Subject: Review of Potential Savings Arising from Warwickshire County Council Public Interest

THE CABINET 16 JUNE 2014

Subject: Review of Potential Savings arising from Warwickshire County Council Public Interest Debate – Unitary Local Government for Warwickshire Lead Officer: David Buckland Contact on 01789 260425 Lead Member/ Portfolio Holder: Councillor C Saint

Summary The purpose of this report is to consider the Notice of Motion in the names of Councillors Cheney and Moorse in respect of Shared Services, as presented to the Council meeting on 24 February 2014. Recommendation That an option is selected from Section 2 of this report.

Background/Information 1.1 At the meeting of The Cabinet on 10 March 2014, consideration was given to the following Notice of Motion in the names of Councillors Cheney and Moorse that the Council, at its meeting on 24 February 2014 had referred to The Cabinet: ‘Council notes that the Medium Term Financial Plan shows that on current projections this Council will face a serious and increasing financial shortfall from 2016/17 onwards and that significant further cuts in services may be necessary. Council also notes that in a number of areas where the Unitary model has been adopted there have been major cost savings. Council therefore requests The Cabinet to approach the County Council, to jointly identify the level of cost savings that could be made were Warwickshire to move to a Unitary system.’ 1.2 In considering the options on how to consider the Notice of Motion, The Cabinet concluded that it would be beneficial to receive a detailed report from the officers before the Motion could be debated. With regard to the preparation of the report, the Chief Executive informed the meeting that the Council had insufficient resources at its disposal for such a detailed paper to be prepared for the next meeting. However, such a paper could be available for the June meeting of The Cabinet. 1.3 It was agreed that consideration of the Notice of Motion, in the names of Councillors Cheney and Moorse be deferred pending a report from Officers to the earliest suitable meeting.

1.4 Warwickshire County Council (WCC) – Unitary Local Government for Warwickshire 1.4.1 At a Special Meeting of Council at WCC a report was presented which introduced the concept of proposing exploring the opportunities of unitary government within the County. The report provided background to the financial pressures which the County Council is having to face including the requirement to deliver savings of £92m over the next four years. 1.4.2 The report drew upon experiences from other local authority areas where Unitary Government has already been implemented including Wiltshire, Shropshire and Cornwall. 1.4.3 The paper included reference to two potential methods of implementing Unitary Government; either one authority covering the whole of the county area, or based upon two authorities for the same area. 1.4.4 It was stated within the report that annual savings for a single unitary could be generated of up to £17m pa, with a two council model potentially saving £12m pa. It was suggested that these savings could in the main be used to protect services. In addition it was suggested that the arrangements could result in a reduction in Council tax of £30 per year for an average Band D properties (based upon single Council Model). Following debate at the County Council the following motion was AGREED

“ This Council believes that in facing the considerable financial challenges of the last and current Comprehensive Spending Review, Local Government has responded with innovation by transforming services and controlling financial expenditure responsibly. The Council believes that any further reduction in Government Grant to local authorities will have so great an impact on the ability to deliver safe and quality services that consideration should be given to a re-evaluation of the structure of Local Government and a move from a two tier system of principal councils to Unitary Local Government. Consequently, the Council believes that it is in the public interest to explore the opportunities of Unitary Local Government. It will engage with members of the public, other public sector bodies, businesses, the voluntary sector and Central Government to develop ideas around this way of working. It will provide evidence - based analysis so that the people of Warwickshire can form their own views about unitary solutions” 1.4.5 Following the notice of motion discussions have taken place between the Assistant Chief Executive and the County Council on better understanding the assumptions which were made in relation to the savings which could be achieved from such a proposal, and specifically the impact for Stratford-on-Avon District Council. This report provides some further detail in order to inform Councillors of these assumptions. 1.5 Review of Financial Benefits. 1.5.1 As stated above the assumed level of savings to be generated from such a proposal are quoted at £17m for a single authority (Option 1) reduced to £12m for a two authority model (Option 2). The table below identifies how it is envisaged these savings would be achieved:

Type of Saving Option 1 Option 2 £m £m Senior Officer Savings 3.8 1.5 Democracy Savings 1.6 1.5 Integrated Functions 10.6 8.2 Accommodation 0.3 0.2 Support Services 0.6 0.3 Total Savings 16.9 11.7

Senior Officer Savings 1.5.2 In relation to Senior Officer savings it was assumed that the existing top tier management structures in place within the existing District Councils could be removed, and that all of the existing functions could report into the existing management structures in place at County level. It is important to note that any proposed new unitary council would be a new entity; however there would need to be a competitive process in establishing any new management structure. Democracy Savings 1.5.3 It is recognised that the total number of Councillors required in order to serve the options would represent a significant reduction in the current number of elected members. Across the entire County area there are currently 272 Councillor positions. It is recognised that of the 214 District/Borough Councillors, 32 of these are also County Councillors. 1.5.4 Under the proposals it is assumed that a single council model would be made up of 80 Councillors, and if a two council model was implemented the assumption would be that 100 Councillors would be required. Integrated Functions 1.5.5 The report suggests that assumptions have had to be made, informed upon experience in other local authority areas as to the level of savings which could reasonably be achieved through the integration of functions. It is also acknowledged that further work is required in order to engage with the public sector including a dialogue with District and Borough Councils to further improve upon assumptions in this area. However, the current working assumption is that a target of savings of around 20% can be achieved by merging and rationalising common services across the County area. If Option 2 was progressed the level of target savings is reduced to 16%. 1.5.6 There needs to be an element of caution in relation to this broad assumption. A number of authorities have existing contractual arrangements in place for areas such as waste, cleansing and leisure. It would therefore be very difficult to realise these savings in a short time frame. 1.5.7 At this point no further savings have been assumed by merging functions such as waste or planning where there are distinct responsibilities at district and county level. It is suggested therefore that further gains could reasonably be assumed in this area. Accommodation 1.5.8 This area presumes modest savings of £300k pa for Option 1. It is recognised that this is a prudent level of assumed gain; however, again would require detailed investigations with the district/boroughs in order to refine further. Support Services 1.5.9 Similar to accommodation, only broad brush assumptions have been made in this area. It has been assumed that the current cost across the local authorities could be reduced by £600k for Option 1 reducing to £300k for Option 2. Again further input from the Districts/Boroughs would further refine this position. 1.6 Implementation Costs 1.6.1 The estimated cost of implementing Option 1 is in the region of £34.6m, and Option 2 £26.9m; both providing payback of the order of around two years. Such implementation costs include significant provision for redundancy and pension strain costs (c£16m); however also include ICT integration (£2.8m) and the cost of maintaining a shadow authority (£3.8m). It is assumed that the cost of such implementation could be met by the revenue balances (District or County), invest to save or potentially through borrowing. 1.6.2 It is again accepted that further work would be required in order to further refine these costs. However, it is worth noting that no estimate has currently been provided for any Equal Pay issues. The new entity would need to implement Pay Harmonisation along with other terms and conditions across either option. This in itself would be a complex and potentially costly exercise; an allowance for this has been made within the implementation costs. 1.7 Council Tax 1.7.1 The report suggests that the proposals will deliver significant savings which could be used to protect existing services. This is particularly important in areas such as Adult Social Care where it is well documented about the pressure facing this budget in the future. The report also identifies however that there could be reductions in the average Band D Council Tax of £30 across the County area. 1.7.2 It is worth noting that under the proposals a common level of Council Tax would need to be charged across the whole area. Currently there is a differential, the 2013/14 Band D Council Tax for the County and District element ranges from £1,362.55 in North Warwickshire to £1,283.30 in the Stratford on Avon District, a differential of £79.25. 1.7.3 Using 2013/14 as a base if Council Tax was reduced by £30 on average across the whole of the County area, this would actually result in a significant reduction in areas such as North Warwickshire and Nuneaton. However, such a proposal would actually result in an increase for the council tax payers of Stratford-on-Avon. This is shown in the following table:

Forecast Council tax Implications District Area Current Current Current Option 1 Change District County Combine potential from Council Council d Council Council Current Tax Tax Tax Tax Position £ £ £ £ £ North 207.30 1,155.25 1,362.55 1,288.10 (74.45) Warwickshire Nuneaton & 203.99 1,155.25 1,359.24 1,288.10 (71.14) Bedworth Rugby 169.21 1,155.25 1,324.46 1,288.10 (36.36) Stratford-on- 128.05 1,155.25 1,283.30 1,288.10 4.80 Avon Warwick 146.86 1,155.25 1,302.11 1,288.10 (14.01)

Average 162.85 1,155.25 1,318.10 1,288.10 (30.00)

Note: All figures shown as Band D Council Tax equivalents Average Council Tax calculated by using Taxbase weightings 1.7.4 It should be noted that the above table has been worked out using the 2013/14 level of Council Tax. The assumptions which were included within the County report were based on a period two years in the future during which time it was assumed there would be increases in the District level of Council Tax. Under this scenario actually the impact for SDC area would be to maintain the current level of Council Tax with reductions being implemented in all other district areas. 1.8 This section of the report has provided further information in relation to the financial issues which were raised within the report to the County Council. The report to the County Council also considered sections in relation to the impact on:  Individuals – Citizens & Service Users  Community – Local Identity & Leadership  Services – Joint-working across Local Government Services  Organisational – Efficiency Benefits  County-wide and beyond – Inter-agency Working/The Economy

1.9 It should be noted however that since the resolution of the County Council apart from the approach that was made from the Assistant Chief Executive, there has been no engagement from the County on this debate. 1.10 Political Context for Unitary Government National Position 1.10.1 The position from Central Government is clear that there has to be an appetite within a particular area for Unitary Government for proposals to be considered. Eric Pickles is quoted as saying “Of course I am not opposed to unitary authorities; what I am opposed to is the imposition on local authorities, from the centre, of costly reorganisations I am urging authorities, particularly small district authorities, to start to work together, to merge not just back-office but front-office functions, and to provide a much better deal for their people”. Local Position 1.10.2 Within Warwickshire a number of Councils have already made their position clear on whether they support the principle.  The Leader of Nuneaton and Bedworth Cllr Dennis Harvey has stated “The idea of a unitary authority would be a disaster for the north of the county. We would be forgotten even more than we are already.  Cllr Craig Humphrey, leader of Rugby Borough Council, has issued a statement on the county council's unitary status debate. “All local authorities are having to deal with the reduction in public sector spending arising from the recent recession. "Rugby Borough Council has met this challenge by focusing its services on what our customers want. We have improved services at the same time as reducing their cost. "Warwickshire County Council has responded to its need to make savings by opening a debate about the structure of local government in Warwickshire. This is a distraction from the job in hand. No structure of itself delivers either good services or savings  Cllr Mick Stanley, leader of North Warwickshire, has stated that "The county council has put up their Council Tax this year. We held the council tax down three years running. Now the county council wants to grab all our money and make the decisions about our money and our services miles away in Warwick. We have looked after North Warwickshire Council Tax payers but they want to transfer some of our money to help people in South Warwickshire.”

 A statement from Warwick District Council Leader, Councillor Andrew Mobbs on the issue says “ This is a debate that the County Council has initiated by themselves with no involvement or co-operation from Warwick District Council. Neither myself, Chris Elliott, or any other Councillor or Officer will be participating in that debate. “

Stratford-on-Avon District Council – Policy Position 1.10.3 The current position of the Council is to develop joint working opportunities with Cherwell and South Northamptonshire Council. At the meeting of Council on 14 April 2014, Council approved the following resolution: “That the principle of shared working with South Northamptonshire Council and Cherwell District Council be confirmed as part of the adopted policy framework” 1.10.4 In addition to this policy position the Council also approved the shared service for ICT services across the three authorities. Further shared services are being developed in line with the acceptance of the Transformation Challenge Award funding from Central Government. A business case for sharing the Legal Service across the three authorities is included within this agenda and significant progress has been made in relation to a joint procurement and implementation of a new Financial Management System. 1.10.5 It should be noted that the County Council does provide both payroll and internal audit functions to the council. The contract period for internal audit comes to an end on 31 March 2015 and a review/contract tender will be required for the period beyond that date. In relation to payroll a review will be undertaken in July of the future provision of this service following the decision of the County Council to start charging for this activity in 2014/15 (see budget report for more details). 2. OPTIONS AVAILABLE TO THE CABINET 2.1. The options available to The Cabinet are as follows: 2.2. To fully engage with the County Council in relation to the development of proposals for Unitary government within Warwickshire in line with the Notice of Motion; 2.3. To continue working to deliver financial and organisations benefits with other partners specifically Cherwell and South Northamptonshire councils. 2.4. To continue working to deliver financial and organisations benefits with other partners specifically Cherwell and South Northamptonshire councils, and also engage on options with Warwickshire County Council. 2.5. To take no further action in respect of the Notice of Motion

3. Evidence Base 3.1 This report has been developed using the Warwickshire County Council report – “Public Interest Debate – Unitary Local Government for Warwickshire”, along with discussions with Warwickshire County Council officers. 3.2 The report also includes various statements and quotes which have been taken from individual authority web-sites and specific quotes from sources such as Hansard. 4. Members’ Comments 4.1. Comments from Cllr Thirlwell have been incorporated into this report.

5. Implications of the Proposal 5.1. Legal/Human Rights Implications 5.1.1. The report identifies that there is currently no legislative power to create a unitary government within Warwickshire. Such a decision would need to be taken by the Government, and has been indicated would require the support of all potential members.

5.2. Financial 5.2.1. The report identifies the assumptions behind the figures quoted within the County Council report in relation to exploring proposals for Unitary Government. 5.2.2. It is necessary for such a report that indicatives amounts are identified to enable a debate. The assumptions are clear and there is an allowance for implementation costs which is also quantified. Although some of the assumptions would be difficult to implement in the short term due to contractual implications, others appear to be extremely prudent and could have scope to be increased. 5.2.3. One area of concern however relates to the implementation of equal pay across the county and district areas. The cost of implementing this requirement has not been quantified, and given the experiences locally of implementing equal pay at SDC in 2004 on a relatively modest sized authority, the impact of this is likely to be significant. 5.2.4. The County Council has reviewed this paper and minor agreed amendments were made in relation to the financial elements. 5.3. Environmental 5.3.1. The report does not identify any environmental issues. 5.4. Corporate Strategy 5.4.1. The report does not identify any Corporate Strategy issues. 5.5. Analysis of the effects on Equality 5.5.1. There are no direct or indirect impacts on equality issues arising from this report but individual proposals for an alternative method of service delivery would examine these in detail.

6. Risk Assessment 6.1. This report is purely a review of the financial and policy elements surrounding the proposals from the County Council. Should the proposals be further considered a thorough review of all of the risks surrounding such an initiative would be required. 7. Conclusion 7.1. This report has been prepared in response to the Notice of Motion in the names of Councillors Cheney and Moorse. 7.2. The County Council has already voted in favour of further engagement with other public sector bodies including SDC on developing these proposals further. However, there has already been significant negative reaction from a number of other local authorities within the County and no tangible work in taking these proposals further forward. 7.3. The Cabinet is asked to consider the issues raised within this report and determine how the authority should proceed. David Buckland ASSISTANT CHIEF EXECUTIVE Background papers: Not applicable