Agenda item

Report of Report of Portfolio Holder for Resources and Communications, Leader and Chief Executive

Summary

To consider the business case for a shared management team between Cherwell District Council and South Northamptonshire Council.

Recommendations

The Executive is recommended:

(1)               To hear at the meeting the outcome of the Extraordinary Joint Meeting of Resources and Performance Scrutiny Board and Overview and Scrutiny Committee on 6^th October at which both Committees considered the business case and the comments received during the consultation with unions and staff at both councils.

(2)               To recommend to Council at its meeting on 3^rd November 2010 that it approves the business case (and the fifteen specific recommendations included in it) for a shared management team between Cherwell District Council and South Northamptonshire Council, subject to any amendments the Executive make after hearing the outcome of the scrutiny committees at (1).

Recommendations Approved, subject to the amendment to recommendation 2 that the Business Case be recommended to Council on 8 December 2010.

Additionally it was agreed:

3)                 That in light of the concerns from the Overview and Scrutiny Committee and Resources and Performance Scrutiny Board about arrangements for the appointment of the shared Chief Executive and the commitment in the business case to competitive recruitment to the shared roles, the Joint Working Group be asked to consider mechanisms for an open recruitment process to this role and recommend the best way forward to both the Cherwell Executive and South Northamptonshire Cabinet.

4)                 That in light of the concerns from the joint Overview and Scrutiny meeting that a joint IT working group be convened to look at the issues of technology integration, costs and savings  that would be required should a shared management team be agreed.

The Portfolio Holder for Resources and Communications, Leader of Council and Chief Executive submitted a report to consider the business case for a shared management team between Cherwell District Council and South Northamptonshire Council. In the course of discussion it was noted that the Council meeting to consider the business case would now be on 8 December 2010, additionally it was proposed that there should be competitive recruitment to the role of Chief Executive and an IT working group be convened to look at IT integration issues.

Resolved

(1)               That the outcome of the Extraordinary Joint Meeting of Resources and Performance Scrutiny Board and Overview and Scrutiny Committee on 6^th October at which both Committees considered the business case and the comments received during the consultation with unions and staff at both councils be noted.

(2)               That Council be recommended to approve the business case (and the fifteen specific recommendations included in it) for a shared management team between Cherwell District Council and South Northamptonshire Council, at its meeting on 8 December 2010.

3)                 That in light of the concerns from the Overview and Scrutiny Committee and Resources and Performance Scrutiny Board about arrangements for the appointment of the shared Chief Executive and the commitment in the business case to competitive recruitment to the shared roles, the Joint Working Group be asked to consider mechanisms for an open recruitment process to this role and recommend the best way forward to both the Cherwell Executive and South Northamptonshire Cabinet.

4)                 That in light of the concerns from the joint Overview and Scrutiny meeting that a joint IT working group be convened to look at the issues of technology integration, costs and savings  that would be required should a shared management team be agreed.

Reasons

The business case proposes a shared senior management team of twelve posts, with three further posts to be shared at this stage. Putting these shared posts in place will deliver an ongoing annual saving of £686,000 to this council, adding up to £3.430m over the next 5 years.

The implementation costs associated with achieving this annual saving of £686,000 will vary depending on which staff leave the two organisations and therefore a range of costs have been estimated in the draft business case. The lowest cost estimate is £817,000. The middle case (as used in the business case) is £1.384m and the highest cost estimate is £1.693m.

The Joint Working Group has recommended that, regardless of which staff in which organisations are made redundant, the costs will be split on a 60:40 basis, with Cherwell District Council picking up 60% of the costs. Both District Auditors have agreed with this approach ‘in principle’ and we will be able to report further at the meeting by which time the two Heads of Finance will have had another meeting with the District Auditors.

The expected overall pay back period for Cherwell District Council is 1.21 years, working on average one-off costs. This will improve to 0.71 years if one-off costs prove to be our best case costs or drop back to 1.48 years if we face the worst case one-off costs.

The business case is based on a maximum of 30 weeks redundancy compensation being given at both councils. This is currently not the practice at South Northamptonshire Council and the business case states that if either council awards, at their discretion, redundancy compensation exceeding 30 weeks then that council will be responsible for covering that additional cost.

The business case also identifies the possibility for further savings elsewhere in the organisations if a joint management team structure is put in place. Indicatively it sets out the level of additional savings if costs in the next tier of management were reduced by 15%, 20% and 25%.

If 20% reductions were identified in the next tier of management, as a result of the opportunities to work more closely once the senior management team were in place, this would equate to an approximate further ongoing annual saving for Cherwell District Council of 392,000 (or £1.960m over 5 years).

These savings would be in addition bring the total annual saving to potentially £1.078m per year, subject to further business cases which would explore the costs and benefits of services on a case by case basis.

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