Agenda item

1     Mr Burr explained that the Council was mid way through phase 1 of the transformation process.  12 areas of service were being investigated through engagement with the market to determine whether there were alternative ways of delivering services.  Some areas of Kent County Council were more forward thinking than other areas and the Council was in the process of determining outline options, one of which would be to leave the service as it is.  The options would then be submitted to the transformation group who would select their preferred option and a detailed business case would be worked up, to include costs and risks and this would then be reviewed by the Transformation Board (a cross party group) and then reviewed by the Transformation Advisory Group (which, it was noted, was not a formal decision making body.  The option would then proceed through the formal governance processes of the Council.  No decisions or recommendations had been proposed yet, there was always an option to keep and expand services by raising revenue. 

1.    Phase 2 would begin with a provisional list of services to review for the next financial year.  The focus was on doing things better and once the top tier had been realigned the directorates would be moved into the right areas then the work would begin on looking for further efficiencies over the next 12-18months.  Most savings from working in different ways – need 20 -30%

2.    Being a Commissioning authority meant having an educated client with top level awareness of what the authority was aiming to achieve and the ability to specify it to someone who would be able to deliver it. KCC not always clear – need to be clear to provider, and good specification, may be in house KCC provider or external provider, but depend on service. The Corporate Programme Office had a role in monitoring and ensuring delivery of projects and make sure save and do what we say we are going to. 

3.    In response to a question around the 12 areas or 300 services to be reviewed Mr Burr explained that the 12 areas were business which had put themselves forward for market engagement, libraries and HR for example.  The 300 services were teams within the County Council, the suggestion would be to continue with larger but fewer teams as they are developed and streamlined as part of the transformation. 

4.    In response to a question about the areas in which KCC was doing well at Mr Burr explained that KCC’s legal services team was very forward thinking, generated external revenue and was very highly regarded nationally.  Property Services was another area which was doing very well with a forward thinking business model and potential to run as a business arms length in year or so time.  Areas which were more challenged were business behaviours and finance  - this included Kent Scientific Services, which did not currently make a profit (base trade figures from finance but not account for costs as a private sector would – with salary multiplier of 1.7 – 2% compared to KCC 2.4%). If externalise officers are on protected salary and pension. KCC costs are higher than first think – no commercial understanding. Need to understand true cost.

5.    A Member asked about the role of the voluntary sector, Mr Burr explained that most voluntary companies are not for profit but still have costs, but may not need 3-4% return. Many were run with volunteers e.g. ramblers phone in issues, voluntary bus drivers/trips to hospital, which are both very successful but if the service was needed from 7.30am – 6.30pm this became a job and there was a need for pay. Very few organisations were prepared to undertake scheduled regular work without being paid. 

6.    In relation to procurement practices it had been difficult to find, for large areas, organisations to tender for or meet obligations that KCC set.  For example Highways - wanted to award contract to/with SMEs but they didn’t work/want to work together and wanted 20 – 30 contracts, so went to one main supplier who subcontracts. Have tried to underwrite risk as many voluntary organisations don’t carry indemnity insurance and did not have high public liability insurance. KCC had to determine whether it was prepared to underwrite some of the risk involved for voluntary organisations.  To make it easier for the voluntary sector to engage, but they also have to compete in like for like basis.

7.    The Chairman asked for suggestions of how the procurement practices could be improved and requested some written advice to be provided to the Select Committee on this issue. 

8.    A Member commented that for a number of years KCC had been focussing on outsourcing which was concerning due to the lack of flexibility and lack of exit strategy.  It was now a commissioning authority but there were concerns about whether this was a one way direction of travel or a cycle.  Was the Council factoring in future proofing?  Mr Burr confirmed that there was no agenda to outsource for the sake of it, the focus was on how teams could be more efficient, and there were no plans to outsource problems as a provider would then take profit in this.  Needed to get better then decide if there was a more appropriate way of doing something – in house/or outsourced.  Regarding the risk aspect there was a need to have some commercial understanding and the ability to write good contracts (write good price yr 1 and for subsequent years, deductions, progression of KPI difficulty).  In relation to contracts there may be ways of obtaining cheaper contracts but if it didn’t work for KCC it would not be feasible, there was often a difference between what the public wanted and what the public needed.  It was necessary to have this commercial contract insight but it could result in political conflict. Need to balance KPIs and need to fix e.g if KPI objective 99.5% street lights on and contract for 5 yrs and one goes at 99.6% won’t fix it.

Need to build flexible contracts, work out what is controllable overhead, what is fixed overhead – (one objective was to ensure salary multiplier doesn’t increase). Kent multiplier was often higher than providers.

9.    In response to a question about whether the Council had considered franchising outside of the Kent boundary Mr Burr confirmed that property was one area which would operate outside the county boundary, Norfolk had a very successful property business. 

10. Concerns were raised regarding the transformation project and the related insecurity, fear, risk aversion and delays, had the project been humanised? Mr Burr explained that he worked closely with the Corporate Director of Human Resources, a range of programmes had been utilised to engage staff, caution was advised and it was considered important to create a need for change, there was a need for a balance.  The theme of the transformation project was to be straight talking, open and honest.

11. Members considered that the culture within KCC led officers to be accepting of small failures as long as they were not critical, this empowered officers and members to take risks and needed enforcing. 

12. In response to a question about the continued involvement of Members, Mr Burr confirmed that this was a definite; success would be measured by the satisfaction levels of members and customers.  Possibility of Scrutiny/advisory group was raised. There was a commitment to involve members as much as possible.  Wanted to bring ideas in more structured way.

13. Mr Burr confirmed that it was no longer possible to specify subcontractors or products to be used by companies, but it was possible to encourage a supply chain that when need to top up ask to use SMEs. The Council wanted companies that listened and add key points to bid docs, show willing regarding social value and encourage supply chain and can then contract for this. Council need companies with ideas and challenge, there was a need for more experience to promote varied ideas and practices.  The role of the procurement team within KCC was to get the best deal for KCC.  The Commissioning role would be to determine which services was required, what level of risk the Council was prepared to accept and then determine whether the supplier should be internal or external. 

14. A Member asked how it was possible to have control over an outsourced service which was not providing the expected service.  Mr Burr explained that it was necessary to have the right client officers, knowledge and culture, this was not currently the case all across KCC, and there were inconsistencies in contract management.  It was necessary to buy from the right company – needed to be robust and be happy to be judged by success. Have to be judged as service is judged not just contractually – need the company with mindset to share risk. It was possible to write information into contracts - outcomes, number of apprentices, value added etc and contract incentives: with penalties for not meeting targets.  In the newer contracts there was no automatic right for a contract extension, it was possible for companies to meet their objectives but for the Council to be dissatisfied with their work. It was vital to build in flexibility around perception and reputation – so included a contract clause to deal with this as protection, but it was hoped that this would not be used. Mr Burr was able to terminate contracts at any point if the need arose - without a contractual reason.