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  • Generating savings and income opportunities

    Report of the Budget Scrutiny Committee

    September 2016

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    Chair’s Foreword Cllr Alistair Strathern Recent years have been an especially challenging time in Local Authority funding, with cuts from central government ushering in an era of unprecedented funding pressure. Here in Waltham Forest alone, we’ve been forced to identify necessary savings totalling some £110m since 2010. In the face of this challenge, we’ve had to look for increasingly innovative and creative ways to provide and fund the services we all rely on. To this end, the council launched its ambitions Redefining Waltham Forest program, a fundamental review of the services we provide and the way we provide them.

    This report, Generating savings and income opportunities, aims to provide a mid-program ‘check in’ on how the project has been delivered, challenging ourselves to consider what lessons can be learned, and to think of ways we can be even more ambitious and inventive in maximising the services we are able to provide.

    This report highlights many positives in the program, with the council’s proactive, strategic approach to addressing funding challenges enabling services to be designed in a thoughtful and creative manner, minimising where possible the knock on impact to residents and in some cases even improving the service provided. We also highlight some opportunities for improvement, from firming up the links between savings targets and service performance tracking to challenging ourselves to be more ambitious in our approach to generating revenue through other means. This latter aspect perhaps offers the greatest area of opportunity for Waltham Forest, with additional revenue generation providing valuable independence from central government to fund and protect the services we all rely on locally. We would challenge the council to be as ambitious as possible here, evaluating what opportunities the continued regeneration of

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    the borough offers us to capture value for the benefit of all current and future residents of Waltham Forest.

    To conclude on a personal note, I would like to thank my fellow committee members and officers without whose engagement and insights this report would not be possible.

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    Members of Budget Scrutiny Committee 2015/16

    Councillor Jenny Gray

    Vice Chair

    Councillor Kastriot Berberi

    Councillor Peter Herrington

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    Summary of recommendations

    Recommendation 1: Performance reporting against the Council’s Key Performance Indicators should be linked with savings achieved through the Redefining Waltham Forest programme to enable the Council to see clearly how savings impact on the delivery of outcomes.

    Recommendation 2: Ensure elected members and the Management Board continue to provide strong and high-level leadership for the Redefining Waltham Forest programme, particularly as it is becoming increasingly harder to find savings without even greater impact on the borough’s residents.

    Recommendation 3: The Council should consider options for strengthening the support that is provided to staff who are affected by organisational change, with a particular focus on supporting individuals and teams to understand, influence and adapt well to the changes the Council is making.

    Recommendation 4: Develop an income generation strategy, covering the development of opportunities arising from the Council’s charging and trading powers. The strategy should set out consistent processes for setting and reviewing fees and charges, and for developing business cases for new commercial opportunities. It should also explore the suitability of setting Council departments income generation targets.

    Recommendation 5: Explore further the potential of using the Housing SPV as the Council’s trading company; considering not only a more ambitious approach to acquiring land, developing, owning, and managing housing and other property assets but also opportunities to enter into wider commercial acquisitions which could both support the council's growth strategy and support the funding of future service provision.

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    Recommendation 6: Elected members and the Management Board should provide strong leadership for the Council’s income generation strategy. A progress report on income generated from council services should be made available to the Cabinet and Management Board on a quarterly basis.

    Recommendation 7: Invest in staff training to develop commercial awareness and skills within the organisation to explore and exploit income generation opportunities.

    Recommendation 8: Develop fundamental principles in an income generation strategy to ensure that the Council can achieve some of its income potential whilst protecting organisational integrity.

    Recommendation 9: Elected members and the Management Board should provide strong leadership for contract management to ensure that the new strategic approach is prioritised across the Council, and ensure that investment in the appropriate systems is in place to allow for robust comparative assessment of contacts. A report on contract management should be made available to the Cabinet and Management Board on a quarterly basis.

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    Introduction 1.1.The combination of funding and cost pressures that have faced local government over

    recent years has led to a situation where the Council is expected to have identified and delivered savings totalling some £110 million in the period 2010/11 – 2016/17.

    1.2.The impact of austerity on its budgets has created significant challenges for the Council to maintain quality services which deliver strong outcomes through more efficient and innovative ways of working.

    1.3.Recognising the significance of this challenge, our Committee launched a review into the effectiveness of the council in managing its ongoing financial sustainability as part of our 2015/16 work programme.

    1.4.Our focus has been on three key aspects of the Council’s approach to addressing the reduction in the funding it receives from central government, whilst continuing to deliver services that meet residents’ needs:

     Generating savings  Generating income opportunities  Contract management

    1.5.The Committee received evidence on the Council’s approach to these three key areas at regular intervals throughout 2015 and the early part of 2016. This report details the key issues and findings of the review undertaken by the Budget Scrutiny Committee during the 2015/16 municipal year into the Council’s approach to generating savings and income opportunities, and managing contracts.

    1.6.The review was led by Cllr Alistair Strathern, Chair of Budget Scrutiny Committee during the 2015/16 scrutiny cycle. Evidence was gathered across the 2015/16 meetings of the Committee.

    1.7.The report puts forward a number of recommendations, which it is hoped will support the Council to continue to maintain quality services which deliver strong outcomes for residents, whilst operating with significantly reduced budgets.

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    Generating savings Redefining Waltham Forest programmes

    1.8.Due to the austere financial times the public sector has experienced, the Council has faced the challenge of reducing its budgets on an annual basis over a number of years.

    1.9.In the four year period following the government’s 2010 Spending Review, the Council identified and delivered savings totalling some £65 million - equivalent to a budget reduction of 28%. These reductions in budgets were achieved through the Council deciding to identify and implement the funding cuts as early as possible in order to stabilise the Council’s financial position and focus on delivering resident’s priorities. This strategy enabled the Council to avoid year on year budget saving activities and created the environment to plan how the Council might respond in the event of further funding reductions.

    1.10.Additional funding reductions were announced in the Chancellor’s 2013 budget and the Council estimated that it would need to achieve a further savings of £45m during 2015/16 and 2016/17. As it was becoming increasingly difficult each year to find savings while continuing to deliver services that meet residents’ needs the Council identified the need to change its strategy for reducing budgets.

    1.11.To assist in this process, the Council commissioned Price Waterhouse Coopers (PWC) to conduct a review of key corporate and operational services within the Council to identify potential cost reductions and service improvements that could be achieved.

    1.12.Based on the key findings of the PWC review, the Council instigated a an organisational change programme known as Redefining Waltham Forest [RWF] in October 2013 which aims to deliver sustainable services that meet residents’ needs while managing on significantly reduced budgets. The programme focused on tackling eight themes: Local Democratic Leadership, Commissioning for Outcomes, Customer Insight and Digital Services, Business Support Functions, Innovation in Service Delivery, Procurement and Contracting, Efficiency, and Business Change.

    1.13.As subsequent reductions in local government funding have come to light the Council has developed and agreed a new savings schedule RWF2 in July 2015, which itself was refreshed and renamed RWF2020 following the 2015 Comprehensive Spending Review.