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MAIDSTONE BOROUGH COUNCIL

 

CABINET

 

DATE 13 JULY 2011

 

REPORT OF DIRECTOR OF REGENERATION AND COMUNITIES       ]

 

Report prepared by Stephen McGinnes 

 

 

1.           Revenues and Benefits Shared Service Update

 

1.1        Issue for Consideration

 

1.1.1   To consider the progress of the shared service arrangement entered into with Tunbridge Wells Borough council for the delivery of the Revenues and Benefits function.

 

1.2        Recommendation of Head of Revenues and Benefits

        

1.2.1   That the progress of the shared service is noted.

 

2.      Reasons for Recommendation

2.1        Background/Introduction

 

2.1.1   The Revenues and Benefits service is one of the largest services

provided by district councils. In 2010-11, the combined staffing for Maidstone and Tunbridge Borough Councils was 76.8 full time equivalent employees (FTE), with budgeted staff costs of £2.3 million. The large scale of the operation and emerging shared services elsewhere demonstrated potential for significant savings to be made through business improvement and shared working.

 

2.1.2   Initial scoping work in 2009 confirmed the potential for efficiency savings, performance improvements and opportunities to enhance the overall resilience of the service. Widespread agreement was therefore given to a full review of Revenues and Benefits across the Mid Kent Improvement Partnership (MKIP) with a view to establishing the viability of a shared service.

 

2.1.3   A  review of Revenues and Benefits was undertaken in the latter part of 2009, and comprised several key work streams that would inform the proposal for future delivery of the Revenues and Benefits service:

 

·      A review of the services by the MKIP Business Transformation Programme team (BTP);

·      Market testing and review of potential options for outsourcing the service;

·      Identification of ICT solutions to enable shared service working; and

·      Evaluation of a “stand alone” option for each partner as an alternative to shared services.

 

2.1.4   The development of the shared service initially focused on a partnership involving all four MKIP boroughs.  Following decisions by Ashford and Swale to withdraw from the service element (although Swale are still involved on the shared ICT), the work that followed considered a scalable model and set of principles by which a shared service should operate, and was used to inform the shared service proposal put forward between Maidstone Borough Council and Tunbridge Wells Borough Council.

 

2.1.5   The service focuses attention on the core functions of revenue collection, benefits administration and customer services, with the service pooling work centrally.

 

2.1.6   The detailed business case was considered and approved by a joint Cabinet Meeting held at Maidstone Borough Council on the 25^th October 2010.

2.2        Operating Model

 

 

1    

2.2.1   The decision was taken to join the Revenues and Benefits sections at the two councils. Both sections are structured in a very similar way and the restructure will see the management of the two services rationalised and combined, with members of staff in the teams combined into a single team.

 

2.2.2   A partnership arrangement for the counter-fraud function between the two councils has already been in operation since April 2008, structured in a similar way to that proposed for the remainder of the service; with a single team manager and staff across both sites acting as a single team, with work allocated based on priority and officer ability rather than on the employing authority or physical location of the member of staff.  The operation of the fraud partnership has helped develop a strong relationship between the two departments and demonstrated that performance can be maintained or improved, whilst making financial savings.

 

2.2.3   As this element of the service is already operated in partnership, the impact of wider shared service will be restricted to improvements in IT and a review of the level of resource employed for benefit review visits.

 

2.2.4   A central business support team was created that pulled together the major technical elements of the service - system administration, financial reconciliation, statistical returns, quality assurance, and appeals.  This allows officers to specialise, whilst gaining resilience through the shared nature of the team.

 

2.2.5   A full structure chart for the shared service is shown in Appendix A. 

 

2.3        IT System Requirements

 

2.3.1   The service operates two primary systems, a core back office processing system and an electronic document management system.

 

2.3.2   In order to identify the potential efficiencies of jointly procuring and hosting the core back office system operated for Revenues and Benefits, the project team worked with Capita Software Systems as the existing provider for both authorities to establish how the cost could be reduced and level of service improved.

 

2.3.3   The outline IT proposals put forward by Capita demonstrated the potential for financial saving through jointly negotiating a new contract term and transferring the existing two separate applications onto a single shared application.

 

2.3.4   An assumed IT saving of £105,500 per annum across the two authorities was therefore included within the business case based on those discussions.

 

2.4     Expected Benefits

 

2.4.1   In creating a shared service between the two councils delivery of a range of benefits to the two authorities was identified. These included:

 

·      Financial Benefits – annual staff savings of £454,900, equivalent to 14.9 FTE. In addition, IT savings of £105,500; a total full year saving of £560,400 across the two boroughs.

·      Increased Resilience – a larger pooling of staff which is able to manage the peaks and troughs in service demand and provide cover for specialist roles that are currently vulnerable areas within the service.

·      Service Improvement – to share the cost and skills needed to drive out further savings in areas such as channel migration, staff training and procurement of services.

·      Commercial Viability – opportunities to actively sell the service to other councils in order to further reduce cost in the future; and

·      Customer Service – maintaining and seeking to improve standards of customer service and performance.

 

2.4.2   The BTP review of Revenues and Benefits demonstrated, based on a set of standard ‘lean models’, the financial viability of a shared transactional service. The proposed service delivery model is based on the business case and draws on examples of best practice such as the Anglia, Census and West Midlands partnerships. In particular, establishing a resilient sustainable partnership requires a clear understanding of the critical requirements of all the partners and a model which is flexible enough to accommodate those and be adaptable in the future. The main principles of the MKIP Revenues & Benefits model are as follows:

 

·      A customer focused approach;

·      A service that is going to be resilient and sustainable;

·      An efficient and effective service that offers value for money;

·      Clear performance levels and standards;

·      An approach that supports partnership working;

·      A clear, pragmatic implementation plan (with supporting resource plan); and

·      Clear governance arrangements.

 

2.4.3   Meeting these expectations for both partners has inevitably necessitated a degree of compromise. The resulting model retains elements of excellent practice evident at the individual authorities and sets out to:

 

·      Improve outcomes and performance to the service users;

·      Reduce the overall cost of the service;

·      Establish stronger, more resilient services, able to adapt to the peaks and troughs of service demand;

·      Create a flexible and commercial attitude to service delivery;

·      Build in resilience to support a range of possible future changes; and

·      Keep the service within Mid-Kent and within local government control.

 

2.4.4   Specifically the proposed model recommended:

 

·      Flexibility to deliver customer services that meet local needs - building on the Gateway and corporate contact centres at each council;

·      Inclusion of a £50,000 contingency and £40,000 training budget to mitigate any immediate risk to service performance throughout the transition and support the development of staff within the new joint service; and

·      A single core IT service model to minimize the support and ongoing investment required.

 

2.5       Implementation

 

2.5.1   The agreed implementation plan was initially divided into three stages to allow the direction of the new service to be set progressing into an operational shared service. The implementation plan has been updated to report progress and can be seen in Appendix B.

 

2.5.2   The implementation team has been led by the new Head of Service (Stephen McGinnes) and the management staff from the shared service teams with support from an HR resource. During the period of implementation regular reports have been made to the MKIP Programme Board, with any exceptions or variations to the planned implementation highlighted and proposed actions agreed.

 

2.5.3   The full cost of implementing the shared service was estimated at £561,100 which given the savings identified would mean a payback period of less than two years.  Implementation costs of £445,000 have been committed to date, with total costs revised at £602,000. 

 

2.5.4   For planning purposes it was estimated that the full service would be operational by the end of August 2011.

 

 

2.6       Progress to Date

 

2.6.1   The overall implementation of the shared service has progressed well, with changes and savings to be made in line with the business case and implementation plan that was presented to Cabinet in October 2010. 

 

2.7        Service Restructure (staffing)

 

2.7.1   Following the decision to progress with the shared service a formal consultation process was undertaken with all staff affected and trade unions.  This commenced in November 2010 and enabled the views of all staff to be taken on board in defining the final structure and implementation process.

 

2.7.2   The first phase of the implementation was scheduled to take place between 09 November and 31 March 2011.  Within the first phase a number of key appointments to took place, the Head of Service, Revenues Manager, Benefits Managers, Assistant Managers and Business Support Team.  A total of 4 FTE were recruited to the management team of the shared service, generating a saving of 3 FTE.

 

2.7.3   A recruitment process has been undertaken and all positions have been filled from within the existing staff, as per the original timetable. 

 

2.7.4   A total reduction in staffing of 14.9 FTE was targeted, of which a reduction of 6.5 FTE was anticipated through the first phase.  A saving of 4.9 FTE has been achieved, with two displaced staff applying for posts within the second phase.

 

2.7.5   The second phase of the restructure was to commence from 1 April 2011 and was expected to deliver a saving of 8.4 FTE.  Through voluntary redundancy, holding of vacant posts, ending of fixed term contracts and a number of changes to individual working hours for staff this reduction has been achieved in full.

 

2.7.6   The total staff saving for the two councils is projected to be £359,300 during 2011/12, achieving in full the assumed saving.

 

 

2.8        IT (New Operating Systems)

 

2.8.1   To progress this joint procurement the councils have utilised a Government Buying Framework to seek expressions of interest in providing such systems and services. The only response was from the existing provider in both boroughs, Capita.

 

 

2.8.2   Negotiations have taken place to formalise the service offering from Capita which will provide an annual saving of £74,500 for the two councils.

 

2.8.3   With support of legal services, a new joint contract has been entered into with Capita on behalf of Maidstone, Tunbridge Wells and Swale Borough Council, with back to back agreements in place between the three partners.

 

2.8.4   The implementation of the joint system is at an advanced stage with the systems now in place and testing being undertaken. The full implementation of the system and staff training is scheduled to be complete by 8 August 2011.

 

2.8.5   The new solution will provide the following additional functionality, at no cost to either Council, in addition to the financial savings.

 

·  Total mobile

·  E - notifications / schedules

·  E- billing

·  Customer self service (e-citizen)

·  New print functionality

·  Quality assurance

·  Debt recovery profiling

·  Customer self service

·  Shared service desktop

 

3.           Alternative Action and why not Recommended

 

3.1        In making the decision to enter into a shared service arrangement the Council made a commitment to deliver the service in partnership for an initial period of five years.

 

3.2        Whilst the Council could look to terminate the arrangement early, it would fail to deliver the financial savings and increased resilience currently being achieved.

 

4.           Impact on Corporate Objectives

 

4.1.1   The implementation of the shared service supports the council’s commitment to its customers to deliver efficient and effective services.

 

5.           Risk Management

 

5.1     A risk assessment was completed and has been maintained throughout the implementation of the project

 

 

 

 

 

 

6.           Other Implications

 

1.          Financial	x
2.                   Staffing	x
3.                   Legal
4.                   Equality Impact Needs Assessment	x
5.                   Environmental/Sustainable Development
6.                   Community Safety
7.                   Human Rights Act
8.                   Procurement	x
9            Asset Management

 

6.1        Financial

 

6.1.1  The project set out to deliver combined annual savings of £359,000 in 2011-2012 and £560,400 in subsequent years for the two boroughs, which allowing for savings achieved during the course of the project and implementation costs, provided a net saving of £2 million over the next 5 years.

 

6.1.2  Based on the savings achieved or scheduled to be released, the service now expects to deliver an annual saving of £437,900 in 2011-12 and £587,900 in 2012-13. From 2013-14 savings will normalise, achieving a saving of £587,900 in subsequent years.

 

6.2        Staffing

 

6.2.1  There were 76.8 FTE employed within Revenues and Benefits across the two authorities, with a net reduction of 14.9 FTE planned and achieved through the implementation of the shared service.

 

6.3        Equality Impact Needs Assessment

 

6.3.1  An Equality Impact Assessment has been undertaken for the implementation of the shared service, with a further assessment planned on the ongoing operational delivery of the service.

 

6.4        Procurement

 

6.4.1  Introduction of the new IT platform has involved a formal procurement for which support has been provided by the Councils’ Procurement team and Legal Services.

 

7.       Conclusions

 

7.1        Whilst a number of shared service initiatives have been progressed through the Mid Kent Improvement Partnership such as Audit, Legal and External Print and Graphics, the delivery of a shared service for Revenues and Benefits represents the most ambitious shared service to date.

 

7.2        The project has made progressed in line with the initial timetable and is expected to deliver the financial savings outlined within the original business case, approved by Cabinet in October 2010. 

 

7.3        With the introduction of further change through the Welfare Reform Bill, the Revenues and Benefits Service will undergo further change, however through the introduction of the shared service will be well placed to both manage that change and the opportunities it provides.

 

 

7.1        Relevant Documents

 

Cabinet Decision dated 25^th October 2010

 

7.1.1   Appendices

 

Appendix A – Shared service structure

Appendix B – Project milestones

 

7.1.2   Background Documents

 

Shared Service Business Case

Report of the Business Transformation Team

 

 

IS THIS A KEY DECISION REPORT? Yes                                               No     If yes, when did it first appear in the Forward Plan?   ..     This is a Key Decision because: ..   .       Wards/Parishes affected: ..   ..