THIS REPORT AND BACKGROUND INFORMATION ARE OPEN TO
INSPECTION BY MEMBERS OF THE PUBLIC
West Yorkshire
Joint Services
AGENDA ITEM NO: 8
REPORT TO
JOINT SERVICES COMMITTEE
TO BE HELD ON
26 JANUARY 2017
REPORT OF THE DIRECTOR
1.
SUBJECT:
BUDGET STRATEGY AND MEDIUM TERM FINANCIAL PLAN
UPDATE 2016/17 TO 2019/20
2.
EXECUTIVE SUMMARY
2.1
West Yorkshire Joint Services needs to have a robust budget strategy
in place to manage budget reductions that will be required by the
funding authorities up to 2019/20. This is in line with a continuing
programme of budget reductions faced by the Districts themselves.
Following previous reports to West Yorkshire Directors of Finance and
the Joint Services Committee during 2015/16, this report provides an
update on the budget strategy. Since the last update in December
2017, meetings have taken place with stakeholders to discuss budgets
and the existing strategy, with financial targets which have been
reconfirmed by them.
3.
RECOMMENDATIONS
3.1
That Members note the re-confirmation of the budget strategy by the
West Yorkshire Directors of Finance, Chief Executives and Leaders;
3.2
That Members note the actions taken and proposed by officers to
increase the momentum in income generation;
3.4
That Members continue to receive quarterly revenue budget monitoring
reports with an out-turn review in June 2017 and a full review in
December 2017 of progress towards achieving budget targets for
2017/18 to 2019/20.
4. REASON FOR RECOMMENDATIONS
4.1
Regular review of the budget strategy is essential to ensure that
amendments to the strategy are considered if there is a likelihood that
targets will not be achieved.
5.
BACKGROUND INFORMATION
5.1
Approach to Revising the Medium Term Financial Plan
5.1.1 During 2015/16 Members received reports in July, September, and
December 2015 on the budget strategy and organisational change.
This followed meetings with West Yorkshire Directors of Finance and
subsequently West Yorkshire Chief Executives and Leaders to agree a
budget strategy and medium term financial plan 2016/17 to 2019/20. In
January 2016 the Joint Committee finally approved the budget strategy
which resulted in the need to deliver £938k of budget savings over the
medium term period.
5.1.2 This financial strategy included an existing budget requirement in
2016/17 of £300k and 15% cashable reductions over the budget
strategy period which amounted to £638k. This budget strategy was
based on a mix of revenue savings and growth in the commercial area
but also other parts of Joint Services.
5.1.3 Members received a full report in December 2017 setting out revisions
to the budget strategy, which showed a projected shortfall on target
savings in later years of the strategy. The details are set out in
Appendix 1.
5.2
What action has been taken since the last Committee
5.2.1 Officers have presented to three stakeholder groups – the Directors of
Finance, Chief Executives and Leaders.
Officers outlined the
challenges as well as the successes made to date. Opportunities have
been identified by officers for closer working with the stakeholder
Councils and it has been agreed that these opportunities will be
discussed on an individual level with each Council. Each Council has
different interests and needs so this is a sensible approach, though
further opportunities to work collaboratively with 2 or more councils will
also be sought.
5.2.2 Officers believe that the overall growth strategy is still valid, but
something needed to be done to increase the momentum and pace of
growth. The Director has consulted with a wide range of managers
internally, and looked at external models to identify good practice. As a
result, the Director is in the process of implementing a re-alignment of
senior management responsibilities which includes additional capacity
on a temporary basis at Strategic Leadership Team level with the
addition of a Head of Commercial Development role for 12 months. A
similar role exists in the structure at a lower management level, but
more than one attempt to recruit has failed, with feedback being that
the role was at the wrong level on the management structure, and the
salary was insufficient to attract someone with the right skillset and
experience.
This temporary role will be funded from the transformation fund within
earmarked reserves, and if successful, consideration will be given to a
permanent role in the future. This will create additional capacity and
allow more focus to be given to support functions around which we are
carrying some risk. This was evidenced by the data incident we had in
Summer 2016, and we must ensure that our governance is strong and
robust, plus our staff are properly supported with the “tools” they need
to deliver. This is the feedback staff have provided, so things like IT,
facilities, quality, will get more attention to ensure they work for
individual staff as well as the wider organisation. Appendix 2 shows
the realignment of strategic leadership responsibilities.
5.2.3 The Monthly Business Reviews in January 2017 have shown good
income levels from April to December 2016, and strong prospects for
further growth in early 2017, particularly in Archaeological Services and
Calibration.
5.2.4 The Marketing Account Manager has resigned to pursue other
opportunities. Whilst only in post for 8 months, the impact has been
significant and we will continue with many of the activities that have
been put into place. We will take the opportunity to review the role, now
that we know more about what kind of marketing support really works
for us, and advertise shortly to ensure that we provide continuity of
support to our managers. In the meantime this marketing activity will
continue and meetings have been set up with managers to develop this
in pursuit of our commercial growth.
5.3
How will the budget savings be achieved?
General Approach
5.3.1 The original plan remains the same. We will target growth throughout
all service areas. Leaders have now given the go ahead to establish
the trading company that was recommended by Committee in
December 2016. This will now go to each Council’s Executive for
approval, before one last approval by this committee. This will allow us
to pursue income growth and profit.
As well as looking to generate income from the wider public and private
sectors, more attention is being given to try to develop relationships
with our stakeholder Councils. The Director has had and has planned a
number of meetings to discuss opportunities and will report back as
part of these budget strategy updates on successes.
5.4
Emerging Risks and Events
5.4.1 A number of emerging risks and events were reported to members at
the December 2016 committee. An update is provided as follows:
5.4.2 Data Incident – a response has been provided to the ICO on the
questions raised and we await confirmation of what further action, if
any, will be taken. Further reports will be presented to the Governance
and Audit Sub-Committee.
5.4.3 Asbestos Income – Progress has been made with agreeing activities to
increase the projected income on asbestos in this financial year. The
new air monitoring contract is in the process of being finalised, and will
be managed alongside the bulk ID sampling contract that will see
income decrease in future years – it is hoped that by dealing with them
together we will minimise that future reduction in income in one area.
Discussions with two other stakeholder Councils in relation to this work
are also progressing well and may result in additional income being
secured.
5.4.4 Since the last committee, an opportunity arose to tender to be on a
framework for the provision of toxicology services. We put a lot of effort
into our tender to ensure that we get onto that framework which will
open up opportunities to expand that work, which is part of the strategy
for the Laboratory. An announcement is due to be made on successful
tenderers before this Committee meeting.
5.5
Issues that still need to be resolved
5.5.1 The issues remain the same as outlined at the previous meeting and
are set out below.
5.5.2 There are some fundamental issues that need to be resolved, and if
they are, it could have a significant positive impact on our ability to
meet our budget strategy. These are as follows:
5.5.3 The Morley site is a large overhead, and is significantly under
occupied. It would be virtually impossible to move site due to the
specific nature of the services we provide – our laboratories, tanker bay
and archive stores would be difficult to replicate on another single site.
The fixed costs of occupying a site of this size are significant and
shared amongst our existing services. This in some cases and
particularly the commercial areas makes our tender prices too high as
they are set to recover these overheads.
Our strategy is to increase utilisation of the site by renting our office or
other space which will provide the opportunity to share the fixed costs
over more cost centres. This in turn will ensure that our commercial
areas are more competitive. We are struggling to secure new tenants,
and whilst there is a possibility of the West Yorkshire Urban Traffic
Management team being located here, the decision on whether to use
our site or a site owned by Leeds CC is still to be made. The
accommodation is high quality, modern and in an excellent location for
road transport links within West Yorkshire and beyond.
5.3.4 Internal Service Provider – as WYJS is a joint committee, we are
classed legally as an “internal service provider”. Most councils have
provision in their standing orders and financial regulations that if work is
required, an internal service provider should be used, subject to testing
out value for money in terms of cost and quality. We need to engage
more officers in the 5 Councils to ensure that they understand this.
There are some services that we are currently providing to one or more
Councils but which we could be providing to all of them. It is likely that
they will be using external providers for these services. There are also
some services that have synergy with what we do that we could
develop to provide to the Councils. We could develop a cross-skilled
workforce who could undertake a variety of testing/inspection services
throughout West Yorkshire, benefitting from economies of scale. This
would help with reducing overheads, and ultimately help to ensure we
meet our budget strategy. Examples of services we could provide are
more ecological surveys such as bats or other protected species;
asbestos air monitoring and surveying, dust monitoring and a variety of
calibration services to schools, vehicles etc.
5.3.5 Shared commercial expertise – as we have developed our commercial
approach, what is clear is that we need additional and different
skillsets. These are difficult to buy in as people with these skillsets are
more attracted to the private sector where remuneration packages are
higher, and there is a focus on reward by results. As all the 5 Councils
are moving towards income generation, it would be sensible to buy
collectively into the expertise needed to do that. One way of doing that
would be to build on the commercial expertise developing at WYJS,
and potentially to use the new trading company as a vehicle to employ
that commercial expertise – this could be done very transparently, but
on different, more attractive terms. All 5 Councils would then benefit
from it.
6
CONCLUSIONS/OPTIONS APPRAISAL
6.1
That the Joint Committee continue to support the overall Budget
Strategy and Medium Term Financial Plan 2016/17 to 2019/20;
6.2
That the Joint Committee do not support the overall Budget Strategy
and Medium Term Financial Plan 2016/17 to 2019/20 in which case
alternative strategies will need to be considered.
7.
KEY PRIORITY IMPLICATIONS
7.1
Children and Young People – the implications contained in this report
will impact on the key performance indicators contained within the
Service Business Plan 2016/17.
7.2
Safer, Stronger Communities – as above.
7.3
Health and Wellbeing – as above.
7.4
Sustainable Economy and Culture – as above.
8.
ENGAGEMENT
8.1
Engagement with Members and officers of the constituent authorities is
a key part of the budget strategy process. Additionally consultation on
these proposals will take place with staff, trade unions and partner
organisations.
9.
CORPORATE IMPLICATIONS
9.1
Relevance to Service Delivery Plan – The Joint Services Budget
Strategy is an essential tool in ensuring that the Joint Services overall
plan and strategies are viable.
9.2
Risk Management – The implications contained in this report will be
incorporated into the WYJS risk management processes.
9.3
Human Resources – The implications contained in this report will
impact on staffing and in these circumstances appropriate policies will
be followed in consultation with the trade union.
9.4
Finance – As set out in the report.
Susan Betteridge, Director, West Yorkshire Joint Services
Contact Officer: Susan Betteridge
Telephone No: 0113 393 9700
Fax No: 0113 253 0311
E-mail address: [email protected]
Background Papers:
West Yorkshire Joint Services Committee Minute 25, 38, 48, 56 (2015/16)
West Yorkshire Joint Services Committee Minute 19, 32 (2016/17)
Appendix 1
UPDATED BUDGET SAVINGS PROPOSALS FOR 2016/17 TO 2019/20
Amended Detail
16/17
£
17/18
£
18/19
£
10,000
-
10,000
-
10,000
20,000
10,000
20,000
Trading Standards
Reduced Spec Inv Team Capacity
Reduction in Team Leaders
Grow Business Advice
Utilise existing surplus
Review Service Provision*
30,000
45,000
30,000
74,470
115,000
30,000
45,000
30,000
40,000
115,000
30,000
45,000
60,000
40,000
115,000
30,000
45,000
60,000
40,000
115,000
Heritage
Realignment of SLT
Revised opening times
Increased RM/Vacate outstore
Increase HER income
Restructure HER
Reduce service levels in Archives
80,000
23,000
25,000
7,410
26,000
30,000
80,000
23,000
25,000
6,000
26,000
30,000
80,000
23,000
25,000
6,000
26,000
30,000
80,000
23,000
25,000
6,000
26,000
30,000
Commercial & Resources
Reduced staffing Analytical Services
Marketing & Comms Post
BSO/Credit Controller
Income Growth WYMTS
Income Growth WYCS
Income Growth ASWYAS
Income Growth WYAS
24,000
(38,000)
93,000
16,700
14,000
(52,150)
24,000
(38,000)
132,863
44,289
19,000
(11,250)
24,000
(38,000)
132,863
45,149
30,137
27,950
24,000
(38,000)
132,863
46,025
48,357
27,950
Total budget reduction
553,430
630,902
732,099
751,195
Target budget reduction
498,430
728,370
864,640
938,000
Shortfall Plan vs Target
(55,000)
97,468
132,541
186,805
Cumulative
(55,000)
42,468
175,009
361,814
Corporate
Renegotiate SLA
Increased rental income
19/20
£