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Efficiency Plan 2016-20

 
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Efficiency plan

 

In the 2016-17 provisional local government finance settlement (SR2015) the government offered local councils the opportunity to take up a four year funding settlement that would cover the period 2016-17 to 2019-20.

For Tower Hamlets, the four year settlement only relates to the Revenue Support Grant (RSG) which is a decreasing element of the council’s total funding that has driven the councils Savings and Transformation strategy since 2010.

Councils are required to develop an Efficiency Plan in order to qualify for the four year funding settlement and presented below are the key components of the Tower Hamlets Efficiency Plan.

The Efficiency Plan is an integral part of the council’s Medium Term Financial Strategy (MTFS) and thus will be updated and monitored as part of the council’s MTFS.

Track record of delivering efficiencies

The council has a proven track record of identifying savings and delivering efficiencies. Since 2010-11 the council has delivered over £138m savings broadly by adopting the following efficiency principles:

  • A leaner workforce: with a particular focus on rationalising senior management; stripping out duplication and bureaucracy; and creating a flatter, more generic operational structure designed both to enable the progression of talented employees and to be more acutely focused on serving the needs of our residents.
  • Smarter Working: with a particular focus on reducing the number of administrative buildings; more localised patterns of working; better use of new technology to enable council officers to do their jobs more effectively and at less cost and; opening up opportunities for residents to access our services in ways that reflect the realities of their lives be that in their homes, on-line, over the phone or in our offices and one stop shops.
  • Better utilisation of our assets: with a particular focus on underutilised buildings being put to better use and, where not possible, disposed of to support the council’s capital programme and a root and branch review of our treasury management and capital planning arrangements.
  • Income Optimisation: with a particular focus on ensuring that charges are set fairly and in a manner that protects our most vulnerable residents; ensuring money owed to us is collected in a timely and efficient manner; and on a review of our commercial charges.
  • Better Buying: with a particular focus on supporting local businesses to access the council’s supply chain, ensuring a continuing role for the third sector in the delivery of services and ensuring that private sector contractors give value for money and deliver efficiency savings where appropriate, whilst working within the values and ethos of the council.

The Efficiency Plan for 2016-17 onwards

The Efficiency Plan for 2016-17 onwards aims to build on these principles and also develop new more strategic approaches, such as the Outcome Based Budgeting (OBB) methodology, to help deliver the longer term transformational changes required going forward.

Details of the efficiency projects that will deliver £17.423m worth of savings in 2016-17 can be found in Appendix 4.

In addition to this, the council’s MTFS over the 4 year settlement period has identified that further savings of around £58m would be required between 2017-18 to 2019-20. The council has adopted an Outcome Based Budgeting (OBB) approach to developing savings proposals that will help meet this efficiency challenge.

Outcome Based Budgeting (OBB)

Outcome Based Budgeting (OBB) aims to directly link how resources are allocated through budget making to the strategic priorities of the council. OBB seeks to break down traditional departmental approaches in terms of the assumptions around how budgets should be set and the basis for making savings. The council’s new Medium Term Financial Strategy (MTFS) 2017-20 seeks to reflect OBB principles, delivering the council’s priority outcomes as set out in the Strategic Plan, while making savings through planned budget reductions rather than cutting costs on a service by service basis.

Proposals will be identified covering the whole of the MTFS planning period and bridging the total identified funding gap.

This approach allows for a programme of savings to be planned and undertaken over a longer timeframe which should result in proposals that will allow for the development of more detailed future operating models alongside partners and stakeholders. It also allows for the support necessary to deliver the changes successfully to be better matched and planned for; this would include for example programme management arrangements and support and training for staff that may need to operate in new ways in the future.

Strategic approach

Cabinet have received a report in September 2016 and October 2016 that detail principles and progress in developing savings proposals. As part of its Strategic Plan the council has identified its three strategic priorities as:

  • creating opportunity by supporting aspiration and tackling poverty
  • creating and maintaining a vibrant, successful place
  • a transformed council, making best use of resources and with an outward looking culture.

Within each of the strategic priorities a number of focussed outcome areas are set out which have formed the basis for evaluating the council’s performance and outcome achievements. The Cabinet and the Corporate Management Team have worked alongside each other to consider cost, performance and outcome data where available, to identify a number of opportunities for further investigation.

Benchmarking and other comparative data has been used to compare the council’s efficiency and performance with other similar authorities across the whole of the council’s budget and this has been used to focus an examination of expenditure across the council based on the following key approaches:

  • a focus on the outcome priorities, regardless of how the council is structured, such that complementary services are considered in the round where they deliver against the same priority outcome
  • individual directorates are not given nominal saving targets to achieve with the intention of avoiding a disjointed approach to saving proposals and again seeking to reinforce the synergies that can exist between services delivering against the same priority outcome areas
  • where the linkages against the council’s priority outcomes are not clearly evidenced there must be a strong indication that it fulfils a statutory function or another compelling case in order to justify its continued delivery
  • service provision for statutory functions should be considered equally against cost, efficiency and performance data to ensure that value for money is being achieved in the provision of all council services
  • where efficiency indicators suggest that other Local Authorities are delivering similar or better service outcomes for less, Directors have been challenged to initially identify and achieve cost reductions to align with the average cost of comparator authorities
  • approaches which align service delivery to ‘best in class’ performance should also be considered as a part of a longer term aspiration of the council
  • acknowledge that in times of constrained or reducing resources a move towards centralised service provision is an accepted strategic approach unless there is evidence to the contrary
  • long term service transformation across the whole of the medium term financial planning period provides the opportunity to identify best practice and develop services that will reflect the fact that by the end of the planning period the council will be spending significantly less on its services that it does now
  • the council’s reserves will be reviewed and prioritised so that they can be used to effect service transformation and mitigate the risks associated with widespread service change and funding reductions
  • front line services are prioritised against support services.

Strategic support & project management arrangements

The scale of change means that savings proposals will need to be innovative and transformational in nature. In order to support the council in the identification, review and implementation of a substantial number of proposals, Cabinet agreed to the procurement of a strategic partner. The partner will provide the high level strategic support necessary to assist the council to deliver these transformational projects successfully.

More specifically the partner will;

  • assist in devising a longer term savings strategy for the council over three years
  • embed outcome based budgeting methodology to support the process
  • support elected members and key stakeholders to participate in the process
  • help implement cross cutting and transformational change
  • bring innovative solutions that will help deliver council services at lower cost

The strategic partner will work alongside the council’s own Corporate Project Management Office (CPMO), which will comprise internal staff with more specific organisation knowledge and experience. The CPMO will be the longer term resource that will progress and deliver the longer term efficiency plan and retain specialist knowledge developed through the strategic partner.

Savings plan 2017-20

The efficiency proposals being developed will be organised around the following themes. The CPMO resources and work streams will also be organised along these themes. 

  • Customer – resident insight, access channels, service front door redesign, behavioural change, localities, partner offer.
  • Business Support – HR, Finance, IT, Executive Support, all support services, service redesign, service standards.
  • Smart Working – agile working, ways of working, corporate accommodation, technology, business processes, change.
  • Demand Management - types, drivers and reasons for demand, techniques for managing reduced demand, systems approaches including collaboration, impact on future operating models, implementation actions such as trials.
  • Services – co-ordination of service change programmes through the MTFS
  • Workforce Strategy – One HR programme, Enabled Manager programme, Employment Deal
  • IT - digital and mobile working, information management, ICT that ‘just works’, partnership working
  • Council Restructure – organisation design principles, management spans & layers, role definitions

Budget & funding information

Performance & outcomes data

Efficiency plan