Bridgend County Borough Council Audit of the Corporate Improvement Plan Auditors’ Report 29 October 2004
Index • Introduction • This document contains our Auditors’ report to Bridgend County Borough Council (“the Authority”) on its Corporate Improvement Plan which was published in June2004. It also sets out our observations and recommendations under the four key themes as set out by the Audit Commission in Wales. • Contents of Statutory report • Auditors Report • Observations and Recommendations on the Plan - Joint Risk Assessment - Corporate Improvement Plan - Performance Management - Track Record • Note on recommendations • All formal recommendations contained within this document are prefixed by the letter R eg R1. Recommendations from prior years are prefixed S eg S2.
Marlborough House Tel +44 (0) 29 2046 8091 Fitzalan Court Fax +44 (0) 29 2046 8201 Fitzalan Road Cardiff CF24 0TE ABCD • This was supplemented by further guidance on how the Wales Programme for Improvement (WPI) will be implemented under Sections 3, 5 and 6 of the Local Government Act 1999. Under this guidance, the statutory Best Value Performance Plan has been replaced by a statutory Improvement Plan (the Plan) which must be published by 30 June of the financial year to which the Plan relates. For one year only, 2004, the publication date was changed to 31 July in order for new authorities to have more time, following the elections, to consider the Improvement Plan before publication. • The Authority is responsible for the preparation of the Plan and for the information and assessments set out within it. The Authority’s future work programme set out in the Plan should connect to the outcomes of the updated risk assessment. The Authority is also responsible for establishing appropriate performance management and internal control systems from which the information and assessments in its Plan are derived and for ensuring that it provides sufficient capabilities and capacity needed to manage change and improvement. The form and content of the Plan are prescribed in Section 6 of the Act and statutory guidance issued by the Welsh Assembly Government. • As the Authority’s auditors, we are required under Section 7 of the Act to carry out an audit of the Plan, to certify that we have done so, and: • To report whether we believe that the Plan has been prepared and published in accordance with statutory requirements set out in Section 6 of the Act and statutory guidance and, where appropriate, recommending how the Plan should be amended so as to accord with statutory requirements • To recommend: • - where appropriate, procedures to be followed in relation to the Plan; • - whether the Audit Commission should carry out an Inspection of the Authority under Section 10 of the Local Government Act 1999; and • - whether the Welsh Assembly Government should give a direction under Section 15 of the Local Government Act 1999. Keri Lewis Esq Chief Executive Bridgend County Borough Council Civic Offices Angel Street Bridgend CF31 4WB 29 October 2004 Dear Keri Auditors’ report to Bridgend County Borough Council on its Corporate Improvement Plan published July 2004 Certificate We certify that we have audited Bridgend County Borough Council’s Improvement Plan in accordance with Section 7 of the Local Government Act 1999 and the Audit Commission’s Code of Audit Practice. We also had regard to supplementary guidance issued by the Audit Commission. This report is made solely to Bridgend County Borough Council, in accordance with Section 7 of the Act. Our audit work has been undertaken so that we might state to the Authority, to the Audit Commission and (where necessary) to the Welsh Assembly Government those matters we are required to state to them in such an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than (i) the Authority, for our audit work, for this report, or for the opinions we have formed, (ii) the Audit Commission, for our recommendations under section 7(4)(e) and (iii) the Welsh Assembly Government, for our recommendation (if positive) under section 7(4)(f) of the Act. Respective responsibilities of the Authority and the Auditors Under the Local Government Act 1999 (the Act) the Authority is required to prepare and publish a Best Value Performance Plan summarising the Authority’s assessments of its performance and position in relation to its statutory duty to make arrangements to secure continuous improvement to the way in which its functions are exercised, having regard to a combination of economy, efficiency and effectiveness.
Basis of report We planned and performed our work so as to obtain all the information and explanations that we considered necessary in order to report and make recommendations in accordance with Section 7 of the Act. For the purposes of our report, we have interpreted compliance with the statutory guidance issued by the Assembly in the Wales Programme for Improvement: Guidance for Local Authorities as being sufficient to meet the statutory requirements under Section 6 of the Act. In giving our opinion we are not required to form a view on the completeness or accuracy of the information or realism and achievement of the Plan published by the Authority. Our work therefore comprised a review and assessment of the Plan and, where appropriate, examination on a test basis of relevant evidence, sufficient to satisfy ourselves that the Plan includes those matters prescribed in legislation and statutory guidance and that the arrangements for publishing the Plan complied with the requirements of the legislation and statutory guidance. Included in the Plan are the Authority’s performance estimates for the year ended 31 March 2004. Actual results for the year may be different from the figures reported, because events and circumstances frequently do not occur as expected and the differences may be material. To the extent that the figures included in the Plan are estimates, our audit work comprised an assessment as to whether the estimates made by the Authority had been properly compiled in all significant respects on the basis of the assumptions stated by the Authority, as at the date at which the Plan was prepared. For the purpose of determining whether or not to make recommendations on procedures to be followed in relation to the Plan, our work included a review and assessment, and where appropriate, examination on a test basis of evidence relevant to the adequacy of the systems set in place by the Authority for collecting and recording specified performance information; and the testing of specific Performance Indicators (PIs) selected by the Audit Commission in Wales (ACiW) and ourselves because of the inherently higher risks of their mis-statement. The work we have carried out in order to report and make recommendations in accordance with Section 7 of the Act cannot be relied upon to identify every weakness or opportunity for improvement. In particular, it has not necessarily covered the same areas as an Inspection. Many of the issues identified by this work as requiring further attention have already started to be addressed by the Council through their inclusion in improvement work programmes. Others are currently being discussed with the Council. There are, nonetheless, a number of important issues that are fundamental to the delivery of the Council’s improvement agenda that are raised as formal recommendations in pages 6 to 11 of this report. Unqualified Opinion In our opinion Bridgend County Borough Council has prepared and published its Corporate Improvement Plan in all significant respects in accordance with Section 6 of the LGA 1999 and the statutory guidance issued by the Welsh Assembly Government. Recommendations on referral to the Audit Commission in Wales / Welsh Assembly Government We are required each year to recommend whether, on the basis of our audit work, the Audit Commission in Wales should carry out a Best Value Inspection of the Authority or whether the Welsh Assembly Government should give a direction. On the basis of our work: We do not recommend that the Audit Commission in Wales should carry out a Best Value Inspection of Bridgend County Borough County Council under Section 10 of the Local Government Act 1999. We do not recommend that the Welsh Assembly Government should give a direction under Section 15 of the Local Government Act 1999. Appointed Auditor’s signature: Date: The Authority must consider this report and formally respond to the statutory recommendations contained within it, within 30 working days.
Recommendations/Updated Risk Assessment • Recommendation • (R1) The Authority will need to prioritise the risks identified in the Joint Risk Assessment, as soon as possible, in order to focus its limited resources on the areas which are considered to pose the most significant threat to the successful implementation of the Corporate Improvement Plan. The urgency is driven by the forthcoming budget process, which must begin to reflect the corporate priorities to drive change. • Observation: Risk Assessment • A key element of the Wales Plan for Improvement process is the requirement for each Authority to undertake a Whole Authority Analysis on a five yearly basis, which should be revisited annually. The Authority updates its self assessment and agrees the results with the regulators in the Joint Risk Assessment Process. The Authority’s risk assessment for the current year considered, among other things; • the corporate and service priorities as detailed in the 03/04 Corporate Improvement Plan • the findings of the Joint Risk Assessment produced by the Audit Commission in 2003 • a Strategic Risk Profile of the Council produced by external consultants, Marsh • The final risk assessment exercise was undertaken in March 2004 by the Cabinet and Corporate Management Team Working Group and agreed with the regulators. We believe that the process undertaken by the Council for identifying risks was fair and subject to internal challenge, however, the Authority recognises in the Corporate Improvement Plan that they have yet to prioritise the identified risks. Given the Authority’s expected tight budgetary settlements from the National Assembly of Wales, prioritisation is crucial if the Authority is to have sufficient focus to be able to deliver on its key objectives.
Recommendations: Corporate Improvement Plan • Observation: Community Strategy • The statutory guidance from the National Assembly dictates that the Community Strategy should be the ‘central reference point’ for the Corporate Improvement Plan. The Authority did not meet the Assembly’s timetable for issuing the Community Strategy by 31 March 2004, but issued a draft for consultation in May. The Authority acknowledges that the draft is a ‘high level’ document and does not set out in any detail how the Authority will achieve its aims and objectives over the coming years. • The Corporate Improvement Plan refers to the draft Community Strategy, but there is a risk that any changes in the Community Strategy from this process there will be differences in the final strategy not reflected in the Plan. • The Chief Executive has now taken the lead on the Community Strategy, and has been chairing the Local Strategic Partnership responsible for producing the Community Strategy. This is evidence of the importance that the Authority is now placing on delivering a strong relationship with its community. The Authority has also recruited an external consultant to help the Local Strategic Partnership complete the process. It is imperative that the Authority continues to drive this process and that the final, agreed strategy is used to inform the 2005/08 Corporate Improvement Plan. • Recommendation • (R4) The Community Strategy should be given high priority and brought to a conclusion so that the 2005-8 Corporate Improvement Plan is based on an agreed ‘central reference point’. The process should be monitored regularly to ensure that progress is made in accordance with the agreed timetable. • Observation: Linking of the budget to the Corporate Improvement Plan • The 2004/05 Corporate Improvement Plan is a well-designed document that presents a fair picture of the Council’s performance in the year and sets out relatively concisely the plan for the year ahead. The summary corporate improvement plan is also well set out, and is a fair reflection of the full corporate improvement plan. Following discussions with ourselves, the Authority has decided that future Corporate Improvement Plans will be prepared on a rolling basis to cover three years. The Authority will then be able to plan on a longer term basis, annual budgets will be more closely linked to the Corporate Improvement Plan than in previous years, and the Authority’s key objectives should have the necessary financial resource to deliver their set targets. • The Plan and budget are inter-related. The key change activities listed in the 2003/4 plan had not been subject to formal costing procedures, which the Authority recognised by setting recycling of resource as one of its key aims. • Recommendations • (R2) The Authority will need to ensure that the budget for 2005/06 reflects the overall aims of the current Corporate Improvement Plan, and that key objectives are supported with the appropriate level of financial resource. • (R3) The process for developing the 2005/8 Corporate Improvement Plan is scheduled to start in the Autumn of 2004. It is critical that this happens, so that the necessary financial analysis can be used to drive the new three-year plan and ensure that the Authority’s goals are realistic and achievable.
Recommendations: Corporate Improvement Plan • Observation: Communication • Ownership and communication are key to the successful implementation of the Corporate Improvement Plan. It is crucial that all stakeholders support the process and work towards the same goals. The Authority has engaged with its external stakeholders through the consultation process. We have also seen evidence of a desire to ensure a cultural change at a corporate level in Bridgend, facilitated by work carried out during the year by Syniad. However there is still evidence of a lack of ‘buy in’ from staff members and, as recognised in the Plan, corporate objectives are still not reflected in directorate and departmental service plans. Going forward the Authority should consider interactive ways of engaging employees in order to ensure that all services and departments are aware of the Authority’s objectives and understand and support the mechanisms that are in place to achieve successful outcomes. • Recommendation • (R5) The Authority should consider how it might engage its staff in a more proactive way for the 2005/08 Corporate Improvement Plan to ensure that the objectives are embraced as widely as possible across the Authority. This could include, for example, a series of presentations cascaded from directors and line managers, with opportunity for staff to feed back comments. • Observation: Future Work Programme • The improvement work programme set out in the Corporate Improvement Plan considers corporate and service level risks separately. The action plans dealing with service risks include milestones and deadlines but, as recognised by the Council, lack any detailed information on costings and efficiency savings. Corporate risk action plans are high level and lacking in detail. They will need development if the Authority is to be able to achieve its desired improvement. • Recommendation • (R6) Action plans should be further developed to include SMART objectives which are clearly linked to the risks identified in the Corporate Improvement Plan.
Recommendations: Corporate Improvement Plan The Authority recognises that there is scope to further develop this area and anticipates that all services will have a minimum of one local PI for the 2005/08 Corporate Improvement Plan and also intends to align local PIs where possible with the Community Strategy. While we agree that it is important to roll out local PIs across the Authority, there is a risk from measuring single PIs in isolation. Service areas may focus on the single PI to the exclusion of other important factors. A simple example might be an area that increases its outputs successfully, but increases costs to do so. The Authority has benchmarked its PIs against average statistics for England and Wales. It has not, however, used information from similar Authorities to compare performance. Benchmarking against peer groups would provide the Authority with useful information that could help in assessing performance and setting future targets. Recommendation (R7) The Authority should continue to support the development of the PI processes and encourage their use as a tool in the performance management process. Performance indicators should not be used in isolation, but in a “balanced” group that deals with all the major issues facing a service area. PIs, national or local, should be used consistently to measure performance both internally and also against other comparable Authorities. • Observation: Performance Indicators • The Authority is required to record and report certain performance indicators set by the National Assembly for Wales (NAWPIs). Of the NAWPIs disclosed in the Corporate Improvement Plan: • the majority (79%) had been accurately calculated. • 11% related to housing indicators that the Authority chose not to report as a result of the Housing Stock transfer which occurred mid year • 2% had not been recorded • 2% were adjusted following audit • only 6% of indicators were considered to be materially misstated or not supported. • The set of NAWPIs does not necessarily measure all of the areas of performance that are important to Bridgend. In these cases, the Authority should develop local PIs to monitor and, where possible, benchmark performance. There is presently inconsistency in the use of local PIs. Some services make good use of local PIs; however the Corporate Improvement Plan recognises that there are services that have no local PIs. Those local PIs that have been disclosed in the Corporate Improvement Plan do not have targets set for 2004/05.
Recommendations: Performance management • Observation: Collation of Performance Information • The Council has a system in place for the quarterly collation of NAWPIs. The system is labour intensive and potentially distracts the performance management unit from its core role of analysing, interpreting and reporting performance information. The performance management unit recognise this and has considered alternative solutions such as IT packages; they are now awaiting guidance from the National Assembly regarding future changes to the performance management framework before making an investment. • The Authority should aim for a position where performance indicators are actively used to manage the Authority’s performance throughout the year. Managers and directors should identify the key performance indicators in the service areas under their responsibility and monitor them at appropriate intervals. For some severe risks, that frequency could be daily. Significant deviations in performance should always be reported upwards so that remedial action can be taken. The Corporate Management team should review the PIs that relate to the Authority’s top level objectives and risks. • Recommendation • R9 The anticipated work programme for the Performance Improvement Group should include provision to address the issue of the quality, use and interpretation of performance information. • Observation: Performance Management Framework • Performance Management is an end to end process. It involves identifying objectives, preparing detailed strategies, action plans and targets, finding measures (performance indicators) that can be used to track progress against the plan, having a reliable process for reporting the key PIs to line managers, directors and members, taking action if the PIs are out of line, and ensuring that individuals’ personal objectives and appraisals are focused on the achievement of the Authority’s objectives. • The Authority has recognised that its performance management processes need further development, and that a cultural change is necessary if services are to be managed more effectively. A Performance Improvement Group has been established at a very senior level in order to make this happen. The group will initially be primarily responsible for ensuring that all risks identified as part of the Joint Risk Assessment are being dealt with appropriately and that any significant issues are escalated to the Corporate Management Board. The group will also work closely with the Performance Management Unit. It is important that the new group takes a key role in considering and addressing the issues concerning the quality and use of performance information across the Authority as a whole. • Recommendation • R8 The Authority should review its Performance Management Framework, to define clearly the links between objectives, service plans, budgets, indicators, targets and individuals’ objectives and appraisals. It should communicate the need for performance management to all staff.
Recommendations: Track record • The Council has made significant effort during the year to consider how it will be best placed to drive the WPI agenda in the future. It has made good progress in some areas, particularly with regard to adopting a new 3 year framework for its strategic planning, which should help to drive real improvement in the longer term. There remains, however, a significant number of issues raised in the prior year audit that have yet to be fully addressed (as set out in the table below). It is crucial that the Authority endeavours to address recommendations, as many of them are fundamental in determining whether or not the Authority will be able to meet its objectives.
Recommendations: Track record (continued) Trend in performance The overall trend in performance as measured by the PIs reported in the Corporate Improvement Plan is positive. Of the readily comparable PIs, 65% showed improvement in 03/04 (53% reported in 02/03); however only 57% met or exceeded their target.