Agenda Item No.












The contents of the draft Medium Term Financial Plan 2014/15 - 2017/18 report; was endorsed by Cabinet at a meeting on the 11th August, 2014 and was included within the documentation received by the Committee prior to the meeting.  The Head of Finance informed the Committee that the Medium Term Financial Plan was not a budget but the plan based on the best available information.  The purpose of the plan was to link the Council’s strategic planning process with the budget process and to ensure consistency between them.  It was a mechanism that attempted to match future predicted resources and expenditure, identify potential shortfalls and provide the financial framework for the next 3-5 years.  He further confirmed that it was not a budget setting process that allocated detailed budgets for services. Its purpose was to inform Members and to suggest a way of dealing with the future financial pressures facing the Council.


The Head of Finance informed the Committee that three quarters of the Vale of Glamorgan Council’s net funding came from Welsh Government and the other quarter from Council Tax.  Previous assumptions regarding future funding settlements from Welsh Government had been revised following a letter issued in June 2014 by the Minister for Local Government and Government Business to all Welsh Local Authorities.  The letter raised the prospect of the 2015/16 assessment being a reduction of up to 4.5% in cash terms.  The indicative figure for the Vale for 2015/16 had previously been advised as a reduction of 1.64% with each 1% additional reduction equating to approximately £1.5m less funding.  Furthermore, he informed the Committee that the Minister had stated that local authorities should assume that current trends in local government funding would continue and that local authorities should scenario plan for a range of challenging settlements beyond 2015/16.  The Head of Finance informed the Committee that the latest Medium Term Financial Plan had subsequently been based on the assumption of varying settlements from Welsh Government, of decreases of 4.5% in cash terms in 2015/16, a further 4% reduction in 2016/17 and 2% reduction in 2017/18.


The Head of Finance informed the Committee that a variety of legislative, demographic and other issues would have an impact on the Medium Term Financial Plan and that these would have financial consequences and that the financial pressures could possibly be understated.  The Head of Finance provided the financial context for the Reshaping Services Programme and advised the Committee that some £32.4m of savings needed to be found over the next three years, of which £18m had been identified, however, these had not yet been implemented.  There was therefore a £14m shortfall in the savings targets.  The Head of Finance further informed the Committee that the figures contained within the Medium Term Financial Plan were based on assumptions and the best available information at the time.  The Council would need to wait until they received their settlement and would continue to work closely with the WLGA. 


The Head of Finance informed the Committee that £61m worth of savings were required over eight year period from 2010-2018, which excluded schools.  The Welsh Government had set a minimum funding commitment for Education, and the schools’ budget represented 37% of the overall Council budget.  The Vale of Glamorgan Council ranked 20th out of the 22 Welsh authorities for funding per head of population and that the Council’s current Band D Council Tax was below the Welsh average at £1,029.42. 


The Committee was shown a graph which had been modelled by the Welsh Local Government Association to illustrate the impact of the level of funding reduction, if Welsh Government continued to require protection for Education and a possible level of protection for Social Services.  The graph further illustrated that the full burden of the budget reductions would fall on other services which included many statutory services, therefore 'business as usual’ was not an option, however, current way of business could not continue, however, there would be opportunities within the change programme which included investigating the way in which the Council works and delivers its services. 


Following the presentation from the Head of Finance, a Member stated that Members of the Vale of Glamorgan Council had received the Reshaping Services Programme briefing and also received the report at Scrutiny Committees; therefore they had been given the opportunity to make their comments and it was important that the Voluntary Sector were now provided with the opportunity to put forward their views on this programme.


The Head of Performance and Development informed the Committee that the Reshaping Services Change Programme was in response to the Council’s dire financial situation and that the Authority would need to look at new ways of progressing as a Council.  The Reshaping Services report had been considered by Cabinet on the 11th August 2014 and it had been agreed in principle to institute a Reshaping Services strategy and change programme and to refer the report for consultation purposes to the Voluntary Sector Joint Liaison Committee.


The Head of Performance and Development informed the Committee of the conventional options for savings that were normally employed by Councils which included the following:


·                Efficiencies

·                Effectiveness - which involved questioning how the authority was providing services

·                Income generation - which involved ascertaining whether services had scope for the generation of revenue

·                Targeted cuts and decommissioning - these had not been identified as yet.


The Committee was informed about alternative delivery models which included:


·                  Joint provision with other public sector bodies

·                  Delivery by external partners

·                  Council owed companies

-        Joint ventures

-        Trading companies

-        Employee / community owned companies

·                Co-production.


The Council was already involved with joint provision for services which included the Joint Education Service, Prosiect Gwyrdd and the proposed joint Regulatory Services with Cardiff Council and Bridgend County Borough Council.  He confirmed that public sector bodies were already in dialogue with each other about how to deal with joint provision of services and provide services more effectively and efficiently. 


The Committee was informed that the Authority already had experience of outsourcing certain services to external partners, such as the leisure centres to Parkwood and had transferred Dyffryn House to an external partner, the National Trust.


The Committee was informed that Council owned companies would involve the splitting off of a Council service from its parent, making it a separate, stand-alone company and staff would transfer to the new company.  The main variants of Council owned companies were:


·                Joint Ventures

·                Local Authority owned companies

·                Employee / community owned companies

·                Privately owned companies.


Joint ventures involved the Council and a private sector company forming a newly jointly owned company to sell and deliver a service.  They were used as a means of injecting significant funding to support rapid growth in the business, in return for an ownership stake. 


Local authority trading companies were set up with the express purpose of entering into contracts with the public or private sectors and acting as an 'incubator’, run on commercial lines but under the protection of the Council.  In this way a service could be nurtured and allowed to develop by the Council before being fully exposed to the rigours of the commercial world. 


Employee / community owned companies were owned by employees and their profits were redistributed to employees and the community.  Mutuals and Co-operatives were examples of these kinds of companies.  The Head of Performance and Development informed the Committee that the Authority was starting to look at aspects of co-production.


The Committee was informed of the pros and cons of Council owned companies.  The main positives were that they would deliver cost savings by introducing a commercial discipline, the companies would be able to invest, there would be more flexibility and adaptability within the services and the company would have the ability to trade commercially and the Council would remain involved strategically, but not operationally.


The advantages of Mutuals and Co-operatives would be that there would be greater employee motivation and satisfaction due to self-determination.  Furthermore, there would be lower absentee levels and greater community satisfaction.  These companies were able to focus on citizen priorities and the Council would be on-board and retain a stake in the operations. 


The downside of Council owned companies was that the Council would lose operational control, there could possibly be a lack of entrepreneurial enthusiasm in local authorities as well as the skills needed to set up a business.  Furthermore, there could be an impact on pay, terms and conditions and pensions of staff and possible service fragmentation, there was also a lack of clear legislation on these companies, particularly for Co-operatives and Mutuals.


The Head of Performance and Development informed the Committee that co-production was not a vehicle for service development but was a set of values.  He informed the Committee of a definition from the Wales Council for Voluntary Action (WCVA) which stated that co-production was:


Seeing people and communities as assets and equals in the design and delivery of services.  Services are built around the person and community creating opportunities for engage more actively in the community in which they live. 


Co-production unlocks the potential resources of time, money and expertise to combine with and add to state funding so that state resources are used to enable and maximise the citizen and community action, social capital and care.


Following the presentation the Chairman asked for questions from Members of the Committee.  A Member of the Vale of Glamorgan Council stated that Wales had been underfunded for some time and this was becoming worse due to the level of the cuts.  The Member asked what the delivery timetable was for the Reshaping Services programme, which services the Authority was looking to possibly outsource and how would this programme affect the voluntary sector.  In response the Head of Performance and Development stated that there were several stages involved with the timescale for the Change Programme and that the first stage was to raise awareness of the programme itself.  The Reshaping Services Programme was currently in the consultation phase and the report had been taken to the Local Service Board, the Community Liaison Committee and the Council was also consulting with Trade Unions.  He advised that the main aim at this stage was to inform people and help them understand the current financial position and gave an assurance that any proposals would be taken seriously. 


The timescale for the Change Programme was that in autumn 2014 a substantive strategy would be taken to Cabinet.  This would be followed by engagement with and the establishment of a governance structure.  He informed the Committee that baseline assessments of services were being carried out to identify possible problems, the effectiveness of services and also to identify ways of delivering services differently.  Following the baseline assessments, the assessments would be analysed with a view to looking at and identifying possible service reviews to initiate.  The baseline assessments and service reviews would be completed by April 2015 and the Change Programme would last between three and five years.  The Head of Performance and Development further informed the Committee that he wanted to engage with the voluntary sector to take things forward.


Following the presentation, Rachel Connor, Executive Director of the Vale Centre for Voluntary Services (VCVS), presented the initial response of the Third Sector to the Reshaping Services Change Programme, copies of which were circulated at the meeting.  Ms. Connor informed the Committee that they had received a briefing from the Head of Performance and Development and the Head of Human Resources on the change programme and that the attendees had been very optimistic.


Following the presentation of the Cabinet paper on Reshaping Services at the Local Service Board in August, VCVS held a briefing event to engage the Third Sector in looking at how they might input to this complex scenario.


Ms. Connor stated that it had been noted that the Reshaping Services agenda outlined the need to consider alternative delivery models for services and that the Third Sector was well placed to play a role in these discussions, given its experience in innovative design and delivery, flexibility and adaptability to change.  However, ongoing conversations would need to look not just at what was currently being provided and how best to provide that, but also to consider the need to do different things.  This required looking at what was needed, why it was needed and who could deliver the services.  Ms. Connor stated that the result might be not only a move to different providers of current services, but also encompass the development of different services delivered by a range of providers.  An example of this was the provision of residential care.  This could be looked at differently in terms of the quality of the offer and there was a role for the Third Sector in providing quality residential care on a different, not for profit model.


The Committee was informed that there were a number of important issues to consider; which included the costs of developing different models, which could not be borne by the Third Sector alone.  Over the last few years, the Third Sector locally had lost resources and therefore capacity and faced increased competition for external funding from sources such as the Lottery.  Ms. Connor stated that a move to different models of service, delivered by the Third Sector, must include some longer term commitment from the Vale of Glamorgan Council to the Third Sector organisations involved.  Furthermore, there was also the issue of the public sector moving to a function which was primarily about managing contracts and relationships.  As more services were moved to other providers, the safety net function of local authorities would be diluted and disappear.  An example was given of a residential care home which if primarily delivered by the private sector; and the provider decided to close down, what role the local authority would have in ensuring the safety and wellbeing of the residents.


Ms. Connor informed the Committee with regard to what the Third Sector would need to be able to contribute to the Reshaping Services programme. The initial thoughts were that involvement in discussions about Reshaping Services from the beginning would support the Third Sector contribution.  A better understanding of the range of Council services would help Third Sector services identify the areas where they may be able to deliver.  It would help the Third Sector take a broader look beyond what they currently provided.


There were a number of Third Sector services which were currently being funded by the Council, but which potentially faced funding reductions.  These services might well be the kinds of services which Reshaping Services was aiming to achieve.


The Third Sector currently played a vital role in promoting health and wellbeing and as such contributed both to the public health agenda and to legislation such as the Future Generations Bill.  The preventative nature of these services, which saved future, more costly interventions from taking place, needed to be considered.


Ms. Connor informed the Committee that some Third Sector organisations had already established trading and enterprise companies which could potentially take on a range of service provision, if adequately resourced.


An identified person within the Council who could liaise with the Third Sector about proposals submitted would help facilitate conversations and they could ensure that other Council staff were involved in discussions as appropriate.


The Committee was informed that VCVS and the wider Third Sector were keen to work with the Council to put in place a process whereby Expressions of Interest in providing services could be submitted, discussed and evaluated and that Third Sector organisations were being encouraged to think outside their normal areas of delivery.


Ms. Connor confirmed that VCVS would support the Reshaping Services strategy, with support from Third Sector Representatives, drawn from a range of Third Sector organisations and that resources would be required to support this increased activity.


Ms. Connor expressed concern that competitive tendering was not well suited to smaller, local Third Sector groups or to supporting co-production on a local basis.  A preferred providers list would ensure that local Third Sector groups, which provided local services and supported co-production on a local community basis, were supported to bid for statutory funding.  Where this was not possible or the size of the contract would suggest broader appeal from larger organisations, then the weighting in the score card for evaluation should take 'co-production’ more into account.  Ms. Connor also advised that there could be other models of commissioning which were alternative to either contracts or grants, and which might work better with new models of service.


Ms. Connor informed the Committee with regard to other areas for consideration, which included apprising them that there was a range of help available via Wales Co-operative Centre, Co-production Wales and Social Board Wales, which could be utilised.  There needed to be a way of encouraging private sector investment, as it might not be easy to pull in private capital to support new models of service delivery, unless there was a commercial gain involved.


New models of service delivery might require looking at new roles, rather than perpetuating traditional health and social care roles. Discussions about Reshaping Services would benefit from involving Health Board colleagues as investment in social services had an impact on use of health services.


The proposed merger of local authorities was due to take place by 2020 and a legacy statement detailing Third Sector funding at the time of merger would provide stability to the organisations funded.


Following the presentation of Ms. Connor’s report, a Member stated that the Authority would need to look at all service areas, however the Local Authority would need to maintain some overall control of these services.  Members further expressed concern that the Council’s reserves could be at a minimum by 2018/19 and therefore a level of urgency was required in delivering the Reshaping Services agenda. 


A Member thanked Ms. Connor for her report and expressed concern with regards to commissioning and the danger of the Third Sector being out-bid and that it was important to remember the central nature of services and that people and services were involved and co-production was central to this.  The Member also stated that the Reshaping Services programme should not be rushed without ensuring that the right services were provided at the end of it, however, appreciated that it was a difficult situation as the Authority was also dealing with the possibility of mergers concurrently.


A Member expressed the view that there needed to be a lot of consultation with stakeholders and concurred that the change programme should not be rushed and asked whether the Authority could look to well-run establishments for ideas of best practice and stated that they would like to maintain the ethos of the way services and establishments were currently run.


Ms. Connor confirmed that the request for a nominated officer could assist with the co-ordination of the Change Programme across the Authority and facilitate liaisons with various Third Sector bodies, however the officer would need to be the right point of contact and that the right representatives would also need to be identified within the Third Sector to review services.


The Chairman stated that the key element within the Change Programme was effective communication.  A Member expressed the view that joint ventures and stand-alone companies had more potential and had improved performance and income streams and that these could also be established with other authorities.  Furthermore, he stated that links could be made with outside sectors, including the Third Sector, with a view to income generation. 


The representative from Cardiff and the Vale University Health Board informed the Committee that the Health Service was not in a dissimilar situation to local authorities and would embrace the Reshaping Services agenda, however, it was important that all parties worked together and also considered any possible negative impact on the Health Service and advised that they would like to build upon the work that had been started such as the integrated health work streams.  In response to this, a Member stated that this was why it was important that Third Sector bodies were involved from the outset of the programme and that any change in services added to the role currently provided by the Health Services. 


Following consideration of the Reshaping Services report and the Third Sector response the Committee




(1)       T H A T the contents of the Reshaping Services report and the presentation given to the Committee be noted.


(2)       T H A T it be recognised that the Third Sector were keen to engage in meaningful conversations about any proposals with the aim of contributing to Reshaping Services.


(3)       T H A T involvement in discussions about Reshaping Services from the beginning would support the Third Sector contribution.


(4)       T H A T having an identified person within the Council to liaise with the Third Sector about proposals submitted would help facilitate those conversations and they could ensure that other Council staff were involved in discussions as appropriate.


(5)       T H A T additional resources to enable the Third Sector to participate fully in the co-production and planning involved in this initiative would be required.


(6)       T H A T Cabinet be informed of the above.


Reason for Recommendations


(1)       To have regard to the content of the report and presentation.


(2-6)    To ensure that Reshaping Services has the greatest opportunity for success.