Councillor Michael White, the Leader of the Council, introduced the report.

The report before Cabinet concerned the creation of a Joint Committee with the London Borough of Newham to create a shared back office function.

It was reported that both Newham and Havering Councils had faced considerable financial pressures in recent years, with Havering having to make £40million on savings by 2014. Recognising that reductions in local government funding would continue but, however with little room as individual authorities to make further reductions in support service costs, the two Councils agreed, in October 2012, to work together to fully share back office services. The aim was to drive down costs and make savings which would allow protection for frontline services for residents.

It was noted that both Councils had worked quickly to develop the shared service in order to maximise the savings it could achieve. Go Live was aimed for December 2013, with full redesign and transformation of services completed by 2018/19. The two Councils were also ambitious to market the shared service to other councils, public and third sector organisations, creating a preferred model for support services and generating additional income for both councils.

The report outlined the main benefits of the shared service as: 

·                    Improving the customer experience

·                    Increasing operational efficiency

·                    Reducing the costs of support services by sharing staff & assets

·                    Resilience and flexibility through standard systems and a pool of resources

·                    Building on best practice service delivery in either Council

·                    Pooling scarce specialist resources and creating additional capacity

·                    Savings through common procurement strategies and sharing expertise

·                    Reducing the cost of transformation for each Council by doing things only once

The proposed shared service would include 21 separate services across the two Councils with a combined cost of shared in scope services of £57m and employing 1,100 people. The back office services include:

Members were informed that the shared service would be delivered through a Joint Committee model, with three members of the Executive from each Council making up the Joint Committee. The Joint Committee had been chosen over other models, such as simply outsourcing all the services, as it enabled retention of all the savings, provided a more flexible approach to developing the shared service and would allow marketing of the service to take place to additional users. The Joint Committee would go live some time during December once both Councils had given approval.

Under the proposed model for the shared service all of its staff would continue to be employed by one of the two Councils; the shared service itself would not employ anyone. This would negate the need for a TUPE transfer of staff and the impact on the two Councils’ pension funds would be negligible. Staff would remain on their existing terms and conditions.

The shared service was anticipated to save the two boroughs £10.6m per annum by 2018/19 with Havering’s share being £3.9m.

Reasons for the Decision

To enable the Council to continue to deliver financial savings a shared back office service with the London Borough of Newham has been proposed.

Alternative Options Considered

It was considered that minimal further savings in the back office functions could be made without considering alternative arrangements. The business case considered alternative delivery vehicles to that of a Joint Committee but it was considered that the alternatives did not deliver the same level of savings in the required timescale.

The setting up of a joint committee at this stage did not preclude the two Councils from deciding on another course of action in the future.

It was stressed that the shared back office proposal would not jeopardise the delivery of frontline services. There was however concern raised at the disparity in pay levels between staff in the two Councils.

Cabinet:

1.      Agreed to create a shared service for back office functions with the London Borough of Newham.

2.    Agreed to the setting up of a Joint Committee with the London Borough of Newham as the chosen vehicle to deliver the shared service and to recommend to the Governance Committee that it approves the necessary changes to the Council’s constitution to create such a body with an effective date of 1 December 2013.

At its meeting on 13 November, the Governance Committee approved the necessary changes to the Constitution.

3.    Agreed that power to determine the management structure of the shared service be delegated to the proposed Joint Committee as from 1 December 2013 and recommends to the Governance Committee that it approves the necessary changes to the Council’s Constitution to achieve such a delegation.

At its meeting on 13 November, the Governance Committee approved the necessary changes to the Constitution.

4.    Noted that further detailed alterations to the council delegations would be required once the senior management structure for the shared service was known and that a further report will go to the Governance Committee in early 2014.

5.    Approved the basis of the funding formula as identified in paragraph 7.1 and 7.2 of the report with the recalculation of the funding agreement percentages which are to be finalised later in the financial year once final budgets are known for each council.

6.    Approved the delegation to the Group Director (Resources) in consultation with the Lead Member for Value the arrangement for the signing of the Joint Committee Agreement.