For Portfolio Holder decision: Learning and Adult Education

REPORT ON FUNDING ARRANGEMENTS FOR THE JOINT ARCHIVES SERVICE

1. BACKGROUND

1.1 Poole jointly funds the Archive Service with Bournemouth and Dorset Councils 1.2 The Joint Archive Service collects and preserves historical records and manuscripts in specialist conditions that no one individual authority could afford to provide 1.3 Funding has been provided on a per capita basis by the 3 local authorities 1.4 A revised medium-term strategy is for the funding of the archive proposed due to the challenging of the existing arrangements by Bournemouth Borough Council

2. RECOMMENDATION

2.1 That the Borough of Poole accepts the joint report by the Director of Corporate Services (Dorset), Director of Leisure and Tourism (Bournemouth) and the Head of Culture and Community Learning (Poole) and agrees to the proposals outlined in section (6) of this report. 2.2 That the Borough of Poole agrees to the proposals and considers the issues in 2003/04 as part of its medium-term strategy and budget process.

Claire Chidley Head of Culture and Community Learning 23 June 2003 Agenda Item:

Joint Archives Advisory Board – 12 May 2003

FUNDING ARRANGEMENTS FOR THE JOINT ARCHIVES SERVICE

JOINT REPORT OF DIRECTOR OF CORPORATE SERVICES, DORSET COUNTY COUNCIL, THE DIRECTOR OF LEISURE AND TOURISM, BOURNEMOUTH BOROUGH COUNCIL AND THE HEAD OF CULTURE AND LEARNING, BOROUGH OF POOLE

1. PURPOSE

1.1 (a) To report the outcome of officer discussions and a report by Kingshurst Consulting Group on alternative funding arrangements for the Joint Archives Service and (b) To seek Members views and support for the proposals for the future funding of the Joint Archives Service outlined in Section 6 of this Report.

2. RECOMMENDATION

(a) That the Board recognises the proposals in Section 6 of this Report as the basis for discussion and (b) That the Board recommends that each Authority makes a formal response to the proposals and considers the issues in 2003/04 as part of their medium term financial strategies.

3. REASONS FOR THE RECOMMENDATION

3.1 To provide an agreed and stable basis for funding and managing the Joint Archives Service.

4. ALTERNATIVE OPTIONS

(a) To continue with the present agreements or to adopt arrangements based on volume and usage of archives and full shared costing of the archive building, neither of which proposals has the support of all three Partner Councils, or (b) To end the joint arrangements for Archives services and disaggregate the Joint Archives Services, which is an outcome not sought or welcomed by the three Partner Councils.

5. BACKGROUND

5.1 It was reported to the last meeting of the Board (5 December 2002) that Bournemouth Borough Council had decided to withdraw its Notice to Terminate the Joint Archives Agreements subject to Dorset County Council and the Borough of Poole considering revised partnership arrangements.

5.2 The Board recommended that the three Partner Councils agree that a joint officer working group should review the funding arrangements for the Joint Archives Service, taking into account usage and volume of the archives and the costs of supporting the archive building.

5.3 Officers have met a number of times and commissioned further work from Kingshurst Consulting Group to facilitate their discussions, as was also agreed at the Board meeting in December.

5.4 Kingshurst Consulting reviewed the position and drew together a report based on using a formula based on the volume and usage of the archives. The report has sought to estimate the full actual costs for the operation of the Joint Archives Service at its current level over the next few years. The report used estimates of future base budgets which incorporated foreseeable salary, pension and National Insurance costs as well as estimates of rental and building costs.

5.5 The report of Kingshurst Consulting Group, which was presented in draft form to a joint officers’ meeting on 18 March 2003. The final report is attached as Appendix 1 to this Report.

5.6 The joint officer working group was unable to reach agreement on options for future funding of the Joint Archives Service based on the consultant’s report or the existing arrangements which cold be put to the Board and which all three Councils would find acceptable.

5.7 In the light of the failure to reach a common view, a compromise set of proposals, based on the current agreements, but acknowledging the outcome of the work down on usage and volume of archives was put forward. These proposals have the support of officers of all three Partner Councils and are recommended to Members as a practical way forward for the Joint Archives Service.

6. PROPOSALS

6.1 Arising from meetings and discussions between officers it was clear that there were a number of outstanding issues which needed to be addressed if a resolution of the funding arrangements were to be found. These were in essence: (a) That the Borough of Poole was unable to increase its contribution to the sort of level that the potential alternative arrangements would call for. (b) That Bournemouth Borough Council wanted the outcome of the work on usage and volume of archives to be recognised as, due to budget pressures, the Borough was having difficulty in maintaining current levels of expenditure (c) That the base budget position (using RPI alone) needed to be addressed as it was not working realistically, especially in terms of national pay settlements, superannuation, National Insurance and wider insurance costs. (d) That there needed to be a robust mechanism for dealing with significant building maintenance and repair issues. (e) That there also needed to be a forum for discussion of wider budget issues facing the three Councils and a mechanism to deal with these issues by agreement

6.2 The Kingshurst Consulting Group’s report, makes it clear that Dorset County Council is favoured by the use of a population base in relation to usage and volume of archives. Though this benefit is compensated for by the rent free provision that it currently makes for the building and the large capital items which it has undertaken to fund (replacement of halon gas fire extinction system completed March 2002 and continuing support and maintenance of air handling units over a ten year period).

6.3 These proposal are based broadly on the current position, but with the addition that Dorset County Council Board Members may be prepared to recommend that the County Council address the base budget question (£27,200 shortfall in 2004/05) in recognition of the benefit accruing to it in terms of usage and volume of archives, which the Kingshurst Consulting Group’s report has highlighted.

6.4 If Dorset County Council were to agree to meet the budget problem for the reasons noted above, then this could be the basis of a revised funding formula. If this formula were used as the basis of the funding arrangements for the future, Dorset would contribute 58.07% (currently 56.04%), Bournemouth would contribute 22.41% (currently 23.5%) and Poole would contribute 19.51% (currently 20.46%).

6.5 These proposals are put forward on the basis that Dorset County Council would be prepared to continue to provide the building rent free on the basis that an appropriate arrangement for future funding of the Joint Archives Service can be reached.

6.6 At the last meeting of the Board it was agreed to fund an anticipated shortfall in the base budget for 2003/04 by the one-off use of reserves. At the Board meeting and in subsequent officer discussions it has been recognised that there will be serious ongoing budget difficulties for the Joint Archives Service unless there is a move away from using RPI as the sole basis for budget setting. This could be achieved if all Partners agree that future increases in the pay element of the budget should be calculated separately and RPI used to set the base budget for the remainder of the Service’s expenditure/income.

6.7 These proposals seek to recognise that all three Councils will at times be faced with budgetary pressures. Whilst the Joint Archives Service should not be immune from these pressures, it is proposed that the contributions from all three Partners should be treated in the same way in each year. We are proposing that the Joint Archives Advisory Board should debate each year a level of efficiency savings which could be delivered by the Service. This could be delivered either through increased income or reductions in expenditure. It would give an opportunity for wider budget issues to be discussed and for all Partners to be involved in the budget setting process. The Board would then be able to make recommendations to their authorities as part of the budget planning process.

6.8 The issue of how to deal with significant building maintenance issues has proved a problem for the Service and the Partnership. In order to provide a way of resolving key priorities and providing for clear discussion of the particular needs of the building from time to time, it is suggested that the Board be asked to make a judgement, when necessary after taking professional advice from the County’s building management specialists as to what major building maintenance expenditure should be incurred over and above routine repairs and maintenance, and how these should be financed. This would again give all Partners a larger voice in important decisions and in setting priorities.

6.9 If the above proposals were agreed by all three Partner Councils, then it would be necessary to work them into a further variation of the current joint arrangements.

7. CONCLUSION

7.1 The above proposals, subject to the views of the Board and the executive bodies of each Partner Council, do provide a way forward for the funding of the Joint Archives Service, which draws on the work done over the last year and provides a pragmatic opportunity to involve the Partners more closely with the Service and its budget setting processes.

7.2 Should the Board and the Partner Councils agree that this is a viable way of revising the funding arrangements for the Joint Archives Service, it would still be necessary for Dorset County Council to include the additional funding in its Medium Term Financial Planning process and to agree to fund the additional amount in its budget for 2004/05.

7.3 They are dependent on the good will and commitment of all Partner Councils and their agreement that these proposals are not a ‘quick fix’, but the basis of a long- term and sustainable way forward for the funding of their Joint Archives Service.

ELAINE TAYLOR, Director of Corporate Services, Dorset County Council

STEPHEN GODSALL, Director of Leisure and Tourism, Bournemouth Borough Council

CLAIRE CHIDLEY, Head of Culture and Learning, Borough of Poole Appendix 1: Report of Kingshurst Consulting Group

Background Papers: Joint Agreement for Archives 1997, Supplemental Joint Agreement for Archives 2000, Kingshurst Report on the Dorset Archives Service 2002, reports to and minutes of the Joint Archives Advisory Board, 25 July 2002, 14 October 2002, 5 December 2002.

If you have any queries regarding this report contact Elaine Taylor on 01305- 224177 or [email protected], Shelagh Levett on 01202-454615 or [email protected], Claire Chidley on 01202-262429 or [email protected] or Hugh Jaques on 01305-228929 or [email protected] Joint Archives Advisory Board – 12 May 2003

APPENDIX A

DORSET JOINT ARCHIVES SERVICE - ALTERNATIVE FUNDING OPTIONS

A REPORT TO THE JOINT ARCHIVES ADVISORY BOARD

March 2003

Kingshurst Consulting Group 60 Churchill Square, Kings Hill, West Malling, Kent ME19 4DU Tel: 01732 842840 / Fax: 01732 842844 E-mail: [email protected] www.kingshurst.co.uk Dorset Joint Archives Service : Alternative Funding Options

CONTENTS

Page no.

SECTION ONE : INTRODUCTION 1

SECTION TWO : APPROACH 1

SECTION THREE : FINDINGS 2

SECTION FOUR : ALLOCATING THE BUDGET 5

SECTION FIVE : CONCLUSIONS 6

SECTION SIX : ALTERNATIVE OPTIONS 7

SECTION SEVEN : RECOMMENDATIONS 7

Appendix I : Summary usage and archive collection statistics

Appendix II : 3 year budget projections

Appendix III : Allocation of costs between usage and acquisitions

Appendix IV : Allocation of budget

     Dorset Joint Archives Service : Alternative Funding Options

SECTION ONE : INTRODUCTION

1.1 Following our report to the Joint Archive Advisory Board (JAAB) dated 21st August 2002, Kingshurst Consulting were asked to provide an independent view on one or more alternative methods of funding the Service from the current population based arrangements.

1.2 To avoid repeating much of the background to the work contained in this report, it may be helpful that this more complete review of the Service be re-visited, copies of which can be provided as needed.

1.3 At a meeting of Officers to scope this work, it became apparent that existing arrangements to fund annual budget increases based upon the agreed RPI formula would leave the Service in serious deficit from 2004/05. As a result, it was agreed that alongside work involved in (1.1), a more complete budget projection through until 2005/06 would be prepared which made provision for known material increases, notably those relating to the Record Office itself and staff salaries/support costs.

SECTION TWO : APPROACH

2.1 Statistics have been analysed to provide a more complete picture of the demand and make up of archive services specifically looking at:-

 Enquiries (type; source)

 Outreach activities (involving Service staff)

 Archive collections (type; share between Partners)

 Receive archive collection pattern (type; source)

2.2 Also, population growth/change estimates between Partner areas through until 2011 have been examined to see if there are material shifts in shares anticipated.

2.3 Shared archive services were identified in England and Wales and requested to complete a questionnaire setting out their partner arrangements. (It is a mark of the interest in this work both the completeness and number of responses received (17).)

2.4 A detailed budget breakdown has been prepared for the years 2003/04; 2004/05 and 2005/06, set alongside the existing 2002/03 budget for comparison purposes. Using the statistics of Service usage by respective Partners emerging from this study, revised costs have been allocated to provide individual Partner contribution through until 2005/06.

SECTION THREE : FINDINGS

3.1 The following provides a more detailed explanation of the findings of the work carried out in January and February 2003, supported by Appendices 1 – IV. Dorset Joint Archives Service : Alternative Funding Options

3.2 We should state here that this exercise must be regarded as a starting point for further discussions and not be grasped as a definitive revised funding formula. Whilst a number of the numbers used are statistically sound, some are very much snapshots over a relatively short time and cold be challenged.

Usage (Appendix I)

3.3 Visitor numbers to the Record Office have been analysed over three years – 2000, 2001 and 2002.

3.4 Likewise outreach numbers have been analysed over the same period but exclude participation in large general gathering (e.g. local history fairs) which are not regarded as Service specific events.

3.5 Post/email and telephone figures represent those collected in the first two weeks of January 2003. These have been combined to provide a single total to reflect the nature of the enquiries.

Usage (electronic)

3.6 Unfortunately, figures available from access to the website do not provide data on the source of enquiry, therefore are of little value in this exercise.

3.7 However, in practice this enquiry route to the Service will increase and has the potential to develop into an important income stream. While it is currently not possible to allocate sources of access between Partners, it is an area that will need continued support and development and could represent a shared cost/benefit for all three Partners in due course.

3.8 To illustrate the growing importance of electronic access the scale of usage shows the following picture for the budget year 2001/02:

- total ‘hits’ – 743K

- daily average – 2K

- documents viewed – 44K

- average visit time – 4-5 minutes

- total visitors – 8.5K

- repeat visitors – 1.6K (19%) Dorset Joint Archives Service : Alternative Funding Options

Archive Collections (Appendix I)

3.9 There has been no change to these figures they remain as set out in our previous report (section 5.15). This data for actual boxed holdings as at 2001 have been aggregated with the 6-year acquisition picture to provide the final figures as shown. However, there is an issue which will need further discussion, for included in the 6 year acquisition figure is a very significant number of boxes representing the Borough of Poole’s own archives deposited in 1997. The equivalent Borough archives for Bournemouth were deposited over a number of years earlier. This does have the effect of increasing Poole’s share in the final figures.

3.10 There probably would need to be some adjustment to reflect the changing pattern of accrual of archives over the next few years, arising from the greater importance and size of Bournemouth and Poole from the mid-19 th Century and the faster rate of accrual of Bournemouth records over the period when they have been collected. Issues around the Bournemouth parish records and acquisition arrangements with Hampshire Record Office should be resolved during 2003. Should there be a change in arrangements, then this would need to be reflected in the final apportioning of the volume of archives.

Population

3.11 The current population split between Partners were agreed in 2000 as follows:

- Dorset : 56.04%

- Bournemouth :23.50%

- Poole : 20.46%

3.12 Under the present agreement, this arrangement remains in place for 5 years, being replaced by a second 5 year period effective in 2005/06.

3.13 The last Census (2001) confirms the following picture:

- Dorset : 391.0K (56.04%)

- Bournemouth :163.4K (23.59%)

- Poole : 138.3K (19.97%

3.14 Forward projections contained in the Bournemouth, Dorset and Poole Structure Plan, shows the following estimates for the years 2006 and 2011:

Dorset 413.1K 56.8% 426.4K 57.28% Bournemouth 170.0K 23.40% 172.4K 23.16% Poole 143.3K 19.73 145.6K 19.56% Dorset Joint Archives Service : Alternative Funding Options

TOTAL 726.4K 100% 744.4K 100%

3.15 The above projections shown no material change in Partner shares in the next 10 years.

Other Shared Archive Services

3.16 Most arrangements date from 1997 or thereabouts, coinciding with local Government reorganisation. Some arrangements go back further than this with those for Tyne and Wear being in place for over 16 years. Where shared arrangements have been in place longer, greater partner stability was reported with little difficulty emerging over budget allocations to date.

3.17 A number of services have just gone through their initial period ( 4 yeas) and are adjusting arrangements in the light of experience.

3.18 The overwhelming preference on budget apportionment is the use of local population density, on the basis that it is relatively uncontentious and doesn’t change much.

3.19 Where costs are structured another way (e.g. Cheshire) – by their own admission they tend to be rather loose or ‘crude’ arrangements arrived at historically but maintained in the light of something better emerging.

3.20 Some services have discussed/considered basing cost apportionment closer to usage and/or collections, but have abandoned it as being too complicated.

3.21 Almost without exception, capital costs associated with the main records depository are shared (e.g. building maintenance). Only where partner specific locations exist are arrangements modified to reflect this as a direct charge to that partner. No formal arrangements for sharing major capital spend appears to exist, most relying on negotiations on an ‘ as and when’ basis.

3.22 Notwithstanding those services enjoying long term working relationships or where budget constraints have yet to really impact on the service, most partnerships reported that they anticipate similar problems to those under discussion in the Dorset service, i.e. one or more partners are facing severe budget cuts.

3.23 Two broad structures emerge – either a partnership (legally binding or otherwise) or a service totally owned by the main partner (provider) and service level agreements (SLAs) with between it and the others.

3.24 In some cases the SLAs identify the costs of specific staff regarded as being the resource that would be required in the event of the partnership dissolving (e.g. Bucks or Milton Keynes). However, those operating SLAs admit that they are not very scientifically based. Dorset Joint Archives Service : Alternative Funding Options

3.25 In reality there is little to choose between these two operating structures and the impact on partners. The key to resolving budgetary and other problems as they arise remains the goodwill between all. However, there is merit in fully costing each service delivered for any proper SLA to work as a possible alternative way forward.

Archive Service Budget (Appendix II)

3.26 Dorset has undertaken a detailed review of the existing budget and projected forward figures for the years 2004-5 and 2005-6. The accompanying figures contain known increases relating to:

- staff salaries/awards, superannuation and increases in NIC

- material premises related costs as identified below

A few words of explanation alongside those included on Appendix II itself.

Rent : Full rental costs for the Record Office are included using the Valuers’ figures, commencing in 2004-5 at £107.7K pa. To date these have been absorbed by Dorset.

Repairs and Maintenance : A schedule of forward items through until 2009/10, is shown which will need to be implemented in order to maintain the integrity of the building. Major amongst these is the upgrading of the fire detection & intruder alarm system (outstanding from 2002/3) - £25K; Lighting fittings - £35K; Gas Central Heating Units - £45K; and the most significant – Air Handling Units - £140K. The existing policy of ring-fencing any surpluses and allocating them to R & M will not generate sufficient funds when set against this known expenditure. Therefore an additional provision of £33.5K pa commencing 2004/5 will be needed.

3.27 The effect of including these additional staff, rental and building related cost increases as shown, has the effect of raising the total controllable expenditure to £805.1K in 2004/5 and £833.2K in 2005/6 (£633.0K – 2004/04).

SECTION FOUR : ALLOCATING THE BUDGET

4.1 The next step is to reflect the usage and archive collection statistics set out in Appendix I against the revised budget figures (Appendix II), thereby arriving at individual Partner shares.

4.2 To achieve this, staff time and other costs have been allocated between the various functions then grouped under work more directly relating to usage and archive collections as follows (Appendix III):

 Usage : Acquisitions; Cataloguing; Preservation; Conservation Dorset Joint Archives Service : Alternative Funding Options

 Archive Collections : Access; Research Service; Outreach

 Shared : Reprographics

4.3 Appendix IV brings together the various elements in an attempt to show how the revised budget for the Service would be shared amongst Partners for the years 2004/5 and 2005/6 before taking credit for income earned and recharges where appropriate.

4.4 Existing Partner contributions (2002/3) are shown and the net change in 2004/05, shows the following picture (£000’s):

2002/03 2004/5 2005/6 Increase (2004/05) on 2002/3 Dorset 308 456.8 473.3 148.8 Bournemouth 129 128.4 133.1 -0.6 Poole 112 168.2 174.2 56.2 Total 549 753.4 780.6 204.4

SECTION FIVE : CONCLUSIONS

5.1 We retain the view that notwithstanding the questionable completeness of the archive collections picture which currently works in Bournemouth’s favour, there remains an arguable case for allocating costs more closely in line with the work carried out by the Service on behalf of the Partners. However, in moving away from the more comfortable population split, all costs must be included to ensure a proper and complete picture is being considered. The revised three year Budget (Appendix II) sets this out clearly and Partners need to recognise that this represents the proper costs of running an archive service to the standard currently operated by the Dorset Record Office. Indeed, it can be argued that there are a number of items not included here (e.g. impact of job evaluations), and therefore this budget still represents a task for the Board to deliver against.

5.2 Basing Partner contributions on work done and costs incurred is also less open to challenge in the future provided proper systems are put in place to collect, monitor and review statistics on a regular basis. Reviewing this work and making the necessary adjustments should be a standing annual task for the Board.

5.3 If Partners are willing to take this approach to the next step, it must be on the basis that in replacing the existing 10 year stability agreement, there is a willingness to enter into proper written arrangements which agrees the basis of arriving at contributions and records how this should be arrived at to avoid any dispute in the future. Such an arrangement should also be on no less than a rolling three-year agreement with adjustments being made in the light of changing use. Dorset Joint Archives Service : Alternative Funding Options

5.4 An overriding issue facing Partners remains whether they can see their way forward to sustaining a Service that will have a minimum annual income requirement from Partners in the order of £750K for the foreseeable future. As set out in the previous report, the Service is highly regarded and through its partnership working is in a strong position to continue to compete for grant income from a variety of sources. However, such income, together with that it derives from the sale of its own services, should be regarded as development money, invested into new projects and the continuation of the quality improvement initiatives it has undertaken well to date.

SECTION SIX : ALTERNATIVE OPTIONS

6.1 If Partners cannot agree between them an ongoing formula to fund the revised annual operating budget, then it appears that the only alternative is for one of the Partners to become the Provider of services, and make available some or all of these services to the other Partners on an agreed cost. Here again, such an agreement would need to be solid for at least three years to avoid the disruption involved in the event that one Partner decided to withdraw (e.g. staff reductions; breaking up collections etc).

6.2 Realistically, only Dorset could assume this role, effectively reverting to its old status. The ownership of the capital assets effectively dictates this. Should Partners see this as an alternative way forward then early work would need to be done to:

 specify the core services to be offered (statutory and minimum desirable)

 identify ‘optional’ services – supplementing the above

 prepare service level agreements which set out precisely what is to be purchased and on what basis of cost.

6.3 Apart from the obvious disruption involved in effectively breaking up the Service, moving to a Provider/Customer relationship will be seen as a backward step, both regionally and nationally. It also goes against current DCMS policy aimed at encouraging greater partnership working as evidenced by the creation of the Strategic Regional Agencies for Museums, Libraries and Archives. The value of this is already being seen with the recent South West’s success in being awarded one of the ‘pathfinder’ areas for the funding of regional museums. Effective partnership working underpins such developments and is seen as a central feature of the Government’s agenda. In addition, grant income, particularly that from lottery sources (Heritage Lottery Fund), is increasingly conditional upon recipients being able to demonstrate strong partnerships working.

6.4 Breaking the existing local Partnership cold well have a serious effect on the Service’s ability to generate new funds alongside its ability to retain its position as one of the leading archive services in England. Thus the Service would enter a ‘catch 22’ position – less able to attract external funds with Dorset Joint Archives Service : Alternative Funding Options

resulting declining service levels (relative to other services) and correspondingly, less attractive to Partners to buy into.

SECTION SEVEN : RECOMMENDATIONS AND NEXT STEPS

7.1 Against a background of continuing tight budget settlements in the foreseeable future, we feel Partners should be prepared to ‘value’ the services they receive from the Service as currently structured, i.e. ultimately Members will have to decide where the Service sits in the budget pecking order and just what this means in terms of affordability.

7.2 Our previous report gave the Service more than a clean bill of health, concluding that:

 It performs well both in terms of quality and range of services and in value- for-money  It enjoys customised premises capable of accommodating further services in the future  It is well regarded both in regional and national circles and well positioned to take full advantage of future developments funding opportunities as they arise.

7.3 This report looks at alternative ways of sharing operating costs and concludes that there is a case for bringing contributions more in line with use. From our research no other joint archive service in England has come up with any novel funding alternatives worthy of following up – most have retained local population as the basis of allocating the budget. The only serious alternative is for one Partner to become the ‘provider’ with other ‘buying’ into the Service managed through SLAs.

7.4 We see the Service at a real crossroads at this time. Partners need to find £750K between them to maintain it in its current form which is the level of funding comparable archive authorities make available (e.g. Devon, Gloucestershire). However, if Partners anticipate RPI increases as the most likely maximum available in the next three years, the Service will effectively run out of money within twelve months from now.

7.5 Large cuts in operating costs are just not feasible in our opinion and material savings would necessitate losing one or more services to make any meaningful dent in the budget.

APPENDICES TO THIS REPORT NOT AVAILABLE ELECTRONICALLY