WLGA Peer Review

WLGA Peer Review

BlaenauGwentCounty Borough Council

17-19 July 2013

25th September 2013

Executive Summary

Blaenau Gwent County Borough Council, along with all Welsh councils, faces a difficult and challenging period in the face of the UK Government’s austerity programme and wider service pressures. For Blaenau Gwent, one of the smallest councils in Wales, these challenges are multiplied by limitations of scale and, long standing corporate capacity, cultural and performance issues and the UK Government’s Welfare Reform programme disproportionately impacting on one of the most deprived areas of Wales.

Blaenau Gwent County Borough Council requested a WLGA Peer Review to provide an independent assessment of the council’s preparedness for these challenges and to consider the:

culture of a member-led professionally managed organisation;
existing organisational structure and culture and its fitness for purpose;
existing management systems and processes for reporting to Executive;
strategic approach to improvement planning, risk management and financial planning;
systems to support Value for Money;
viability and sustainability over the short and medium term.

The WLGA would like to thank Blaenau Gwent members and officers for their welcome, honesty and openness during the peer review process and for the support and responsiveness of all staff andmembers in providing information and accommodating last minute changes to interview scheduling.

Since late May 2013, Welsh Government rhetoric about the scale of the financial challenges has altered significantly, warning of ‘English-style cuts’ in the Welsh context as well as suggesting that Welsh Government indicative figures for 2014-15 ‘can no longer be considered as a basis on which to plan’.

The Peer Team was also conscious of the need to avoid duplication and add value to ongoing improvement assessment work coordinated by the Wales Audit Office and wider financial analysis being undertaken concurrently by PwC.

Given the concurrent assessment work and the changing circumstances around the mounting financial pressures, the Peer Team’s emphasis inevitably focused on the Council’s financial preparedness for the coming period.

The Peer Team was onsite for 3 days during mid-July and met with 65 people from the Council and partner bodies. The Peer Team’s conclusions are based on pre-consideration of Council and other relevant documents and interviews and workshops held during the week. The Team also tested emerging conclusions with key individuals during the review.

The Peer Team saw some examples of good practice and good performance,but there were also a number of ongoing improvement challenges which have been previously identified in wider regulatory and inspectorate reports.

The Peer Team concluded therefore that the immediate priorities facing the council are:

To identify, risk assess, deliver and secure up to £10 million budget savings for the financial year 2014-15; and
To improve educational outcomes as quickly as possible

For the moment, all other priorities are secondary, all be it they will enable the key priorities to be achieved.

These 2 key priorities need to be addressed in order for the Council to survive into the next financial year and, in turn, provide some foundations to place the council on a more sustainable footing into the future.

The scale of the financial challenge is unprecedented. Council reports have alreadyforewarned and highlighted the severity of the situation. The recent financial position for 2014/15 report to members (June 2013) stated that current levels of overspending were ‘unsustainable’ and that unprecedented savings of £4.1m had to be identified for 2014-15. The Report forewarned that if action was not taken ‘the forecast position at the end of 2014-15 for… reserves will be 0’[1].

The Peer Team regarded this as a very real risk, which had been exacerbated by Welsh Government announcements in the months preceding the Review which suggested the 2014-15 savings needed to be revised significantly to between £8m-£10m. It should serve as a particularly salutary warning to all councils that the US City of Detroit filed for bankruptcy on the day the Peer Team provided initial feedback to the Council.[2]

The Peer Team observed that the council had already identified a number of potential savings and had proposals to transform services during 2013-14. However, despite the stark scenario and the Director of Finance’s advice that the decision-making process had to be brought forward to April-July[3], the Peer Team was concerned that there was an apparent lack of urgency and some significant delay around managing overspends and implementing identified savings. Given the more recent severe financial prognosis, the Peer Team was concerned that the Medium Term Financial Plan and broader financial prognosis for 2014-15 had not been updated nor was there a clear action plan or timeline to make savings.

In reporting back, the Peer Team reminded the Council that the pace of progress had been a consistent concern of the Wales Audit Office in recent years. The Wales Audit Office was conducting its assessment work to inform September’s Improvement Letter between June and August. The Peer Team advised the Council that, unless adequate progress had been demonstrated, the Auditor General could build on his previous ‘Proposals for Improvement’ which have been superseded by statutory ‘Recommendations for Improvement’ and exercise his powers either to conduct a Special Inspection or further to recommend that Welsh Ministers provide some form of direction to (and further intervention in) the authority.

The scale of Blaenau Gwent’s financial challenge is significant but not insurmountable. There was evidence that the Council was beginning to make some difficult decisions and had identified some savings; and leaders expressed a confidence that progress could be accelerated and savings and reforms could be delivered.

The Peer Team therefore concluded that the Council needed to demonstrate stronger leadership and decisiveness, and to take immediate action, particularly around implementation of current plans.

Recommendations for Immediate Action:

Focus clearly on a limited number of key priorities for 2013-14: namely savings and education
Immediately produce an action plan and timeline for achieving savings
Take urgent action now regarding financial decision-making e.g. implement already identified savings
Update MTFP with latest assumptions, with clearer links to workforce development plan, asset management plan and corporate improvement plan
Ensure ongoing and regular review of savings progress e.g. establish ‘Savings’ Sub-Committee of Executive – this could have independent external/WLGA challenge
Ensure that Human Resourcescapacity is ready for the potential challenge of changes ahead
Move from interim to permanent corporate staffing arrangements as soon as possible
The Local Service Board(LSB) should focus on sharing and, where possible, developing joint plans for savings and/or service reconfiguration

Other Recommendations:

Ensure the ‘Coalition for Change’ has clear accountability and governance arrangements
Plan for the implications of PwC proposals – speak to councils where this has been implemented e.g. Coventry
Implement the annual review element of the Performance Coaching process for the Chief Executive and all Corporate Management Team: providing clarity on key objectives, targets and personal development/support needs
Identify, develop and support internal talent as part of succession planning and also look to recruit externally where necessary
Review the format of Executive meetings and reassert the member lead role in council meetings
Implement the recommendations of the (ongoing) internal evaluation of scrutiny
The business sector should be approached to be a sector representative partner on the Local Service Board
Develop a clear communication and engagement strategy for council (councillors and staff), partners and public, focusing on:

What are the key priorities and why
What we are doing about them
When we are going to do them
What do we need you to do to help

Implement the recommendations of the Task and Finish Group Review of Communications and coordinate communications and engagement resources effectively.

Update

This report reflects the views of the Peer Review Team on Blaenau Gwent County Borough Council based on the evidence gathered by 19th July 2013. The above key headlines were presented to the Executive and Corporate Management Team on 19th July and this report has been produced within 5 weeks as agreed with the authority.

The Council has responded proactively and promptlyto the Peer Review. The Council has provided the Peer Team’s presentation publicly and in full to a full Council Meeting on 2nd August, within a fortnight of the Review concluding.The Council’s speed of response and openness about the peer review conclusions should therefore be commended.

The Council meeting also agreed an initial programme of savings, considered a report on management restructuring and endorsed the ‘Coalition for Change’[4]

Whilst the Council should be commended for its proactive and prompt response to the Peer Review, the impact of these decisions and the ongoing momentum remains to be seen and the Peer Team has not been in a position to assess the activity since the review. It is important that the Council leadership regularly and robustly monitors ongoing progress, particularly around the savings programme.

Given the Wales Audit Office’s previous concerns about pace and progress, the Council leadership needs to ensure that momentum is maintained, that activity remains focused and, critically, that clear and tangible outcomes are achieved.

Background and Context

Financial Pressures

The Medium Term Financial Plan (as of July 2013) outlined that the Council was planning to reduce expenditure by approximately £4.1 million for 2014-15. However, the Council reported in June that the level of overspending of £3.5m ‘was unsustainable beyond 2013-14’[5]. Given the combination of the recurring overspend and the challenges of making significant savings in 2014-15, the Council noted that ‘the crucial time period for identifying and agreeing savings of at least £4.1m will be between April 2013 and July 2013’[6].

Since the elections in May 2012, the new administration at Blaenau Gwent has begun to take action, including new models of service delivery, including the transfer of the Market Hall Cinema Brynmawr to community ownership. The council has also commissioned external analysis from Peopletoo to look at alternative service delivery models jointly with Merthyr Tydfil and has commissioned PwC to undertake an authority-wide ‘operating model assessment’, with particular focus on social services overspending, to ‘identify opportunities for savings and improvements, before building a ‘high’ level case for change’.

Along with other councils in Wales, Blaenau Gwent County Borough Council is a major employer in the community, employing 1,955 staff (FTE) according to the latest 2011-12 figures. However, the reliance on the council as an employer is greater than the Welsh average with 43.9 employees per 1,000 population compared to the Welsh average of 38.2. Sickness absence rates in the council are below the Welsh average, at 9.9 days lost per year compared to 10.4 in 2011-12; however staff turnover rate is higher at 12% compared to the Welsh average of 10.7%.

The financial prognosis for Welsh local government has worsened significantly following a Ministerial letter on 23rd May 2013. The Welsh Government is now forewarning of ‘English-style’ cuts to local government funding and suggesting that the Welsh Government’s indicative local government budgetary figures for 2014/15 ‘…can no longer be considered as a basis on which to plan…Authorities need to engage immediately in decisive and radical short-term financial and service planning so as to align public services quickly to the lower levels of resources available in the future.’

Based on WLGA analysis, the impact of such adjustments to the overall local government settlement could see the Council’s savings target for 2014-15 doubling to between £8m-£10m.

Performance Challenges

Blaenau Gwent’s education service has been in special measures and run by a Commissioner for well over 18 months but recovery had initially been slow. The council has also been the subject of a series of critical Wales Audit Office reports which, whilst identifying some progress, have commented on the corporate capacity, culture, performance and leadership of the organisation. Social services performance however is well regarded by the CSSIW.

Blaenau Gwent’s overall performance appears to demonstrate some improvement, with 61% of key national performance indicators (National Strategic Indicators and Public Accountability Measures) showing improvement, and 29% declining. Comparatively, 12 of Blaenau Gwent’s performance indicators were in the Welsh top quartile, 15 in the middle quartiles and 14 in the lower quartile.

More detailed analysis of the performance indicators however demonstrates performance in line with the inspectorates’ assessment of services, with many of the key social service indicators showing either improvement or top quartile performance (or both), whilst key educationindicators show lower quartile performance.

A number of on-going personnel issues have now been progressed and additional capacity has been added to the corporate centre, albeit on an interim basis. The ambitious plan to merge with Caerphilly social services has been abandoned because of concerns around the financial underpinnings of the project.

The Wales Audit Office’s recent Annual Improvement Report therefore concluded that while

“The Council is slowly taking action to address its long-standing cultural, performance and leadership weaknesses. However, the pace and scale of change required over the next six months is considerable and it is uncertain whether the Council will achieve a sustainable and consistent improvement in services for citizens in Blaenau Gwent”.

Community and Economic Pressures

Blaenau Gwent is one of the most deprived areas of Wales, with 47 Lower Super-Output Areas (LSOAs) in the county borough. Of these:

23% (10 LSOAs) are in the 10% most deprived in Wales – only Merthyr Tydfil has a greater percentage with 25%
87% (41 LSOAs) are in the 50% most deprived in Wales – the highest percentage in Wales (Merthyr Tydfil is second with 78%)

The Welfare Reform agenda is impacting significantly on the communities of Blaenau Gwent, with an estimated average annual loss per working age adult of around £700, well above the Welsh average of £550 and the GB average is £470.[7]

Blaenau Gwent's economy has faced massive cyclical and structural challenges, yet there are green shoots in place which could effect a turning point. The Council has an ambitious programme, which it intends to deliver for the people of the borough.

The duelling of the A465 Heads of the Valley road between Tredegar and Brynmawr has commenced. The huge programme of public investment around the Works site in Ebbw Vale is seeing industrial land being reclaimed and the development of a massive set of capital projects which include a new hospital, school and college provision. Equally exciting is the prospect of private sector investment plans for a £250 million racing complex in Blaenau Gwent. This scheme has the potential to make a major contribution to revitalising the area, with events attracting around 70,000 people, boosting the local economy by £2.5 million per event.

Peer Review Process

The Council leadership, both political and managerial, in recognition of the significant pressures facing the authority commissioned the WLGA to provide a Peer Review of the organisation in order to support them in positioning themselves to meet those challenges corporately.

Peer reviews are a key part of the self-improvement agenda in Welsh local government, where the local government family itself provides collective challenge and mutual support to drive improvement.

Peer reviews are voluntary – local authorities ask the WLGA to provide a peer review. The council is in control of whether to have a review, when to have a review, what the focus of the review should be and who should be involved in the review.
Peer reviews are not inspections - it is instead a tool for improvement. Peer reviews are provided by ‘critical friends’ who understand the challenges and pressures of running a local authority.

Whilst the WLGA encourages councils to publish and share the conclusions and their response to Peer Reviews, the evidence gathering part of the peer review process is confidential and any comments from individual members or officers through interviews or workshops whilst informing some of the conclusions will be treated with sensitivity and remain anonymous.