Agenda item

(Discussion around how well the Council's governance and assurance arrangements are working in these times of uncertainty and change.  The impact on the assurance arrangements following organisational change, fundamental budget reviews and the potential impact on management and corporate assurance functions)

The Chief Executive and all Executive Directors were invited to attend a Panel discussion around how well the Council's governance and assurance arrangements were working in the times of uncertainty and change, as well as the impact on the assurance arrangements following organisational change, fundamental budget reviews and the potential impact on management and corporate assurance functions.

The Chief Executive was invited to open the discussion and provided an introduction, he reported that it was only in recent years that the authority had had to start making reductions to its budget, but it was believed that this was starting from a good place.  However, in some cases change was managed so well that people's perceptions were that nothing had changed.

The headlines of the changes were straight forward – the funding of the authority had reduced by a quarter, and the number of staff had also reduced by a quarter from four years ago.  The authority would have considerably less funding available over the coming four years.  During this period, paradoxically, productivity had increased and this could be for a number of reasons - the authority was finding more efficient and effective ways of doing things, and people being concerned about job security.  The increased efficiency masked the fact that workloads had increased, as there were more children in care, and the number of adults requiring care had also increased for example.  This was something that could be misunderstood and was a risk as there were fewer people doing the same amount of work. 

On a positive note, it was reported that Lincolnshire was well ahead in responding to these changes when benchmarking against other authorities.

It was commented that one of the main issues was the County Council becoming a commissioning authority and that there were underlying concerns regarding whether the county council would have sufficient control over the organisations that would be delivering the services on behalf of the authority. 

Members were reminded that becoming a commissioning council did not mean that all services would be outsourced, but that in house services would be treated in the same way as contracts.  Each service would be examined and it would be determined what outcomes and objectives were required, and what level of budget was available to achieve them.  This would determine the most appropriate delivery model.

Discussion took place over the degree of control that should be exercised over services which the authority no longer needed to deliver.  Officer acknowledged that different management skills were needed, such as a commercial attitude.

The Committee welcomed Sean Hanson, the Managing Director of Serco, who was in attendance to respond to any concerns the Committee held in relation to the contract between the County Council and Serco.

The relationship with Serco would be very important in the coming years.

It was noted that the Value for Money Scrutiny Committee had looked at the Serco contract in great detail prior to it being signed, and assurance would be needed that the contract would deliver what the authority required. 

The Managing Director of Serco responded to comments from the Committee and acknowledged that he understood why there would be questions following the recent article in the national press about Serco.  Members were advised that the organisation had seen enormous change in the past three years with a new Chief Executive and Chief Financial Officer, and when new individuals came into an organisation, there was a need to look at the health of that organisation.  As a result, there were certain aspects of the business which Serco no longer wanted to be involved in, and there were other areas, such as local authority partnerships which it wanted to focus on more fully. 

Members were informed that in comparison to other authorities that Serco had talked to about commissioning, Lincolnshire's level of thinking was mature, which came through in the clauses and the flexibility which had been included in the contract.  There was clear transparency about what was to be delivered and also flexibility in the operating model to change it if necessary.

Members commented that they were reassured by the fact that the Senior Management Team had attended the meeting in order to answer any questions they had, as the authority was going to go through some big changes in the coming years.  During this time communication would be very important, and the Committee requested that they be kept up to date during these changes.

It would be important that officers quickly pick up on any issues which were highlighted by the press so that they could be included in any briefing to the Council.  It was acknowledged that sometimes information may not be shared or communicated widely due to commercial sensitivity, but once public the authority should not be dependent on the media for telling the rest of the story.

Governance would be an important part of this partnership, and officers were keen to ensure that all formal processes were being carried out correctly, but the informal aspects were just as important.  Councillors needed to be as well informed as officers and there was a need to test whether the relationship between members and officers was as good as it could be.

In terms of the contract with Serco, it was noted that the County Council had a job to do in being a good client, if the authority was a good client it was more likely to get a better deal.  Being considered as a good client means being seen as paying on time, best price with fair profit, and having clear contracts as well as having good relationships with partners.  It was commented that due diligence was now a two way process.

In response to a query from the Committee, it was reported that Serco was very happy with the contract that was in place between themselves and Lincolnshire County Council.  Both organisations were comfortable and clear about what was needed and what was to be delivered by Serco.

It was also confirmed that Serco would carry out due diligence into issues such as whether they were likely to get paid, would they encounter any disputes etc. when entering into a contract.  It was found that LCC had a very mature relationship with its contractors, and it had been a very considered decision by LCC to award the contract to Serco.

The Executive Director for Children's Services provided an update to the Committee regarding assurance arrangements which were in place in Children's Services.  Members were advised that the work of Children's Services would be based on four broad commissioning strategies and officers would be working on developing outcomes.  The four strategies would be:

·         Ready to learn when starting school;

·         All Children and Young People learn and achieve;

·         All children are safe and healthy;

·         Young people are prepared for adult life;

Over the next two years, officers would be going through the commissioning process to make a conscious decision on whether the authority is best placed to continue to deliver these services, or if they would be better provided by an external company.  A new post had been established, the Commissioner for Learning, as the authority's relationship with schools was significantly changing, but there was still a statutory duty to ensure that all children received an education.

As there had been a structural change in the Director of Children's Services duties, an independent person had been commissioned to carry out a review of the governance arrangements in place in Children's Services and the Safeguarding Children Board.  The report had been completed and would go before the Children and Young People Scrutiny Committee in due course.  It was noted that there were external assurance arrangements in place as well as internal ones, for example, an Ofsted inspection had been recently completed, and the authority participated in peer review activity.  In relation to internal assurance arrangements, the directorate made use of Internal Audit services.  A lot of the work currently being done was in partnership with CCG's, and it was important to ensure that governance arrangements were robust and so it had been requested that this be added to the list of areas for internal audit to look at further.

It was hoped that an Education Board would be established, and this proposal would again be taken to the relevant Scrutiny Committee for consideration in the future.

Members were advised that the Ofsted report would go into the public domain on 6 January 2015.  The Executive Director had been made aware of preliminary points following the inspection, but the draft report would be received on 9 December 2014.  The authority would then have five days to respond on points of accuracy before the final document was prepared.  This report would also be considered by the Children and Young People Scrutiny Committee.

It was queried how this Committee could be assured that the right mechanisms were in place to ensure that officers picked up problems such as those which had been experienced in Rotherham.  Members were advised that the Authority had a strategy and action plan for addressing child sexual exploitation and had commissioned a review concerning historical issues.  It was also noted that the report by a Parliamentary Select Committee into the situation in Rotherham had been recently released.  It had highlighted that the problems had arisen not just through children's services, but also due to arrangements between officers and members in terms of good governance.  Officers would be looking at the recommendations from this report in order to benchmark the authority and the Committee were assured that Democratic Services had also considered the report.

The Director of Adult Care provided the Committee with an update of activities that had taken place within Adult Care in response to the changes. It was reported that previously adult care would have been the largest directorate in the authority, and now it was 1/3 of the size in manpower terms.  This meant that the directorate had been able to deliver a balanced budget for the past three years. 

However, some serious decisions had to be made regarding which services to provide and how to do that, consequently the authority was dependent on small and medium enterprises (SME's) for providing the necessary services.  This changed the approach to control as services for adult care were almost entirely commissioned.  The authority controlled the gateway to meeting the needs of service users.  It was found that this was proving to be more efficient and staff were assessing people appropriately against a national template.   A Quality Control Unit had been set up who worked closely with Procurement Lincolnshire to help gain assurance on services being delivered.

Members were advised that from 1 April 2015 the safeguarding of adults would become a statutory duty for the first time.  It was also noted that the National Audit Office was testing for the preparedness for the introduction of the Care Act in 2015.

In relation to Public Health, it was reported that the Public Health team was not only managing the transformation within the Council towards becoming a commissioning council, but also was also still managing the move of public health services to the county council.  A review was undertaken when public health services moved to the county council, and one of the issues which became apparent was the ramifications of the reorganisation of the NHS into clinical commissioning groups.  There would be a need to be very careful when commissioning services to ensure that the authority did not end up with a service which was fragmented.

The Executive Director Finance and Public Protection informed members that managers would continue to risk assess all of the Council's activities and areas needed to have more of an appetite for risk.  The budget for the next two years would be heavily supported by reserves in order to manage the changes. 

It was noted that following the review of the Mouchel contract it was decided to bring some services back in-house including financial management and accountancy.  It was hoped that this would provide the authority with more resilience.

It was also noted that it was not just local government that was coping with budget reductions, but also partner organisations, which could limit what could be done around some activities.

The Chairman thanked the Chief Executive, Executive Directors and Sean Hanson from Serco for attending the meeting and answering the questions of the Committee.