Corporate Governance Follow-up Inspection Re-inspection Report - Audit...governance arrangements is...

Corporate Governance Inspection

March 2008

Corporate Governance Follow-up Inspection South Cambridgeshire District Council

© Audit Commission 2008 For further information on the work of the Commission please contact: Audit Commission, 1st Floor, Millbank Tower, Millbank, London SW1P 4HQ Tel: 020 7828 1212 Fax: 020 7976 6187 Textphone (minicom): 020 7630 0421 www.audit-commission.gov.uk

The Audit Commission is an independent body responsible for ensuring that public money is spent economically, efficiently and effectively, to achieve high quality local services for the public. Our remit covers around 11,000 bodies in England, which between them spend more than £180 billion of public money each year. Our work covers local government, health, housing, community safety and fire and rescue services.

As an independent watchdog, we provide important information on the quality of public services. As a driving force for improvement in those services, we provide practical recommendations and spread best practice. As an independent auditor, we ensure that public services are good value for money and that public money is properly spent.

Copies of this report If you require further copies of this report, or a copy in large print, in Braille, on tape, or in a language other than English, please call 0844 798 7070.

Corporate Governance Inspection │ Contents 3

South Cambridgeshire District Council

Contents Introduction 4

What is corporate governance? 4

Executive summary 6 Implications of the inspection findings 7

Recommendations 8

Report 9 Context 9

The locality 9 The Council 10 Background to the corporate governance inspections in South Cambridgeshire 11 The Council Response to the 2006/07 Corporate Governance Inspection 12

The Council’s Improvement Plan: Progress and Prospects 14

Leadership 14

Capacity 19

Partnership 21

Communication 22

Corporate Governance Inspection │ Introduction 4


Introduction

What is corporate governance? 1 Corporate governance is the framework of accountability to users, stakeholders

and the wider community, within which organisations take decisions, and lead and control their functions, to achieve their objectives. The quality of corporate governance arrangements is a key determinant of the quality for services provided by organisations. The purpose of a corporate governance inspection (CGI) is to assess the quality of a Council's corporate governance arrangements.

2 The legal basis for the Commission's corporate governance inspections is the power established in the Local Government Act 1999 to carry out inspections of a best value authority's compliance with its duty to 'make arrangements to secure continuous improvement in the way its functions are exercised, having regard to a combination of economy, efficiency and effectiveness.' Specifically, sections 3, 10, 11 and 13 of the Act provide the relevant powers and duties for the Commission to inspect, report and make recommendations to the Secretary of State. Where the Secretary of State receives a recommendation under section 13, section 15 provides him/her with the power to issue directions to a 'failing authority'.

3 A corporate governance inspection collects evidence to provide judgements on the following two questions.

• How good are the Council’s corporate governance arrangements? • What are the prospects for improvement in the Council’s corporate

governance arrangements?

4 The answers to these questions will determine the scope and nature of the recommendations. Where the Commission is satisfied that current arrangements are and will remain adequate, or that currently inadequate arrangements will improve, it will recommend actions that the Council can take to ensure sustainable improvements are made. Should the Commission not be satisfied that adequate arrangements can be developed, it will recommend more serious action. This can include referral to the Secretary of State, where the Commission has evidence that any of the following apply.

• Serious service failures in an authority that could result in danger or harm to the public.

• Persistent failure by an authority to address recommendations made by inspectors (or auditors).

• Serious failures in a number of services in an authority, which reveal fundamental weaknesses in an authority’s corporate capacity to manage services and make improvements.

Corporate Governance Inspection │ Introduction 5


5 Inspections of corporate governance take a themed approach which looks at how the Council approaches the following.

• Community focus - covering understanding of local needs, vision, access to services, communications and partnership.

• Structures and processes - democratic accountability, decision-making and planning.

• Risk management and internal control - financial performance, risk and project management.

• Leadership, culture and standards of conduct - community, political and managerial leadership, councillor-officer relationships, ethical standards and behaviour.

6 Within this structure, each corporate governance inspection will have its own particular focus, depending on the reasons for the inspection. Inspection teams include inspectors from a range of backgrounds working alongside senior officer and elected councillor local government peers from other Councils. The size and make-up of the team depends on the inspection.

7 The CGI framework and key lines of enquiry are published on the Commission's website www.audit-commission.gov.uk.

Corporate Governance Inspection │ Executive summary 6


Executive summary 8 South Cambridgeshire District Council (from now on the Council) has responded

positively to the 2007 Corporate Governance Inspection findings. It has made good progress against each of the four corporate governance themes, and there are promising prospects for improvement in some areas. The Council has substantially achieved the first year of the improvement plan submitted to the Audit Commission and Improvement Board. It was clear from the outset the extent of the problems facing the Council was going to take more than a year to resolve. Much work remains to bring all areas up to minimum requirements and this is reflected in some of the uncertainties about future improvement.

9 Community focus has improved, and most of that improvement is sustainable, but there is still some way to go. Communication with the media, especially with the writing press, is more effective. The Council has an improved understanding of community need, with services, such as planning, making more effort to know what stakeholders and residents want. The Council now gives real leadership to the Local Strategic Partnership (LSP) and more closely engages with the continuing review of the Local Area Agreement (LAA). Neighbourhood panels are making a difference on community safety. The Council is now an active and effective partner in the local planning for substantial housing and population growth (from now on referred to as the growth area or growth agenda). But these improvements in focus and engagement have not gone far enough. Engagement with residents through parish councils, though improving on issues such as development control, remains weak. Neighbourhood panels remain narrowly focused. Internal capacity building on equalities contrasts with worsening relations with key minority groups, such as gypsies and travellers. Unconsolidated improvements to e-government and inadequate website investment hinder delivery of customer focused, accessible services.

10 Structures and processes have seen considerable and sustainable progress, though again some issues await resolution. The Council’s corporate planning process is more coherent and transparent, with a clear golden thread running from the new corporate priorities down to individual objectives. Reviewed democratic structures have improved accountability. Decision-making is clearer. Cross-departmental working is regular and effective. But scrutiny remains ineffective. The Council still asks more of its limited human resources section than it can realistically deliver. Residents lack opportunities to feed views into service improvement. Customer service and access are variable, though remedial work is now underway.

11 Risk management and internal control have improved, with robust plans for further progress. Risk and project management are both more rigorous. Financial management, already adequate in 2007, continues to improve. Performance management processes are stronger, with plans in place for further improvements. Internal controls are moving towards a multi-year cycle. But the Council needs to do more to embed the improvements made. Its approach to financial management, especially underspends, still reflects the weaknesses of the past annual cycle.



12 Leadership, culture and standards have been subject to sustained effort, with some improvements, but again more work needs to be done. Better leadership means the Council is tackling the difficult decisions avoided in the past. Councillor conduct has improved, with better working relationships between councillors, and with staff. The Council has developed, and is now embedding core values. Monitoring and standards have improved. But the political groups are still adjusting to the new circumstances of one party having overall political control. Strong leadership has had some unfortunate results, adversely affecting Scrutiny. Plans are in place to address some of these outstanding issues. But it is still too early to say that a culture of mutual respect has been established, or that recent improvement will be sustained.

13 The Council has therefore made some real progress in the twelve months since the Commission published the original CGI report. It has well-developed plans to build on its successes. But the Council still has a long way to go. It has a continuing need for robust arrangements to manage and plan further change, which it needs to put in place as a matter of urgency.

Implications of the inspection findings 14 Under section 13 of the Local Government Act 1999 the Audit Commission may

make a recommendation to the Secretary of State that he or she gives a direction to an authority that is failing to meet its best value duties.

15 The inspection team has found the Council’s current corporate governance arrangements for community focus, structures and processes, and leadership have improved, and there are promising prospects for further improvement over the next 12 months. There are therefore no plans to refer the Council to the Secretary of State. But while real improvement has been made, there is still a long way for the Council to go to ensure that improvement in all aspects of Corporate Governance become self-sustaining. The Audit Commission has no plans to re-inspect the Council’s corporate governance again. But the existence of significant risks to future improvement in some areas means there is a continuing need for external support and monitoring for the Council. The Audit Commission will also use the opportunity of other work at the Council to monitor continuing progress on corporate governance.



Recommendations

Recommendations

R1 The Council must ensure recent improvements in political conduct and leadership are sustained, deepened and broadened. This means: • further improving Council decision-making processes to ensure clear

accountability, openness and transparency, and that decisions are based on a more robust evidence base;

• ensuring that all councillors sign up to the member undertakings; • making more productive use of the skills of non-executive councillors;

and • improving engagement with local parish councils, especially on issues of

direct concern to them.

R2 The Council must ensure the process of improvement continues to aim for profound and sustainable change in the way the Council operates. This means: • putting in place robust arrangements to plan and manage future change;

this will begin with succession planning for the departure of the Improvement Manager after May 2008, but also includes longer-term capacity building at Chief Officer level;

• maintaining external review and support (which has been provided by the Improvement Board), at least until the end of 2008;

• using future Audit Commission reviews of performance, such as Direction of Travel assessments, to assess progress on corporate governance; and

• ensuring that improvement at the Council is about lasting cultural change.

R3 The Council must ensure that, concurrent with improvements in processes and procedures, its policies and behaviours address the needs of, and promote the well-being of, all sections of its community. This means ensuring: • access to policy making work, especially for those members of the

community at risk of deprivation; • programmes of diversity awareness training at the Council are made

relevant to local need, and include input from local residents; and • specific policies, such as development control and enforcement, are

reviewed, to ensure the Council is meeting its responsibilities under the Equality Act 2006.

Corporate Governance Inspection │ Report 9


Report

Context The locality

16 South Cambridgeshire consists of 900 square kilometres of countryside that surround the city of Cambridge. It is mainly a rural area which contains no towns, but has several smaller settlements and 101 parishes. Most of the villages have populations of less than 1,000 people. The district contains Cambourne, where the Council offices are located, which is a wholly new village of about 3,500 homes, built in recent years on a greenfield site.

17 South Cambridgeshire is in an economic sub-region with a buoyant economy driven by the 'high-tech' and 'biotech' sectors. While farming is still a significant aspect of the local landscape the district provides bases for many businesses with the administration, financial and service sectors being major employers.

18 The district is part of one of the government's four 'growth' areas identified for substantial development over the next 10 to 12 years. Major housing developments are planned in the district including fringe developments for Cambridge City, which overlap into South Cambridgeshire, and a new town of approximately 9,500 homes at Northstowe. The population of the area increased faster than regional and national averages between 1991 and 2001, growing by 7.1 per cent to reach 131,000 people in 2001. The plan is for the population to grow by a further 33 per cent by 2016 with 20,000 new homes. The regional planning guidance and structure plan identifies the largest increase in the number of dwellings of any district in the eastern region. Planning permissions for the new homes will mostly be needed over the next 12 months, alongside plans and negotiations for section 106 arrangements and the associated infrastructure and services.

19 The population of South Cambridgeshire is mainly white British (93 per cent). The largest ethnic minority population in the district is the fluctuating traveller population, estimated at 1,300 people (1 per cent of the population of the district) in the sub-regional Travellers Need Assessment survey published in 2006.

20 Quality of life and economic well-being are high in the district. The national deprivation index (2004) places South Cambridgeshire as 345th out of 354 council areas in the country. Unemployment was 0.8 per cent in August 2006, which is lower than regional and national averages of 1.9 and 2.6 per cent respectively, and regional estimates suggest there has been little significant change since. Levels of educational attainment are high with the percentage of 16 to 60 year olds with poor literacy and numeracy skills being 7 per cent below the national average. Average life expectancies for both males and females are above the national averages.



The Council 21 The Council comprises 57 elected councillors. At re-inspection the political make-

up was 31 Conservatives, 16 Liberal Democrats, 9 Independents (8 of them forming a group) and 1 Labour councillor. The Council has adopted a leader and cabinet model of governance. Elections are held every year for one-third of the Council's seats.

22 From the creation of the Council in 1973 until 2007, no political group had a sufficient majority to take overall control. As a result it operated a 'consensus' approach, with the largest three political groupings included in the Cabinet on a proportionate basis. In May 2006, for the first time in the history of the Council, the Liberal Democrat group decided to create a formal opposition, but recognition of this, for example, by inclusion in the Council’s Constitution, was resisted at the time by the remainder of the Council.

23 In 2007 the Conservative Party gained an overall majority, and thus overall control, for the first time in the Council’s history. Conservative councillors make up the current Cabinet. A Liberal Democrat chairs the Scrutiny Committee, Conservative councillors chair the Policy Development and Corporate Governance Committees and the Standards Committee runs with a chair who is independent of the Council.

24 During the 2006/07 CGI the Council was in the middle of a senior management restructuring exercise, as part of a wider transformation project to improve the focus on customers in service delivery. By the time of this follow-up inspection, that restructuring process had just been completed, with the two person senior management team supported by five corporate managers who form the backbone of the newly created Executive Management Team (EMT).

25 The Council’s general revenue budget in 2007/08 is just less than £13.4 million. Council tax (Band D) is £102.26 which is still the ninth lowest rate of all district councils and is substantially less than the cost of Council services. General fund balance reserves at 31 March 2007 were just under £6 million compared with £9.1 million in 2004/05. This is still substantially more than the minimum level of balances of £1.5 million the Council has set as a target for itself, following advice from its external auditors. However, the projected trend for the next few years is for a further reduction in balances even if the Council were to be successful in cutting back significantly on net general revenue spending.



26 This sustained pressure on reserves, and on spending plans more generally, comes from two directions. The Council’s medium term financial strategy (MTFS), and an independent financial diagnostic commissioned by the Government Office in 2007 confirms there is no imminent prospect of a budget crisis. However, the financial demands of the growth area plans and the future provision of decent homes for Council tenants could well have significant implications for the Council’s financial standing after 2010/11. The growth area plans, which are currently the subject of the single largest planning application in the UK, envisages that the local population will rise from around 138,500 to 169,000 by 2016. Given that the cost of Council services per head is currently higher than the income derived from council tax, each additional resident will increase the already significant pressure on the Council’s finances. The Council also needs to achieve the Decent Homes Standard for its domestic housing stock by 2010. The conditions survey conducted in 2007 estimated that while 24 per cent of the Council stock currently failed to meet the standard, the Council could afford to meet the 2010 targets but that future maintenance and improvements beyond 2010 are projected to be increasingly unaffordable.

Background to the corporate governance inspections in South Cambridgeshire

27 The difficulties of South Cambridgeshire District Council have been well documented and widely publicised. By the summer of 2006 the problems were sufficient to cause concern there was a serious risk of failure of corporate governance, posing a threat to service users, public funds and public confidence. As a result, the Audit Commission undertook a Corporate Governance Inspection in October 2006 to make a full assessment of the Council’s leadership and arrangements for conducting its business. The inspection report, published in February 2007, concluded the Council did not meet minimum requirements in three of the four aspects of corporate governance assessed. These were leadership, culture and standards of conduct; focus on communities; and structures and processes for democratic accountability, decision-making and planning. Only the arrangements for risk management and internal control were judged to be at minimum standards. The report also concluded there was no confidence as to the prospects for improvement in the next 12 months in any of the four areas assessed.

28 Following publication of the report the Commission considered the representations the Council made about the report, its recommendations and the issue of referral. As a result, the Commission decided not to refer the Council to the Secretary of State under section 13 of the Local Government Act 1999 at that stage. Instead, it announced its intention to re-inspect the Council a year or so after the original inspection, to determine how effectively the improvement plan was being implemented. In doing so, the Commission made clear that if the Council had not made adequate progress in addressing the issues raised in the original CGI report and the Council’s subsequent improvement plan, then the Commission would reconsider whether it was right to exercise its power of referral.



The Council Response to the 2006/07 Corporate Governance Inspection

29 The Council has responded positively to the CGI published in February 2007. There was an immediate change of Leader of the Council. The Council accepted the findings of the report and began to put in place measures to address the failings identified. It established an Improvement Board with the participation of key partners and agencies. An Improvement Manager of chief officer status was recruited in May 2007 from a neighbouring District council on a one-year contract funded by Building Capacity East (BCE). An improvement project team was set up under the brand of INSPIRE, and tasked to develop an improvement plan. The eight themes of the plan were each the subject of an internal cross-cutting team, each with its own champion drawn from the Cabinet. Financial and other support was made available by agencies and programmes such as Go East (the regional Government Office), BCE and the Improvement and Development Agency (IDeA). The Council invested in excess of £425,000 of its own resources to support improvement work in 2007/08, with a commitment to deliver this amount each year for as long as was necessary.

30 The 2007 CGI assessed the Council and its prospects for improvement against four governance themes; community focus; structures and processes; risk management and internal control; and leadership, culture and standards of conduct. The improvement project team blended those four themes with those used in the Corporate Performance Assessment (CPA) process to come up with a plan based on eight themes. This plan, subsequently endorsed by the Improvement Board, comprised the following.

• Leadership. • Prioritisation. • Performance Management. • Capacity. • Partnership. • Communication. • Political Structures.

31 The Council adopted and agreed with the Improvement Board a phased approach to bringing it back up to minimum standards of corporate governance. The primary focus of Phase One (May to October 2007) was to set a clear direction for the Council, develop capacity and enhance the role and contribution of councillors, although work in other areas was also to be commissioned and implemented. Phase Two (October 2007 onwards) focuses on the remaining work in the seven substantive themes, such as performance management and partnership. Around October 2007 the timescales were clarified further, when several additional tasks were scheduled for completion by May 2008. The Improvement Board agreed the form and content of any further phases would depend on the outcome of this follow-up inspection, and on the volume of work still outstanding as of May 2008.



32 The Council’s own review of the first phase of the improvement project, conducted in October 2007, concluded it had made real progress. The Improvement Board recognised that with increased capacity in place ‘the momentum of the improvement process is being driven by considerable energy and focus’. It also welcomed that ‘structures and processes are developing, and although still in their infancy, are also delivering improvements’. The Improvement Board received a progress report on the second phase in January 2008.

Corporate Governance Inspection │ The Council’s Improvement Plan: Progress and Prospects 14


The Council’s Improvement Plan: Progress and Prospects

Leadership 33 The Council has made satisfactory progress in this area, and prospects for future

improvement are promising. But there a few significant risks that may jeopardise future improvement.

34 The 2007 CGI was highly critical of the quality of leadership at the Council. It found there was no clear vision, difficult decisions were avoided, councillors were unaware of, or ill-equipped for, their roles, and community leadership was poor. The Cabinet was failing to tackle the negative culture that was prevalent across the Council. Senior Management Team (SMT) structures were insufficiently robust to ensure good governance and clear leadership.

35 Since January 2007 Council leaders have provided strong and lasting support for the improvement process. The first phase of the Council’s improvement plan gave a high priority to resolving the problems of leadership. The Council moved quickly to adopt the ‘Strong Leadership’ model of cabinet, thereby enhancing the role of the Leader and enabling him to focus the energies of the Cabinet on the main conclusions of the report even before the Council adopted the improvement plan.

36 Council leaders are demonstrating a greater willingness to shape events and agendas. The election results in May 2007 gave one party, the Conservatives, overall control. This, combined with implementing the strong leadership model, led to a wholly Conservative cabinet with revised portfolio responsibilities that better reflected the issues facing the Council. The new administration quickly developed a clear vision for the Council. It reduced the number of corporate objectives from four to three and aligned these more closely with the outcomes of the consultation that underpinned the Community Strategy. This means the Council now has a clearer and more streamlined strategic framework to shape its work.

37 The Council has taken a more active and strategic approach to partnership working and the growth agenda although there is still scope for improvement in leadership of the community. The Leader has taken the chair of the Local Strategic Partnership (LSP) and the Council has begun to make a more influential contribution to developing the next phase of the Local Area Agreement (LAA). The leadership has begun a new phase of engagement with the County Council and Cambridge City Council, the key partners on the growth agenda. But engagement with the local population, and with parish councils, is still inconsistent. Nevertheless, because of the strengthened approach, external partners such as the County Council and other district council partners, and the local media, who have been amongst the Council’s fiercest critics, have recognised improved leadership and engagement in partnership working.



38 Council leaders have taken significant steps to tackle internal weaknesses, in particular to clarify and streamline structures, and processes for decision-making and democratic accountability. For example, the new leadership recognised the Council’s responsibilities for equalities and commissioned work beginning with an equalities audit to address weaknesses identified in the 2007 CGI. The numbers of Council meetings were reduced, with an agenda based on recommendations for adoption. A more business-like approach to Cabinet was reinforced by more joint working in informal meetings with officers, and by publicly accessible meetings. Decisions were taken to abolish Advisory Groups, to reduce the size of key committees such as planning, and to reconstitute the Audit Panel as a Corporate Governance Committee and make it answerable to the Council. The Council took steps to respond to the issues of councillor conduct with new councillor undertakings, a councillor toolkit, revised schemes of delegations and improvements to the constitution. One outcome of this is that much less officer time is now wasted by unnecessary councillor contact and interventions.

39 The Council has pro-actively built leadership skills and capacity to deliver improvement. It has secured significant support from IDeA, BCE and the Government Office and all members of the Cabinet and key committee members have attended the leadership academy. There was strong attendance at top team development courses. BCE has also funded a dedicated Improvement Manager at chief officer level, seconded from a neighbouring Council. The Council set up an Improvement Board with guaranteed financial support of £425,000 a year for the duration of its work. Mentoring has been offered to all political groups, and the Conservatives and Liberal Democrats have both taken full advantage of this. One consequence of all this has been a clear and working understanding that neither of the two main political groups would rise to provocative behaviours, as had happened previously. The Independent Group have not engaged as closely with these improvement processes, and there is a requirement for future training to be based more on specific needs, and to draw them in as required.

40 Some weaknesses in decision-making and effective leadership have yet to be overcome. Some of the new, more business-like, approach to decision-making has been based on old habits of working - that is reaching decisions without a clear evidence base. A good example is the decision to abolish the Advisory Groups, which was done without a full analysis of the impact either on future policy or on non-executive councillor involvement in decision-making. The sensible decision to reduce the size of key committees has been overshadowed by allegations that their eventual size was influenced more by political advantage for the controlling group than effective decision-making. This unnecessary politicisation has carried over into the workings of the Scrutiny function, with the appointment of a member of the controlling Conservative Group as chair of the new Policy Development Committee and a lack of engagement by the controlling group members in the Scrutiny Committee.

41 The prospects for further improvement are promising. There are clear plans for building on recent successes in the second phase of the improvement plan, with a stronger base for leadership on key issues of local concern, such as growth, housing futures and diversity. Work is also planned to explore all out elections and embed values.



42 Significant risks to future progress remain for the Council to manage. These arise from the ongoing adjustment to the new circumstances of one party having overall political control. The success of this adjustment requires a clear-sighted recognition by all councillors that many of the recent political problems are an outcome of this change. This includes recognition by the controlling group that some of the problems that have arisen recently were avoidable, and seeking not to repeat the mistakes.

Prioritisation 43 The Council has made good progress on prioritisation, and prospects for further

improvement are promising. The key challenge is to effectively embed the new multi-year approach to corporate planning, while ensuring that the Council continues to develop a more outward facing approach, especially towards those of its population at risk of disadvantage.

44 The 2007 CGI was highly critical of prioritisation at the Council. The links between the Community Strategy and Council priorities were weak. The corporate planning process was not sufficiently rigorous and did not drive the Council forward to achieve clear and measurable goals. There was inconsistent use of data. The Council was not sufficiently focused on its current and future communities and their needs. It was slow to support the growth agenda. It was passive and missing opportunities. Customer access to services was mixed. The Council did not cater well for the needs of minorities and did not take its duties towards minority groups seriously. There was also evidence of racist attitudes among councillors.

45 The Council has made significant progress in developing its plans with a greater focus on community needs and clearer priorities. The new corporate objectives agreed in July 2007 will feed into a new multi-year Corporate Plan, to be adopted in April 2008. These objectives are supported by 21 sub-priorities, which are clear, address local need and provide focus for robust action planning. These in turn form the backbone of a new multi-year service planning framework which creates a ‘golden thread’ from corporate objectives down to personal work plans. The Council has created new priorities, such as economic development, which in turn reflect the more outward looking approach it now takes. It has given higher priority to the LSP and the LAA, and has plans in place to improve the functioning of the first, and a sustained high level input into the next phase of the latter. A review of partnership working is set to align and prioritise Council resources to secure a better return from its investment in partnerships.



46 The Council is more outwardly focused on its communities and customers. Increased emphasis is placed on customer care. The ‘Service First’ programme of improvements to customer service and access is being implemented and a customer care support officer has been appointed to help drive this forward. The joint contact centre, run with the County Council, is open between 8 am and 8 pm and there is a real determination, backed up with specific plans, to tackle under-performance which was previously absent. This improved focus on customers coupled with improving services was reflected in the results of the Council’s ‘Vote for Values’, an exercise that is the starting point for a work plan to embed core values across the whole Council.

47 The Council is taking adequate measures to improve its performance on equalities. It followed up its equalities audit with measures that enabled it to reach level one of the Equalities Standard at the end of 2007, with robust plans in place to achieve level two by April 2009. Delivery on the disability equality scheme action plan is strong, with residents having an input into improvements to the planning process, deaf awareness training for Council staff and the integration of disability friendly sports facilities at Sawston Village College. The workforce is now representative of local communities, at least for BME communities and people with disabilities.

48 All of the Council’s efforts to focus more effectively on community needs have not been successful. The Council has not made best use of existing mechanisms to shape future prioritisation more strategically. A good example is the disbursement of funds by the LSP. In late 2007, the Council gave £100k to the LSP for pump-priming initiatives, which was spent on cycle paths that others, such as the County Council or developers, would have provided anyway. The mechanisms for disbursing LPSA reward monies across the County show a similar lack of foresight, resulting in a mass of small individual bids from local voluntary organisations. Both processes could have been improved by prior agreement with LSP partners about key priorities for spending, which would have encouraged cross-sector bids from coalitions of voluntary groups. In addition internal improvements in process have not all been matched by parallel improvements in delivery. For example while much has been achieved inside the Council in terms of attitudes, processes and policies to diversity and equalities, outside the Council the relationship with the gypsy and traveller community, by far the largest minority group in the District, has deteriorated, with little engagement.

49 Prospects for future improvement are promising. The new Corporate Plan aims to bring a clarity and coherence to the prioritisation process that was previously lacking. The Council is taking decisions that in the past it has avoided, on housing growth, balancing the budget and future housing stock transfer. All point to improved prioritisation. The Council is giving greater priority to customer care with plans for further improvements including a joint improvement plan (with the County) on the contact centre and a new three year customer service strategy. Most of the recent achievements are springboards for future improvement. The Council accepts the need to work on the weaknesses that have been identified.



Performance management 50 The Council has made adequate progress on performance management,

although the Council did not give high priority to these issues until the second phase of the improvement plan. Prospects for improvement are promising.

51 The 2007 CGI assessed performance management as below minimum standards. Neither performance monitoring nor performance management were effective. The failure to value these processes was inhibiting the capacity of individuals and services to improve. Arrangements to secure continuous improvement were weak. Work was compartmentalised, with little effective cross-team working. Performance management practice was inconsistent across the Council, with only some services, such as environmental and homelessness, having a sustained focus. The recommendations of a joint review by the external auditor and the Commission had not been acted upon.

52 Since May 2007, the Council has taken several positive steps but the full impact of the changes on service delivery has yet to be demonstrated by improved service performance in most areas. There is some recent improvement in development control and benefits. The positive steps include:

• the appointment of four senior performance champions, including a councillor. All have attended a ten-day BCE Capacity Building programme for performance management;

• the designation of a portfolio holder with specific responsibility for performance management;

• increased performance management capacity. Performance staffing has been restored to its pre-capping level and staff no longer have to fill gaps in policy areas, such as partnerships and diversity;

• an agreed implementation plan for corporate objectives which allows closer monitoring and management of performance of its 21 sub-priorities;

• development of key performance indicators (PIs), to be known as ‘heartbeat PIs, to sharpen the focus of performance management;

• quarterly reports to Cabinet integrating performance information with financial data and customer service standards;

• replacement of the old system of business process reviews, which were largely about cost-saving, with a forward programme of service reviews based on improving efficiency and effectiveness;

• an LSP Action Plan, which is now performance managed and evaluated in a much more systematic way. New national indicators (NIs) and LAA targets are being built into the design of future monitoring reports; and

• a decision to acquire a new electronic performance management system, to be in place by the summer of 2008. The new system will be common to South Cambridgeshire, Cambridge City Council and the County Council, thereby allowing all three authorities to track progress against shared targets more effectively.



53 There are areas for further improvement. Some local PIs are not outcome focused; for example the measure for councillor training is about attendance, not impact. Under performance is reported to EMT and Cabinet, but this does not always result in improvement. Scrutiny is not yet effectively challenging performance. And managers do not get the robust data they need to help them manage, as well as monitor, performance. These gaps mean the Council does not yet have a robust and embedded approach to performance management.

54 Prospects for improvement in performance management are promising. The Council has made good progress in an area that it did not prioritise for the first phase of improvement. Implementation of the Council’s plans should enable it to deliver a more consistent trend in service improvement and build on successes. Its successes include being a Beacon authority for waste, and a regional champion for approaches to homelessness.

Capacity 55 The Council has invested well in new capacity to deliver improvement. These

investments have already had a positive impact. Prospects for improvement are uncertain with some significant issues that remain to be addressed.

56 The 2007 CGI made a series of criticisms about the Council’s capacity to improve. Its capacity to deliver key projects, such as housing growth, was uncertain. There was no staff resource to support the LSP. Human resources policies were under-resourced, out-of-date and had little strategic impact. The effectiveness of training was not assessed, and there were no programmes of coaching or mentoring. There was no investment in diversity. Cross-departmental working was limited, as was learning from past mistakes, or other councils. There were few benefits to the public from investment in information and communication technology (ICT). The MTFS was not integrated into other plans and arrangements for financial planning were weak. Risk was not managed effectively and not all projects were properly resourced or managed.

57 The Council has moved quickly to fill identified gaps in capacity as follows.

• It has appointed a new Equality and Diversity officer and new officers for strategic partnerships, scrutiny support, customer service and performance management.

• It has put in place a more robust structure to underpin the work on housing growth:

- s106 arrangements have been reviewed and funding is in place to appoint an external negotiator to strike a better bargain for residents;

- a Growth Area Project Team has been established, under a growth co-ordinator appointed by the District Council; and

- two joint development committees have been put in place. There are now delivery boards for both Northstowe and the fringe developments reporting to a senior officer board.



• Additional funding for growth has been generated through Cambridgeshire Horizons.

• The MTFS has been revised, and its general robustness validated by an independent financial diagnostic commissioned by GO East.

• In year budget monitoring has been tightened, thereby reducing underspends. • Risk and asset and project management arrangements have been updated

and improved; for example the keystone asset management system enabling real time evaluation of asset performance went live in January 2008.

58 Streamlined decision-making has increased capacity. Implementing the new schemes of delegation, reducing the size of committees, abolishing advisory groups and introducing the one day Development Control process (site visits morning, meetings the same afternoon) have all freed up officer time. Increased training has had a positive impact. Councillor behaviour has improved and the use of established channels for pursuing the concerns of constituents has significantly reduced the burdens on senior officers. Restructuring has also had an impact, with the five corporate directors that now sit on the newly created Executive Management Team (EMT) offering the potential for much more strategic capacity than the previous arrangements. There are many more cross-cutting working groups in evidence, both in the work streams for the improvement plan process and also more generally.

59 Prospects for improvement are uncertain. Although there are some benefits yet to be gained from the Council’s investments in capacity in the last year there remain some significant issues that could restrict improvement.

60 The full impact of the investments in capacity is not yet realised and so further improvement is likely as the new arrangements and capacity are embedded. Likely areas of further improvement are in diversity, scrutiny and customer care, the latter when the ongoing programme of workshops for staff is complete. Necessary training programmes, for example, risk management, are coming on stream. Extra resources for growth could result from the impending joint applications for the government’s Growth Area Funding (GAF3) and EDRF funding. These developments should help sustain the improvement trend.

61 However some significant resource constraints continue to impact on Council improvement. HR is having more impact than it did, in dealing with, for example, staff sickness, effective support to frontline services and competency development. But it has not been resourced to do all that is asked of it. For example, it does not provide a full recruitment service, the impact of training is not yet evaluated and reporting from the new HR/pay roll system is problematic, and particularly impacts on managers trying to access it.



62 Electronic access and support remains an area of weakness. A short-term recovery plan is in place to address the under-performance of the Customer Contact Centre, and further contingency measures are planned, as required. But ICT capacity is not keeping up with potential demand, internally or externally, as staff posts are deleted to offset investment elsewhere. The Council’s website in particular is insufficiently transactional, while the lack of management Information is evident from the lack of detailed impact assessment of Council capacity building programmes, such as training. This issue is recognised by the Council and ICT is subject to review.

63 Future financial capacity remains a significant risk for the Council to manage. The independent financial diagnostic commissioned by GO confirmed that no financial crisis is imminent. The problems that will arise in the medium term are now the subject of active high level analysis by the Council, with a number of financial recovery options being developed. The future challenge lies in reconciling this need for medium term financial recovery with meeting the needs of existing and future residents, and learning the lessons of past mistakes, such as the timely provision of community facilities at Cambourne.

64 Under capacity at senior management level risks undermining the change process and jeopardising future improvement prospects. For the past few months, the Senior Management Team (SMT) has been four strong, with the Improvement Manager and Joint Planning Officer supplementing the permanent two-person team. With the secondment of the Improvement Manager due to end in May 2008, and with the Joint Planning Officer becoming increasingly burdened by the demands of the growth agenda, the strategic capacity at the top of the Council will again be stretched. A two-person SMT is inadequate for the challenges the Council faces, and the departure of the Improvement Manager is imminent. This role has provided coherence, vision and drive to the improvement programme as well as adding to the strategic capacity of the Council as a whole.

Partnership 65 The Council has made good progress in some key partnerships and has

promising prospects for improvement.

66 The 2007 CGI was highly critical of the Council’s approach to partnership. Passive and internally focused, the Council simply was not active in key partnerships. This lack of direction and impact in partnership working often led to staff and services being overstretched in meeting partners’ needs in areas such as growth and housing.



67 Since February 2007, the Council’s approach to partnership has improved significantly. Partnership is now seen as a means, indeed the means, to meet the key challenges facing the Council. The growth area work is the prime example of this. For the first time since the late 1990s, the Council has engaged in a genuinely joint approach to local growth with the County Council and with Cambridge City Council. The success of this new approach can be measured by the joint arrangements that have resulted:

• the establishment of two joint committees, one for Northstowe and one for the City Fringe developments;

• a joint negotiating team for s106 agreements; • a delivery board centred on Cambridgeshire Horizons; and • a joint strategic implementation committee.

All of this adds up to a robust set of arrangements for a very challenging growth agenda. From being a reluctant partner with no interest or influence, partners now see the Council as a constructive player, with a strong commitment to partnership, and excellent staff to back that up.

68 The Council’s approach to the LSP and LAA has undergone a similar improvement. With dedicated officer support and the Leader chairing the LSP, the Council is now seen to be engaging fully. Workshops on the LSP have engendered greater awareness among councillors. The self-assessment exercise, using the toolkit ASPIRE, has made all partners, including the Council, aware of the future opportunities for the LSP. The Council involvement in shaping the next round of the LAA has increased, led by the Improvement Manager. It has reviewed and ranked its partnerships according to their importance to the delivery of corporate priorities. An action plan to get the best from all its partnerships is being developed.

69 The prospects for sustained improvement are promising. The new Sustainable Community Strategy should give a sounder basis for future partnership working. So should the next round of the LAA, which is expected in the summer. The structures put in place on the growth agenda aim to drive improved partnership working. However, further improvements are necessary. The Council engages parish councils inconsistently in its decision-making processes or on issues of direct interest to them. The performance management of action plans, use of resources and joint working on shared objectives are all areas where there is scope for further development to make the most of partnership in the LSP.

Communication 70 Council communication has improved both internally and externally. The

processes and procedures which have been put in place to improve communication create promising prospects for improvement.



71 The 2007 CGI was highly critical of the Council’s record on communication. There was little direct engagement with communities, least of all face-to-face. The Council was largely ignoring some groups, such as young people. It was not managing its public reputation effectively, with leaks to the media and poor behaviour by a small number of councillors tarnishing its public image. Communication, when it did happen, was usually one way from the Council to its residents. There was limited use of public meetings, real limitations in the approach to complaint handling, and no consistent corporate approach to resident surveys.

72 External communication has improved. The Council produced a new communication strategy in September 2007. Engagement with the community on the new Sustainable Community Strategy has been much more extensive than for previous plans, with more face-to-face meetings, discussion groups, and stakeholder workshops, and with wider participation across all age groups. Council meetings are more accessible. Residents now have the right to speak at Council and Development Control Committee meetings. Portfolio Holder meetings are open to the public and scrutiny committee meetings are now held outside of the main Council offices. The safer neighbourhood panel meetings with the police have been a success in dealing with local instances of anti-social behaviour. The Chief Executive and Cabinet have met with parish councils. These meetings have taken place regularly with parish councils and the third of the six monthly meetings has just taken place. Website navigation, links and the A to Z of services have improved. Satisfaction with complaint handling, previously poor, improved slightly in 2007. And the relationship with the local paper has been put onto a sounder footing. Regular meetings with the editor, background briefings, more targeted press releases, are all leading to a better public understanding of the genuineness of the Council’s commitment to improve.

73 Internal communication has also improved. A monthly corporate briefing was started in November 2007, to supplement the weekly message to staff from the Chief Executive. A new staff magazine, known as Scene, has been successfully launched. Staff have been briefed on developments in the improvement process through regular INSPIRE bulletins. There are now regular lunchtime seminars for managers. The Leader and Chief Executive have run a series of question and answer sessions. Staff are involved in service planning. All this helps keep staff well informed of achievements, what is going on and their part in the challenges ahead.

74 The processes and procedures which have been put in place to improve communication create promising prospects for improvement. But the success of these policies will depend on the Council’s performance in the delivery of services and on conduct and leadership. Weaknesses remain in internal communication. The Council has plans for further work on embedding values and to produce a new paper on community engagement. However, communication internally is more regular and better valued by staff.



75 Future improvements in external communication now depend on how the Council collectively behaves and performs. This was reinforced for the Council in the past year, first with the racist comments made by a councillor, leading to his resignation, and latterly with negative publicity over the Christmas waste bin collection. Parish councils report that communication with the Council is still a significant problem, both day-to-day and strategic. Public access to decision-making is still limited. Neighbourhood Panels do not cover anything other than community safety, when there is a clear demand from parishes for a wider agenda. Communication with minority communities is inadequate, and has deteriorated from an already low base over the past 12 months, although the conference to be hosted by the Council in March 2008 presents an opportunity to start to re-build this. All this means the Council still faces a significant challenge to improve how it communicates.

Political structures 76 The Council has invested significantly in this area, has made real progress, but it

is not yet clear whether this improvement is sustainable.

77 The 2007 CGI made many criticisms about political structures. There was a poor political culture, with no sense of shared values. Relations between councillors and officers were ineffective. The constitution was in need of redrafting. The schemes of delegation were restrictive. The opposition was not formally recognised. There was no code of corporate governance and no clear accountability for political governance. The arrangements for the Audit Panel and scrutiny were ineffective and constructive challenge was neither valued nor developed. There were no robust arrangements for policy development and there were too many Advisory Panels with no clear remit. Above all, there was no awareness internally of the scale of the problems the Council faced.

78 The improvements made since the CGI are substantial. The key ones are as follows.

• A number of changes to the constitution covering a revised scheme of delegation, the adoption of the code of corporate governance, revisions to scrutiny and new councillor role descriptions and toolkit.

• Revised financial regulations, which included further changes to the scheme of delegation, risk management procedures, and the reduction of payments, processed through services.

• The Audit Panel has become the Corporate Governance Committee, reporting to Council.

• The role of the opposition has been formally recognised, and a Liberal Democrat chairs the Scrutiny and Overview Committee. A second scrutiny committee, on Policy Development has been established and forward work programmes are in place for both. Already there is some evidence of successful scrutiny challenge, for example on the decision to freeze community grants in October 2007.



• Advisory panels have been abolished, with a plan to have ad hoc councillor panels to support Scrutiny and portfolio holders now anticipated.

• Publicly accessible portfolio holder meetings are now monthly. • A new councillor undertaking is in place to support good conduct and

behaviour, with more than 50 councillors signed up to it. • The creation of councillor panels provides support to individual portfolios and

scrutiny.

79 All of this has had a generally positive impact on the clarity of decision-making. Councillors’ behaviour has improved, although the Council is aware that it is still too early to judge whether a culture of mutual respect has fully developed.

80 Prospects for future improvement are uncertain. There are plans in place to embed further the changes in political structures with an evaluation of the work of the scrutiny committees by IDeA and ongoing programmes of councillor development. However the sustainability of the improvement depends ultimately on the future quality of the decision-making process, and on sustaining better councillor behaviour.

81 There remain a number of significant risks on councillor conduct. Arrangements to monitor constitution breaches and the monitoring officer arrangements are not yet embedded. There is a perception of disenfranchisement of non-executive councillors which has arisen because of the shift to overall political control, the ineffective scrutiny arrangements and the decision to abolish Advisory Panels without a full analysis of the likely impact. For example the extent of local drainage problems requires the application of the sort of expertise that exists among non-executive councillors.

82 There are also the continuing political tensions arising from the adjustment to overall political control. This can be seen in the lack of a clear understanding of the role of scrutiny as a means of constructive challenge, giving rise to the perception that it is being used as a political tool, and the unresolved difficulties between the two scrutiny committees. The relationships between the role of full Council, the new Portfolio Holder meetings and scrutiny are also unclear, thereby creating and feeding political tensions. Finally, the importance of the future work on embedding values has yet to be recognised by councillors. All this means that it is too early to say that the relationships of mutual trust have been established, thereby bringing uncertainty to the prospects for future improvement in this area.

Corporate Governance Follow-up Inspection Re-inspection Report - Audit...governance arrangements is...

Documents

Transcript of Corporate Governance Follow-up Inspection Re-inspection Report - Audit...governance arrangements is...