts and outsourcing additional functions. This includes reducing the frequency of building cleaning whilst maintaining appropriate standards for public buildings and facilities. The changes have been agreed and implementation has started Restructuring residual waste collection and recycling collections. The Council has opened discussions with its contractor Biffa to deliver in excess of 250k by 2015/16 Reducing the cost of the street cleansing contract whilst retaining DEFRA standards for street cleanliness. The Council has opened discussions with its contractor Biffa to deliver in excess of 50k by 2015/16 Review of the specification of the grounds maintenance contract. The Council has opened discussions with its contractor Continental landscapes to deliver of 50k by 2015/16 Reducing the cost of the Revenues and Benefits contract. The Council is seeking a rebate from its contractor Liberata the value of which cannot be quantified at this stage. Outsourcing the payroll function. Reducing the cost of the coastal defence administration. The catering contract to provide refreshments at the Council s leisure venues will provide additional income for the Council. In July 2012 the Council outsourced facilities management of one of its commercial property assets to a private sector organisation through a performance related contract. The Council uses Norfolk Property Services for property valuations.

9 9 Table 2: Savings and income from shared services and outsourcing Proposal Savings expressed as 000 Achieved Projected Rationalisation of outsourced 2011/ / / / /16 functions Rationalisation of building cleaning contract Rationalisation of waste collection contract Rationalisation of street cleansing contract Review of grounds maintenance contract Delivering services for UHMBT Review of Revenues and Benefits contract Review of CRM contract Review of coastal protection Outsourcing of the Council s payroll function Norfolk property services Total : The Council is aware that a number of significant contracts will be retendered in 2017/18 and is anticipating delivering substantial savings from re-letting these contracts.

10 10 6. Joint procurement 6.1: The Council does not employ a dedicated procurement officer and demonstrates value for money through joint procurement with other organisations. The Council has collaborative procurement arrangements with all the other authorities in Cumbria through the Chest which drives down the cost of the equipment. Cumbria Housing Partners is a housing consortium based in Cumbria. The Housing Service is a member and is delivering part of its investment programme through the consortium which saves an estimated 62k. The Council does not have a Borough Solicitor and procures legal advice through the North West Legal Consortium delivering 30% savings against the market average. The Council has agreed to purchase waste containers through the Eastern Shires Purchasing Organisation in 2014/15. The Council uses Yorkshire Procurement Organisation for energy and other items. Table 3: Savings from joint procurement Proposal Savings expressed as 000 Achieved Projected Joint procurement 2011/ / / / /16 Cumbria Housing Partners North West - legal consortium Yorkshire Procurement Eastern Shires PO Total

11 11 7. Strategic Asset management 7:1 The Council has a Strategic Asset Management Strategy covering the period which was developed with key partners and endorsed by the Council s Executive Committee in : The Council is in negotiation to establish a property Working Group in collaboration with Cumbria County Council and the regional health trusts. The objective of the working group is to ensure that public assets deliver long term benefits to the public. 7.3: A review of the strategy has commenced and the new strategy document will be prepared in collaboration with Cumbria County Council, Cumbria Police and regional health trusts by December : The Council uses Technology Forge software to provide a comprehensive data base that can store information on a range of estate management issues for both Operational and Non-Operational Assets. There is also a Land and Property Gazetteer, which will provide a Corporate UPRN and is linked into the Council s Geographical Information System (GIS). In the medium term GIS will become the principal platform for delivering all Council services. 7.5: The Council has mapped its assets and has agreed to share this information with Cumbria County Council. 7.6: The Council has increased income from our assets by making our commercial properties more viable through better asset management. Underused assets have been refurbished or sold to developers to maximise the income to the Council. 7.7: The Council recognises that current rental levels achieved for commercial and industrial purposes are insufficient to support speculative private sector development. It also recognises the opportunity to achieve additional income from its commercial assets and has delivered savings of 444k to 2012/13. The Council will build on this and aims to deliver an additional 1,275k of savings or income from commercial properties by : Savings delivered The Council has increased income from existing commercial property estates by 71k in 2012/13 and anticipates an additional 370k of income in subsequent years. The Council has established a Property Management Group and has set a target of delivering 100k of savings or additional income per year. The Council has achieved pre lets on commercial office space which will generate additional income of 150k by 2015/16. This represents a payback period on capital investment of two years. 5 Asset management Strategy

12 12 We have transferred management of community centres to their user groups and there is no cost to the Council for these venues. The Council has made their allotment facilities self-financing. 7.9: Projected savings The Council has identified 380k of savings from transferring cultural services venues to trust. The Council has reviewed its Capital Programme and has identified potential savings of 375k from borrowing costs by 2015/16. Table 4: Savings and increased income from Strategic Asset management Proposal Savings expressed as 000 Achieved Projected More robust asset management 2011/ / / / /16 Increased income from the Council s commercial assets The Council will refurbish commercial office space where it has achieved pre lets Transfer management of community centres Self-financing of allotments Transfer cultural service venues to trust Reduction in borrowing costs from a review of the capital programme Total

13 13 8. Additional transformation initiatives and proposals for increasing discretionary income 8.1: The Council is undertaking an on-going review of its corporate expenditure and aims to deliver more than 105k in efficiency and cost savings by rationalising corporate costs. 8.2: The Council also aims to deliver 310k in additional income by increasing discretionary income and reducing subsidised services in line with other service providers. Savings This includes reviewing professional, consultancy fees and subscriptions. Reducing the cost of Member support including training and the cost of committee meetings. Review of administration costs including, postage, printing and photocopying. Reducing publicity costs for events and recycling. The Council is moving to virtual desktops which will deliver savings from not replacing PCs. The Council has established a Business Improvement Team which delivering efficiency savings through improved use of technology including: o Channel shifting transactions to the website. o Access to Council s system whilst offsite which facilitates increased mobile working. Increased income Elected Members have made difficult decisions to increase charges for discretionary services including leisure activities, car parking and cremations and burials to reflect the cost of similar services delivered by other service providers Remove subsidies for discretionary services so that income collected covers the provision costs including allotment charges and bulky waste collection charges. Establishing an all-weather soccer centre in partnership with a private sector leisure organisation. Sharing the delivery of this service provides an excellent facility for local residents and boosts income for the Council. Tender the contract for catering services at the Council s leisure venues to maximise value for money.

14 14 Table 5: Additional efficiency savings and increased income Proposal Savings expressed as 000 Achieved Projected Rationalisation of outsourced 2011/ / / / /16 functions Reducing professional fees and subscriptions Reducing the cost of Member support Review of administration costs Reduce publicity costs Virtual desktops Total Proposal Income expressed as 000 Increasing discretionary income Increasing charges for discretionary services. Income from the soccer centre Tender catering contract Bulky waste collection Achieved Projected 2011/ / / / / Total

15 15 9. Action plan for 2013/14 9.1: The Council aims to deliver at least 590k of savings and 120k of increased income in 2013/14 and has developed action plan to demonstrate how this will be achieved. This represents at least 28% of the total savings being made in the first year. Proposed saving Savings from reduction in staff costs Rationalisation of building cleaning contract Savings from prudent treasury management Increased income from additional rent and reduction in NNDR from Council commercial assets Increased income from catering and soccer centre Additional income from management of non-health related services for UHMBT Shared CEO and senior management Performance review of facilities management Channel shift Action required These cost reductions will be implemented and the savings will be delivered in 2013/14. The new contract has been signed and the savings will be achieved in 2013/14. Review of capital programme by July Savings from zero borrowing requirement. Refurbishment complete by December Start of tenancy by March Contracts will be signed by May Additional savings will be generated by March Contract signed by July Service delivery to commence September The evaluation will be complete by mid Value of saving 190k 25k 375k 60k 40k 20k The review will be undertaken in July and the savings will be evaluated. Implement improved CRM system by September.

16 16 Signed on behalf of Barrow Borough Council Cllr David Pidduck, Leader of the Council..Date.. Phil Huck, Executive Director.Date Susan Roberts, Section 151 Officer..Date.