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KINGSTON/SUTTON SHARED ENVIRONMENT SERVICE – BUSINESS CASE

INTRODUCTION 1. This paper presents a summary of the Full Business Case for shared Regulatory Services

and Highways & Transport services between the London Borough of Sutton and Royal Borough of Kingston. Both Councils received committee approval in early 2014 to explore the business case for each of the shared services referred to above. Some work was started on developing the business cases but following the May 2014 elections this work came to a halt while other options were explored. Now that the Councils are key partners and have adopted an approach based on strategic collaboration, work was picked up again in March 2015 and this paper is the outcome from that activity.

SUMMARY OF RECOMMENDATIONS & BENEFITS

2. The following recommendations are made in the Proposed Way Forward sections of the Summary Business Case:

• To implement a fully integrated shared Environment Service (Highways & Transport and Environmental Health & Trading Standards) for Kingston & Sutton on an in-house ‘hosted’ basis with Kingston as the host

• To develop the shared service against the commissioning Target Operating Model (TOM) being adopted by both Councils as shown in paragraph 33

• To develop a full organisational structure for the shared service based on the TOM and the Highways & Infrastructure and Enforcement functional model shown in paragraph 54

• To undertake a full review of business practices, processes and systems in the first year of the shared service in order to implement modern commercial working arrangements and efficient business systems

• To implement the governance arrangements for the shared service as shown in paragraph 60 and to review these once the shared service is fully up and running

• To build over time a joint approach to the commissioning and procurement of services to deliver the work programmes of all services

3. Implementation of these proposals will provide the key benefits of improved service delivery, greater resilience of services along with gross financial savings of £870k per annum (to be apportioned between the Councils). Some grant funding will also be released which can be re-cycled back into new schemes. These savings will be achieved by 2018/19 through the integration of management and team structures, the introduction of improved management and working practices and shared business systems. The initial phase of implementation will provide a sound foundation on which to explore different approaches for delivering services in the future such as the expansion of services with other Councils or adopting an external model or a combination of both.

OBJECTIVES & METHOD OF APPROACH

Vision & Objectives

4. The vision for the programme agreed by CMT/SLT in May 2014 is:

‘To deliver a shared approach to the commissioning of services, including Regulatory

Services and Highways & Transport, in order to achieve savings and promote service

resilience while retaining service quality & customer satisfaction’.

3. The following objectives for the shared commissioning approach naturally flow from the vision and were used to evaluate the business case for each group of services:

• Achieve financial savings

• Maintain the level of customer satisfaction

• Ensure service resilience

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Project Plan

4. Once it was agreed in March 2015 that collaboration between the Councils was a sensible way forward, a detailed project plan was prepared through to June 2015 which is when the Business Case will be considered and an implementation plan for the delivery of the shared services was also developed for inclusion in the business case. A summary high level plan is shown below.

Project Governance

5. The project followed the Sutton/Kingston Shared Services Framework and operated within the Public Sector Programme Management Approach adopted by both Councils. The project has been run within the following governance structure:

6. The Joint Member Steering Group consists of 2 Members for each Council. The interests of the each council are protected by the scrutiny provided through the Smarter Sutton Board/CMT/informal Member meetings and the OK Place Board/SLT/informal Member meetings. The Strategic Director Environment, Housing & Regeneration (Sutton) and Director of Place (Kingston) are the Project Sponsors.

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Project Approach & Evaluation Principles

7. The project followed the traditional five phase approach as shown below. TOM refers to Target Operating Model. Given that the project had a number of false starts spanning eighteen months, all the work previously undertaken regarding soft market testing, needs analysis and options appraisals was fed into the baseline activity and made a significant contribution to shaping the way forward and the final proposals.

8. The evaluation of options for the future delivery model and organisational arrangements was based against the three key objectives of financial savings, retaining customer satisfaction and service resilience. These were broken down into the sub-categories summarised below.

Quality

Social Value & Sustainability Capacity & Resources Statutory Requirements

Innovation Skills & Knowledge Experience & Track Record

Service User Perspective

Service User Preference Continuous Improvement Communication & Engagement

Service User Involvement Customer Care Ability to meet Priorities

Equalities

Strategic Fit

Statutory & Legal Policy & Processes Service & Business Process

Organisational Culture Organisational Knowledge/Skills Vision & Strategies

Finance

Savings/Efficiencies Investment/Set-Up Inward Investment

Impact on Capital Financing Financial Risk Impact on Overheads

Financial Opportunity Other Financial Impact

STRATEGIC CONTEXT

9. All public and private sector organisations need to be capable of adapting to changing economic fortunes, new policies and legislation and the needs of their customers. However local government is uniquely placed in having responsibility to its citizens to develop and support the local community together with our local partners and central government. We are now in a period of significant change with an emphasis on developing society through greater community empowerment and individual involvement in decision making, personalised budgets in social care, the implementation of Universal Credit, the opening up of public services through shared services, working with charities, social enterprises and the private sector to provide better value for money. All of this against a backcloth of severe financial constraint and increasing demand for many services.

10. Like many Councils, Sutton and Kingston are developing the way forward through a commissioned approach where leadership and accountability is undertaken through a strategic core where commissioners commission services to meet agreed outcomes secured through a mixed economy of providers. Services will be publically organised but not always publically delivered. Sutton and Kingston are focusing on a number of opportunities with partners organisations for strategic collaboration. This is more than sharing services and will involve exploring new and innovative service delivery models while recognising the needs of communities and the service users. Strategic collaboration is about working with partners to develop a collective and shared level of appreciation of the context, issues and drivers for change. It is about planning and securing services for the mutual benefit of all. Success will be achieved through understanding what each partner is trying to achieve,

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aligning ambitions and direction and recognising from the outset where there are issues to address and resolve.

BACKGROUND

11. All the services currently undertaken by both Councils within Regulatory Services (Environmental Health & Trading Standards) and Highways & Transport (in Kingston this covers Street Services & Traffic Management & Design) are considered in scope and these are summarised below. There are over 180 posts in scope (RBK 106, Sutton 80).

12. The profiles of all services in scope for each Council including functions, performance indicators and user satisfaction where this is available are shown as appendices in the full business case.

13. There are some areas which do not align:

• Regulatory Services – Environmental Health (Residential) is undertaken in Housing in Kingston but Regulatory Services in Sutton. Street licensing is part of Regulatory Services in Sutton but within Highways in Kingston

• Highways & Transport – Street Cleansing inspection is managed through Highways & Transport in Kingston but is part of Waste Services in Sutton. There is a Shopmobility Service in Kingston funded by the Council but not Sutton

14. At the present time the Councils have separate contracts for the delivery of Highways & Transport services:

RBK LBS Contract

Supplier Annual Cost £m

Supplier Annual Cost £m

Street Lighting Cartledge 0.47m Cartledge 1.10m

Planned Maintenance LoHAC 2.70m Conways 1.30m

Reactive Maintenance LoHAC 1.20m Dance 1.00m

Schemes LoHAC 0.85m LoHAC 0.40m

Total 5.22m 3.80m

15. Kingston is currently in contract with LoHAC until 2021 but there is some flexibility to buy non-core services through other contracts. Sutton’s contracts have been extended until April 2016 and these services are being re-procured with a view to starting in April 2017.

16. The following table summarises the revenue budgets in scope:

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RBK LBS

Subjective 14/15 Outturn £000s

15/16 Budget £000s

14/15 Outturn £000s

15/16 Budget £000s

Highways & Transport

Expenditure**

Income

Grant

Non-Controllable***

Total

6,120

(1,300)

(1,282)

3,538

1,585

5,123

5,533

(1,091)

(1,141)

3,301

1,769

5,070

5,555

) (2,133)

3,422

384

3,806

5,609

) (2,005)

3,604

373

3,977

Regulatory Services*

Expenditure

Income

Grant Funding

Sub total

Non-Controllable

Total

926

(270)

0

656

352

1,008

949

(239)

0

710

606

1,316

1,749

(452)

(59)

1,238

275

1,513

1,808

(690)

(64)

1,054

288

1,342

Grand Total 6,131 6,386 5,319 5,319

* does not include Private Sector Housing for RBK (see paragraph 56). ** does not include £2m of planned maintenance for RBK the equivalent of which is funded from capital in LBS. *** the larger non-controllable costs in RBK are mainly because support staff are provided through a corporate business unit & recharged to services whereas in Sutton these staff are part of the team and funded through the salaries budget.

17. Income is from a variety of sources including licenses, permitting and crossover charges (no profit allowed). The income/grant line also includes Transport for London funding to cover the LIP activity including sustainable travel. All staff working on TfL schemes are paid for through the LIP funding.

KEY FINDINGS THAT WILL SHAPE THE WAY FORWARD

18. Although current organisational and working practices are working reasonably well, there are a number of areas which present opportunities for improvement. The following comments cover all the Regulatory Services and Highways & Transport Services in scope. The comments are based on observations by the programme team, feedback from workshops and best practice research.

A lot of work is reactive with little based on a proactive approach

19. Most services have seen a budget reduction of 30%+ over the last few years and with this has come a reduction in the size of teams to perform the required duties. This has rightly resulted in a focus on those services which are statutory or require immediate attention. The result is that work is mainly based on reacting to circumstances rather than undertaking planned activities with prevention of future problems in mind. This is particularly clear with Regulatory Services where most resources are devoted to live issues rather than education and awareness raising with businesses in order to avoid future problems.

Similar functions are widely spread across structures

20. There are a number of functions like inspection services where posts are spread across different parts of the organisational structure and where staff are separately going on site to undertake their work. Although the inspections are for different services (such as street works compliance or gully cleansing), there is an opportunity to consolidate posts and co-ordinate work to improve productivity. Similarly, there are enforcement functions that sit in both Regulatory Services and Street Services where benefits could be gained through a common approach and integration of resources.

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Managers spend a lot of time undertaking operational activities

21. Over the last few years, the impact of budget reductions has resulted in many managers finding that they have to do operational duties that would previously have been done by their teams. This is particularly the case in Regulatory services where some managers spend under 50% of their time on pure management functions. While it is accepted that managers need to keep some hands-on professional experience, organisation and productivity could be improved if the balance is redressed.

Insufficient resources to cover some specialist areas

22. There are some areas where the Councils have a statutory duty to undertake activities yet do not have the necessary skills and resources in place to deliver an acceptable quality of service. Sometimes one Council has the necessary expertise but the other Council does not. For example, Kingston has less resources regarding expertise to manage land contamination and air pollution. Kingston is stronger in respect of Environmental Health (Food). Sharing resources across the Councils will help improve the situation but consideration will need to be given to further staff training and more generic working to improve the quality of services required and add resilience.

Out of hours services in some areas need improvement

23. There are a number of areas where out of hours services are poor or non-existent. In Kingston the out of hours response to nuisance complaints is limited to a Summer noise patrol. In Sutton there is no out of hours’ service for Highways & Transport. The service quality suffers as a result but bringing resources together from across the Councils will provide an opportunity to improve on existing arrangements.

Tendency towards a silo-based approach to the deployment of resources

24. Across the services in scope there is a tendency to look within the silo of individual teams to meet all the workload at any given time whether in a normal or peak demand situation. There are times of the year when licensing renewal increases, crossover compliance reaches a peak, the number of highway schemes is greater than normal and a hot Summer creates more pollution and noise. Sharing resources across teams through the introduction of more generic working and flexible staff deployment would help improve service quality and provide a more resilient service.

Contract management is sometimes fragmented

25. The resources managing contracts tend to be spread across teams which sometimes results in isolated posts trying to cope with varying workloads and the quality of contract management suffering. The Street Lighting contract in Kingston has minimal resources devoted to contract management which has resulted in the contractor undertaking some roles which should be a client function. This is recognised and being addressed but there is a wider opportunity to consolidate contract management activity to improve the quality and resilience of the function.

Business support arrangements need to be improved

26. The quality of business support to the services in scope is variable across the Councils. In Sutton some support is provided within the service area, for example, Regulatory Services has its own administrative support & performance team whereas Highways & Transport uses the core Business Support Team for the administration associated with permitting. In Kingston Regulatory Services relies on support from the core Business Support team. The general feedback from teams during this programme of work has been negative about the quality and level of support provided from the corporate support teams. This will need to be

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addressed as part of establishing any new arrangements for the future delivery model for the services in scope.

Responsiveness to customers needs improvement & better co-ordination

27. There are opportunities to introduce more self service and streamlined processes for customer enquiries. The general feedback from the work undertaken is that the workflow between customer services and the back office could be improved with greater clarity around the division of responsibilities. The Review of the Customer Contact Centre picked up some of these points and this shared service programme will work in tandem with the team implementing the outcomes of the review.

28. Responsiveness to Members also needs to improve so that there is a consistent approach in reporting on activities in individual Wards and maintaining the necessary level of awareness.

Some working practices & IT systems are outdated and not efficient

29. Although some mobile technology is employed to support staff undertaking their jobs on site, the use of modern business systems and technology to improve productivity and the quality of services is at a very early stage. More integration of systems is required both in-house with CRM and with supplier systems. Service requests, say to remove graffiti, can have tight target delivery times but currently staff have to come back to the office to close requests in CRM which is not efficient and with tight deadlines can mean a performance target is not met.

Performance management is in need of improvement

30. Although all services have performance targets and record what level of service is achieved, they are not consistently used to identify areas for improvement or to tackle suppliers regarding the quality of services delivered.

Commercial awareness is not part of the work culture

31. In times of austerity when the pressure is on to cut costs or to understand the impact of reduced resources on a service, it is important to understand what services and activities cost. In particular, when outsourcing of services might be an opportunity to make savings, it is important to be able to benchmark internal services against market costs. The services in scope already generate significant income from various sources including licenses and grants. It is important that a culture of commercial awareness is delivered in future to help improve efficiency and create a level of growth.

PROPOSED WAY FORWARD – TARGET OPERATING & DELIVERY MODELS

32. It is clear that there are many areas that can be addressed to enable the achievement of reduced costs, better service resiliency and the maintenance/improvement of customer service. Many of the current inefficiencies are the result of reductions in budgets and staff resources without the necessary changes in the operational model, organisation structure, and working practices. This section of the business case looks at the best ways forward based on a commissioning model.

Target Operating Model (TOM)

33. A number of potential commissioning models were considered with variations as to where the commissioning and delivery of functions divide. All of these had a basic commissioning focus as part of the model with a separate delivery vehicle. This is represented in the following TOM which it is proposed is adopted as this meets the commissioning model being followed by each Council where services are commissioned and delivered to meet agreed outcomes.

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Delivery Model – Regulatory Services

34. An options appraisal process was carried out in order to identify a suitable delivery option for Sutton and Kingston’s Regulatory Services. This process involved the identification of a number of potential delivery options for these services, the short listing of these and then detailed research of the shortlisted options to allow a more detailed appraisal against a number of evaluation criteria to arrive at a preferred option.

35. Initially a long list of options was considered by both Councils separately and these are summarised with scores below. In the first instance, Kingston’s appraisal was based on all the services in scope being together in the delivery model selected. The panels for options appraisals involved senior service managers, commissioning and finance representatives.

36. RBK Shared Service Options Appraisal - May 2014

- Shared Service – 69% This was considered the best initial option - Community Interest Company – 70% The cost & timescale of implementation plus

some concerns over the extent of Council control subsequently downgraded this score - Joint Committee/Managing Director – 59% Relatively untried so high risk - Limited Company – 56% Cost & timescale of implementation marked this down - Outsourcing – 67% An option for the future but best to get shared service sorted first - Join an existing shared service – 54% An opportunity for the future but build a two

borough shared service first & expand from a position of strength

37. LBS Regulatory Services Delivery Model Options Appraisal – July 2014

• Shared service – 87% It was felt that this was the most suitable option and that it should be designed to enable other solutions over time.

• LATC – 87% Officers felt that this option was not possible at this stage due to timescales and savings pressures but could be considered at a later date

• In House – 84% This option was rejected as it failed the test of strategic fit

• Outsourcing – 71% It is not clear if there’s a market for these services, more research required

• Employee led mutual – 66% Option rejected

38. Options appraisal short list

Based on the outcomes of the previous short listing options appraisals two were considered for further evaluation by the team (which included strategic and technical officers from both Councils). These options included:

1. A shared LBS, RBK regulatory service 2. Jointly outsource regulatory services to be delivered by an external provider

It was determined that the following options would be considered at a later stage in the process and therefore were not ruled out.

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3. Five borough shared regulatory service 4. Local Authority Trading Company (LATC)

39. The two delivery options were considered against four key evaluation criteria, these were weighted to reflect their importance to the wider programme and included:

- Quality – 30% - Service user perspective – 10% - Strategic fit – 20% - Finance – 40%

40. The sub criteria that were included under each of these sections are listed in paragraph 8 and the scores for each of these are available in the full business case.

41. The outcome of the scoring was that option 1, the shared regulatory service, received an overall score of 68%, while option 2, the joint outsourced option, received a score of 47%.

Evaluation criteria Maximum possible score

LBS/RBK shared Regulatory Service

Outsource services

Quality 30 20 13

Service user perspective 10 5 5

Strategic fit 20 16 12

Finance 40 27 18

Total 100 68 47

42. The recommendation following these appraisals was to go for the shared service option in the first instance.

Delivery Model Highways & Transport

43. As mentioned previously, the Highways & Transport appraisal for RBK was combined with Regulatory Services (see scores in paragraph 36).

44. LBS Highways and Transport Delivery Model Options Appraisal – July 2014

• Outsourcing – 90% It was felt that this option would be more appropriate following the establishment of a shared service.

• Shared service – 88% It was felt that this was the most suitable option as it would allow for outsourcing, LATC or staff-led solution further down the line

• In House – 87% This option was rejected as it fails the test of strategic fit

• Local Authority Trading Company – 76%

• Employee led mutual – 66%

45. Options appraisal short list

Based on the outcomes of the previous options appraisals three criteria were considered for further evaluation by the evaluation team (which included strategic and technical officers from both Councils). These options included:

1. A shared LBS, RBK Highways & Transport Service 2. Jointly outsource Highways and Transport Services 3. Limited company (Council owned)

The following options will be considered in future options appraisals:

• Shared LBS, RBK Highways & Transport Service outsourced in a single contract

46. These options were considered against four key evaluation criteria, these evaluation criteria were weighted to reflect their importance to the wider programme and included:

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- Quality – 25% - Service user perspective – 20% - Strategic fit – 15% - Finance – 40%

47. The sub criteria that were included under each of these sections are listed in paragraph 8 and the scores for each of these are available in the full business case.

48. The outcome of the scoring was that option 1, the shared Highways and Traffic Management service, received an overall score of 79%, while option 2, the joint outsourced option, received a score of 67%. A summary of the scores are included below along with a summary of the comments and explanations which informed these scores.

Evaluation criteria Maximum possible score

LBS/RBK shared Highways & Transport

Outsource services

Limited company

Quality 25 19 14 18

Service user perspective 20 16 12 15

Strategic fit 15 13 11 12

Finance 40 31 30 31

Total 100 79 67 76

49. The recommendation following these appraisals was to go for the shared service option in the first instance.

Summary of the Options Appraisals

50. Both the Regulatory Services and Highways & Transport results show clearly that the shared service approach is the best option to pursue at this stage. Other options focus on externalising services or expansion and these have been ruled out for the immediate future because:

• There is a significant risk in handing over existing services in their current state to an external organisation and expect them to deliver improvements and efficiencies for both Councils in an environment facing continuing austerity

• It is better to establish the integrated shared service first, sort the working practices and take the savings before seeing what the business case is for an external or an expansion model

• Delivering an external approach could take up to eighteen months to deliver & with implementations costs >£600k to cover the project team and legal support

• Some financial benefits might be lost & others take longer to materialise

Recommendation:

That a shared services model is implemented for Regulatory Services and Highways & Transport Services between Sutton & Kingston Councils with Kingston as the ‘host’

51. It is proposed that a two-phased strategy is adopted:

Phase 1 (2-3 years) – develop a fully integrated shared service adopting modern working practices. Basically get the house in order to create a strong platform for the future

Phase 2 – review and implement the best delivery model/s for the services moving forward. This will include exploring the expansion of the shared service to include other Councils or implementing an external model/s or a combination of both

52. Why Kingston as the host? One Council is required to be the host for administrative purposes. This includes being responsible for the staff in the service and their management

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and providing the support services including HR and Finance. It is purely an administrative role with the governance of the shared service (see paragraph 60-62) being responsible for joint decision making about the service.

53. The case for Kingston being the hosts is:

• A big influx of grant funding (including mini-Hollands) is bringing a wide range of new expertise which might benefit other projects

• RBK already has experience of hosting services with the ICT shared service with Sutton

• RBK has a greater HR capacity to enable the implementation of the service to the proposed timeline

• Sutton is focusing on the outsourcing of Waste services which might detract from the additional effort required from establishing the hosting arrangements

• RBK has the greater number of staff across the services (106:80)

• RBK has the larger budget (£6.4m:£5.3m)

• RBK has more LIP funding

PROPOSED WAY FORWARD - ORGANISATION OF THE SHARED SERVICE & WORKING PRACTICES

Recommendation:

That the functional model shown below is used in conjunction with the TOM shown in paragraph 33 to help develop the full organisational structure for the shared services covered in this business case

54. The functional model below will be used to develop the organisational structure for a shared service where teams are grouped within Highways & Transport and Enforcement. This brings like functions together and presents a clear picture of where synergies can be achieved by grouping functions under teams.

55. In developing the organisational structure the following principles will be adhered to:

• Improving commissioning & contract management • Ensuring more responsive & accessible customer services

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• Integration of functions across teams through generic working • Balancing resources across teams to offset existing weaknesses • A focus on management posts to manage rather than undertake operational work • Separation of commissioning & delivery functions • Structures with flexibility in mind to enable future changes to be adopted without major

upheaval • A move towards a more commercial culture • Planned as well as reactive approaches to work activities • Questioning the need for functions (or activities within functions)

56. At the present time no decision has been made regarding where Kingston’s Private Sector Housing functions will sit. The Sutton services will be included in the shared service. One option is that it is part of the Enforcement Team in the proposed shared service structure.

Recommendation:

That a full review of business practices and processes is undertaken in the first year of the shared service for both the Enforcement & Highways & Transport Teams in order to implement commercial working practices and efficient business systems enabled by technology

57. It is clear from the list of areas for improvement discussed in paragraphs 19-31 that there

are opportunities to improve productivity and the quality and resilience of services through a fundamental review of practices, processes and systems across all functions. This will generate further savings starting in 17/18 through creating opportunities for income growth and a potential reduction in staff resources where the efficiency gains are greatest. Alternatively the efficiency gains could be used to release resources for those services where demand is increasing.

58. In Kingston there is also the opportunity to find an externally funded approach to the running of the Shopmobility service which currently costs the Council a net £70k per annum. This could be through the business or voluntary sector and potential opportunities are currently being explored.

Recommendation:

To build over time a joint approach to the commissioning and procurement of all the services delivered through the Shared Environment Service

59. Although the current contracts in place to cover the services in scope are not aligned, it is proposed that a joint approach to the commissioning and procurement of services is followed as soon as existing contractual commitments reach conclusion. The combined scale of procurement is likely to achieve significant savings per annum if a joint contractual approach is followed.

PROPOSED WAY FORWARD – GOVERNANCE

60. It is proposed that the current governance arrangements as shown in paragraph 5 continue until the implementation of the integrated shared service team is in place (January 2016). Following that, the following structure is proposed:

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61. It is the governance arrangements that will drive the decision making regarding the shared service. The ‘host’ organisation (Kingston) will have employment responsibility for the staff and associated support but all strategic and key operational decisions will be agreed through the structure above. The Joint Interim Shared Service Head of Delivery will liaise with the Director of Place (Kingston) and Strategic Director of Environment, Housing & Regeneration (Sutton), initially, regarding day to day service issues that need attention.

62. The following table provides an outline of the representation for each group and their responsibilities.

Group Membership & Responsibilities Meetings

Committees

Agreement of policy & strategic proposals regarding the services in scope. Responsible for decisions regarding sovereign areas identified eg. Setting licensing fees; proposals where each Council is bidding separately for funding schemes

As in the Committee calendar

Joint Member Board Lead Members from each Council. Rotating chair. Responsible for key strategic & investment decisions

X 5 per annum

CMT/SLT

All members of CMT & SLT. Responsible for scrutinising all key strategic, operational & investment decisions prior to submission to the Member Board. Monitoring performance, benefits realisation & risk management.

X 6 per annum

Directors

Both members of CMT & SLT, managers of the Environment commissioning function & joint line managers, initially, of the Head of Environment Delivery Services

Meet Monthly

Environment Commissioners One in each Council responsible for commissioning services on an outcome basis from the delivery team & monitoring performance

Meet Monthly

Interim Head of Delivery Responsible for delivering the services commissioned to the performance agreed

IMPLEMENTATION 63. The following outline implementation plan is proposed through to July 2016.

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64. The implementation will be fairly complex and will require a qualified specialist in the range

of services involved to implement and establish a functioning service. In order to facilitate this, it is proposed that an interim Head of the Shared Environment Service is appointed for 9-12 months to oversee a successful implementation. Once the service is fully operational, the interim post could be made permanent if the scope of the shared service is expanding to cover other services with Sutton. If the extent of sharing is complete then a permanent post will not be required. The interim Head will need some project management and business analysis support.

65. A key part of the implementation process is the staff consultation. This will enable staff to comment on the proposals which will help shape the organisational structure and developing the way forward. Joint Staff Focus Groups have been established to enable participative sessions for staff to input their views on focused topics. With Kingston as the host, Sutton staff will TUPE across to become Kingston employees at an appropriate point.

66. The nature of the services within the shared service means that a lot of work takes place in the community of both Councils. Staff will need to be located on sites in both Councils and in the first year it is assumed that the existing accommodation in both Councils will be available. The Modern Desktop will be live around the same time as the shared service starts and this will facilitate being able to work across sites. As new flexible working practices develop in year 2, there may be a reduced requirement for office space with more hot desking and mobile working.

67. An Equalities Impact Assessment has been undertaken at this early stage of the project. Once we are further forward with implementation, a further EQIA will be undertaken. In Sutton an Integrated Impact Assessment has been undertaken.

BENEFITS FROM A SHARED SERVICE APPROACH

68. The following benefits will be realised from the recommendations in this business case:

• Improved commissioning & stronger contract management through consolidating resources in the Highways & Transport structure

• Provision of a broader platform for enforcement services offering a more integrated approach

• More responsive & accessible services to customers through improved processes (including self-service) & workflows with Customer Services

• More responsive & resilient services through more generic working & full integration of service teams

• Improved working practices & productivity through a common ICT platform & mobile working

• Balancing resources across teams to offset existing weaknesses & improve resilience • Improved productivity through giving managers more time to focus on management

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• A more commercial approach to work to aid decision making about service provision through a greater understanding of service costs & the potential to increase income

• An agile organisational structure which can flex to take on other shared services between the Councils

• Financial benefits of c£870k per annum will be achieved (see the Financial Considerations section)

69. Benefits realisation will be monitored on a regular basis through the proposed governance arrangements. Performance indicators and customer feedback(including from Ward Members) will be used to show the extent that the benefits set out above have been achieved and to identify those areas where the focus of activity is required to make improvements.

FINANCIAL CONSIDERATIONS

70. Implementation of the recommendations in this business case will generate the following savings to be shared across both Councils in a proportion to be agreed as part of the financial model being established:

Saving 2015/16 2016/17 £000s

2017/18 £000s

2018/19 £000s

Integrated Organisation Structure (110) (650) (650) (650)

Improved Working Practices - - (130) (220)

Total Revenue Savings (110) (650) (780) (870)

One Off Costs

Redundancy 200 50 50 -

Transition Staff 60 190 - -

Pension Transfer Costs 10 - - -

Total One-Off Revenue Costs 270 240 50 -

ICT Investment (capital) - 150 150 -

Total Net Saving 160 (260) (580) (870)

71. The savings are based on the anticipated structure for the shared service and the potential savings arising from improved working practices. The figures will be finalised once staff consultation has been completed and the final structure is agreed.

72. There are opportunities to achieve additional savings if joint procurement is followed in the future and this is an area where more work is required to ensure the opportunity is not lost. Adopting a more commercial culture may well generate an increase in income but at this stage it is not possible to ascertain the scale of this. Kingston also has the opportunity to save £70k per annum if external provision and funding is achieved for the Shopmobility service. Reorganisation within the Highways & Transport team is likely to release some grant funding currently covering staff costs which can then be applied to other schemes.

73. One Off Costs – there are four areas of costs which will arise as a result of the forming of the shared service that total approximately £560k revenue and £300k capital:

• Redundancy – at this stage it is difficult to be accurate regarding redundancy costs. This will be possible once the new structure is finalised and interviews have taken place (January 2016). The anticipated redundancy costs are £300k assuming an average £25k per person.

• Transition Staff – the appointment of an interim Head of the Shared Service for part of the first year, the possible need to use some external business analysis/project management resource to support the process review and, given the complexity of the implementation, the retention of some management resources for part of the first year in order that day to day service is maintained while change is occurring, will cost approximately £250k

V.7

• ICT Investment – the implementation of a common systems platform and improved mobile working is likely to cost c£300k (capital) over the two years

• Pensions Transfer – will incur actuarial costs of around £10k

74. The team developing the financial model will be looking at the implications of the bulk transfer of pensions and the best process and timing for achieving this.

75. Consideration needs to be given to the requirements for support services during the initial establishment of the shared service and the ongoing business as usual need. There may be additional costs/savings associated with the support service requirement.

76. Similarly, the impact of outcome based budgeting needs to be considered once there is clarity around what this means for financial support particularly if it means running separate processes for the individual Councils.

LEGAL IMPLICATIONS

77. The Councils are local authorities for the purposes of the Local Government Act 1972 and best value authorities for the purposes of the Local Government Act 1999. The creation of the Shared Service is to be established by the Councils in exercise of their powers under section 1 of the Local Authority (Goods and Services) Act 1970, sections 111, 112, 113 and 136 of the Local Government Act 1972, section 3 of the Local Government Act 1999, and section 1 to 8 of the Localism Act 2011 and all other enabling powers.

78. The proposed shared service would also have to satisfy Regulation 12(7) of the Public Contracts Regulations 2015.

79. If Kingston is to host the shared service, then Sutton will have to delegate to Kingston their relevant statutory duties and functions that covers these services. Prior to any such delegation, the relevant duties and functions that Sutton has under the various legislation covering these services will need to be identified in order to identify whether there are any that cannot be delegated.

80. As there will be staff transferring under TUPE there may arise the need for legal advice to be sought.

RISKS

81. The following table gives an indication of some of the key risks. A full Risk Register has been maintained throughout the project:

Risk Probability Impact Mitigation

Different cultures & processes in each Council slow down decision making

Medium High Discuss at the Project Board when relevant HR/Finance

professionals are present.

Some Services are already under-resourced so performance targets may not be met

Medium High Introduce a more focused management approach, balance resources across teams & introduce more generic working.

Inability to achieve agreed savings

Medium High Constantly monitor progress & explore new savings opportunities

The weight of corporate change programmes being implemented at the same time in both Councils may slow implementation

Medium High Identify & gain commitment for project resources early in the programme. Allow some time contingency to fit with the timeline around implementation of corporate change activity

Members do not recognise the scale & range of the benefits proposed

Medium High Fully brief Members before and after a decision to proceed. Demonstrate performance improvements as the service proceeds.