Cabinet
28 November 2011
Agenda Item No______11_______
REVENUES AND BENEFITS SHARED SERVICE
Summary:
The report updates members on progress to date on the shared
service work for Revenues and Benefits.
The realisation of savings and efficiencies from working in partnership
can only be delivered if the two authorities operate on the same
application software. The decision therefore on the software upgrade
is crucial to any development of shared working and the development
of a fully operational shared service.
There are a number of interdependent decisions which are required to
be made linked to the software procurement. This report considers
these areas and their dependencies.
Conclusions:
The service will be subject to significant change in the future and
having stable software as well as a system that enables us to
maximise efficiencies will be essential. The decision to procure a new
software system should be considered alongside opportunities that a
partnership approach would give.
The business case has been reviewed following the procurement
exercise for a replacement system, extensive work considering the
infrastructure requirements for a single hosted system, a revision of
employee and supplies and service budgets has also been
undertaken.
As a result of this work it is estimated that a partnership arrangement
would deliver total annual savings of £561,877
Some further financial modelling of Universal Credit has been carried
out which still forecasts a net saving of £438,000 over five years
between the two authorities. Gross savings of £1,525,306 are
forecasted over the five years taking into account capital investment.
Recommendations:
1. To agree the revised financial information within the business
case.
2. For delegated authority to be given to the Portfolio Holder for
Revenues & Benefits and the Deputy Chief Executive to continue
to develop the Partnership Agreement for Council approval.
delegated authority to the Leader of the Council and Portfolio
Holder for Revenues & Benefits and the Deputy Chief Executive, to
develop a shared service model and following full consultation
report back to Cabinet.
3. For authority to be given by the Cabinet to procure the software
from Civica and complete and seal the Agreement.
4. Note that the infrastructure requirements and costs are within
budget and give delegated authority to the Deputy Chief Executive
and Portfolio Holder for ICT to agree the infrastructure
procurement
with BCKLWN.
5. Approve the proposals for BCKLWN to host the ICT infrastructure
and business system and for NNDC to host any proposed shared
management structure.
6. Delegate authority to the Leader of the Council, Portfolio Holder for
Revenues and Benefits and the Deputy Chief Executive, to agree
proposed service level agreements with customer services and
other support services.
Cabinet
28 November 2011
Cabinet member(s):
All
Contact Officer, telephone
number, and e-mail:
Ward(s) affected:
All
1.0
Introduction
1.1
In February 2011 the Council agreed to begin work to enter into a formal partnership
with the Borough Council of King’s Lynn and West Norfolk (BCKLWN) to deliver
Revenues and Benefits services. Delegated authority was given for the Deputy Chief
Executive to enter into a procurement process for the new ICT business system. This
report provides an update to members and seeks to gain approval to enter into a formal
partnership with BCKLWN for the operation of a shared service for revenues and
benefits and to accept the contract for the ICT business system.
1.2.
There continues to be a lack of government guidance on the introduction of Universal
Credit and the introduction of a localised council tax support scheme. No indication has
been given as to how much benefit administration grant we will continue to receive or the
level of support we will receive for a localised council tax support scheme. The proposal
around the retention of business rates adds further financial uncertainty. The proposals
do indicate that the changes are likely to move a greater degree of financial risk from
central government to local government.
1.3.
With this financial uncertainty, an increasing benefits caseload and additional challenges
on revenues collection it is important that the service has stable software to continue to
deliver good services and maximise efficiencies to meet any future challenges. However
it is also recognised that implementing a new system in such a changing environment
also presents challenges and risks.
1.4.
It is considered that this risk could be partly mitigated with the partnership approach
which would give the service area additional resilience and flexibility when faced with
these changes.
2.0
Progress to date
2.1.
Following the implementation of the business case the work to date has centered
around;The procurement of the replacement business ICT system, considering the infrastructure
arrangements and costs for a single hosted system and examining options on
employment issues.
2.2.
The Revenues and Benefits Shared Service Project Partnership Board met on the 14
September to review progress and agreed that a number of proposals should be put
forward in the cabinet reports to both Councils, covering the following:
ƒ
ƒ
ƒ
ƒ
ƒ
Procurement of replacement ICT business system
ICT infrastructure
Revised financial information/ update of the business case
Hosting and support services
A Formal Partnership Agreement.
3.
Business Case
3.1.
It was agreed at Cabinet on the 14th February that NNDC should undertake a full
tendering exercise with BCKLWN to procure a joint solution for revenues and benefits
software with a single host authority and shared management arrangements.
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28 November 2011
3.2.
Business system procurement and implementation for a single hosted system. The
Cabinet report of the 14th February reported indicative savings following the work on the
business case for 3 authorities. These figures and implications are now reconsidered
following a full procurement exercise for new revenues & benefits software and
consideration of infrastructure costs for a single hosted system.
3.3.
The tender for an appropriate software system was conducted through the Official
Journal of the European Union (OJEU) Contract Notice and Invitation to Tender. Two
completed tenders were received by the deadline of 27th June 2011.
3.4.
It was reported into the Partnership Board that following extensive and detailed
evaluation of the two tenders received for the new Revenues and Benefits business
system that Civica was the preferred supplier. The Board concurred that both authorities
should jointly enter into preferred supplier discussions with Civica.
Appendix G shows the price and scoring from the evaluation.
Contracts have now been drafted between Civica and the two authorities.
3.5.
The costs of implementing this new software have been considered financially and in
relation to service performance.
3.6.
As was reported in the previous Cabinet report NNDC’s current software is outdated and
the original contract has expired therefore the supplier could withdraw support at any
time giving a notice period of 12 months. If this were to happen it would have a serious
impact on the service.
3.7.
Working jointly with the BCKLWN to implement the software will enable a joint project
team to be established. Skills and expertise from both authorities will be utilised from
within the existing teams. The ICT project management will be from NNDC and as with
previous large scale projects (PROBASS) re prioritisation of work will be necessary.
It has been estimated that in addition to this resource NNDC will require an average of 6
FTE (12 months) to backfill posts and provide processing support to revenues and
benefits during the conversion process. BCKLWN have estimated an average of 8 FTE
(6-12months). The services could potentially recruit on a temporary basis and/or
consider remote processing.
The costs are considered in more detail at section 5 Table 3.
3.8.
As part of the business case it was recognised that efficiencies could be realised by
having a host authority for the infrastructure for the revenues and benefits system and
also the data base administration/application support. An early decision was required to
determine which authority should host the ICT infrastructure. It was intended that a
report commissioned by both authorities from Foresight Consulting would form the basis
for this decision. The report favoured BCKLWN providing some helpful background
information. This decision was supported by NNDC ICT Strategy Group and the Joint
Partnership Board.
3.9.
Following this decision a group led by BCKLWN with representatives from both
authorities was set up to consider the options and costs for setting up the necessary
infrastructure to support a shared revenues and benefits service. A detailed report of the
options and indicative costs was presented to the Joint Partnership Board. A report has
also been taken to NNDC ICT Strategy Group to consider the options and
recommendations made. This group supports the recommendations made in this report.
3.10. The proposal provides a cost effective solution that is scalable and reuses, wherever
possible existing assets from both Councils.
3.11. In order to align authority ICT Systems it is necessary to have a core network connection
to link authorities together, to obtain the necessary savings from processes and
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28 November 2011
systems. Any solution chosen will be subject to a tender exercise governed by contract
standing orders.
3.12. It is essential to formulate the most efficient connectivity to support Shared Services for
Revenue and Benefits, for NNDC and look at additional benefits, such as disaster
recovery which can improve the business resilience from both authorities’ perspectives.
The line will be adequate for Revenues and Benefits but should have the potential for
additional traffic in the future.
3.13. There are a number of software options to enable access to remote applications in an
effective and efficient way. The software enables data to be transmitted efficiently by
reducing the amount of bandwidth required. It is proposed to use CITRIX technology
which is tried and tested software.
3.14. It is proposed that Fakenham Connect Office be utilised as a communications hub. The
communications links would then go via the Fakenham office offering cost effective, high
speed capacity which could also be scaled up to include other services in the future.
The following considerations have been taken into account when proposing this option:ƒ Uncertainty about the life of Fakenham Connect building – hence costings
estimated on a contract of between 2 years to 5 years. A one off contingency
sum of £11,000 has been put aside should the line need to be moved in
recognition that Fakenham Connect may only be a short-term solution.
ƒ Strategic importance of having a presence to the west of the district.
ƒ Strategic role a building in Fakenham could have if further joint working
opportunities present themselves.
The steering group concluded that the option of using Fakenham as a ‘hop’ was
reasonable and relatively low risk.
3.15. In order to increase the resilience for NNDC and provide a backup link to the internet
should the point to point communications link fail for any reason, it is recommended that
NNDC should have a scalable connection directly into the internet cloud. This would
also double as a connection to replace their current internet feed.
3.16. Data Centre and Applications Servers - The suppliers who have tendered for the
revenues and benefits business system have both outlined their service requirements
and these have been evaluated by the team.
A full breakdown of specifications and costs have been drawn up.
3.17. File storage and backups - BCKLWN will provide resilient storage architecture based
upon storage area network technology.
3.18. Disaster Recovery - There is an opportunity for a reciprocal disaster recovery (DR) site
to be situated in the Fakenham Connect Office to facilitate a disaster recovery solution
for not only the partnership but also for both authorities total ICT provision. No options
analysis has been undertaken at this stage and this would require a separate piece of
work.
3.19. If the above is not considered an option for NNDC the DR for Revenues and Benefits
would be hosted on the DR site for BCKLWN. BCKLWN are currently reviewing their
options which include Hunstanton and Fakenham.
3.20. The total estimated costs for ICT infrastructure set up and the ongoing annual charge is
shown below;
Capital – set up costs
Year 1 revenue costs - onwards
£92,835
£52,059 change
See Appendix H for detail of the indicative costs
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28 November 2011
3.21. The charges to the partnership for the line rental could potentially reduce should other
shared /joint working opportunities present themselves to the authorities.
4.
Service Implications
4.1.
The joint procurement of the new ICT software and an integrated document
management system provides opportunities for the service to be managed jointly with
one management structure and deliver savings in other areas of the service. It was
recognised that the real benefits would only be realised if a different service model was
considered. These opportunities were explored in the initial business case and have
been revisited with savings being based on updated 2011/12 budgets.
A summary of the budgets is attached at Appendix I.
4.2.
Having undertaken a review of how the shared service will develop it is estimated that
savings of £495,946 from employee costs and supplies and services can be made from
April 2013/14.
Details of which are shown at section 4.2 in Table 1.
4.3.
The employee savings are based upon a reduction of approx 13 FTE across both
authorities with a shared management structure and shared processes. Efficiencies can
be achieved in a number of areas of work –e.g. system administration, business support
– government returns, subsidy, performance management and certain more specialised
areas.
4.4.
The estimated employee savings have had to be considered on the services current
legislative responsibilities and no account has been taken of any future changes as there
is insufficient detail on which to make assumptions on.
With the introduction of Universal Credit still timetabled for implementation in October
2013 with a four year transition to 2017, although looking likely that this may have to be
extended, savings identified from within the benefit service may be eroded.
4.5.
It is estimated that a saving of £107,946 can be made from the supplies and services
budgets across both authorities. Examples include duplication of attendance at
training/conference events, printing.
Table 1 – Employee and supplies and services estimated savings
NNDC employee costs
2011/12 Budget
£
1,295,839
BCKLWN employee costs
1,622,795
Total employee Costs
Revised employee budget for
Shared Services 2014/15
Estimated Annual saving
2,918,634
2,530,634
(388,000)
Supplies & Services – Budget Heads
e.g. postage ,printing, stationary
(107,946)
Total Estimated Savings to the
Partnership from 2014/15
(495,946)
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28 November 2011
Apportioned to NNDC (estimated at
44.4%)
4.3.
(220,200)
Other Support Services
The remaining support services that make charges to the revenues & benefits service
are as follows.
Table 2 Support Service Recharges
Support Service Charges
Planning Management
Customer Services
Personnel Services
Common Training Budget
Computer Recharges
Telephone Services
Graphic (photocopying
charges))
Web Team
Admin Buildings
Accountancy and Creditors
Insurance
Sundry Debtors
Internal Audit
Performance Management
Legal Services and Client
Disbursements
NNDC Budget
2011/12
£
BCKLWN Budget
2011/12
£
2,190
301,700
69,440
11,950
252,440
8,220
28,430
18,860
81,110
29,700
39,150
41,730
9,140
13,030
5,240
1,110
405,810
30,175
198,440
11,950
18,030
58,820
18,965
68,120
8,130
6,885
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Support Service Charges
28 November 2011
NNDC Budget
2011/12
£
Graphical Information System
Media and Communication
Central Costs
Total
BCKLWN Budget
2011/12
£
2,120
3,010
43,580
2,915
961,040
829,350
4.4.
No savings have been anticipated for a reduction in support service charges which
represents 34.6% of the overall gross budget of £5,169,834
(70.2%) of the net budget £2,551,455). This net fig includes additional benefit subsidy to
administer increased caseloads as a result of the recession. These would initially be a
fixed charge to the partnership and opportunities to reduce them would be explored as
the partnership develops and the implications to the respective authorities were
considered.
5.
Financial Appraisal
The table below summarises the Capital and Revenue costs and funding position for
Year 1 of the Partnership
Table 3
Year 1 2011/12
Capital Costs
ICT Procurement
ICT Infrastructure and DR
Project Management
Year 1 Licenses
Contingency
Total Capital Costs
Revenue Costs
Ongoing Fraud license
Infrastructure Costs
Backfilling Costs
Total Revenue Costs
Total Year 1 Costs
Funding
RIEP
NNDC Contribution
Year 1 2011/12
BCKLWN Contribution
Total Funding
Net Position
£283,950
£92,835
£50,000
£41,100
£46,788
£514,673
£10,000
£52,059
£236,000
£298,059
£812,732
(£278,000)
(£267,366)
(£267,366)
(812,732)
£0
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28 November 2011
Table 4 below considers the ongoing revenue costs to the partnership
Ongoing Revenues
Costs Year 2
Software Licenses
Infrastructure Costs
51,000
52,059
103,059
NNDC Software licenses
BCKLWN Software Licenses
90,158
78, 832
168,990
Saving
(65,931)
6.0.
Application Support - Hosting arrangements
6.1.
The partnering authorities agreed in the business case that there would be a single host
authority for the Revenues & Benefits software.
6.2.
From an evaluation of the LA’s ICT services, both LAS are well placed to provide the
necessary application support to the Partnership. Both have experienced and committed
members of their teams currently providing an excellent service to the respective
revenues & benefits teams.
.
7.
Shared Management Team – Hosting arrangements.
7.1.
It was recognised in the business case that jointly procuring replacement software
created an opportunity for the service to be managed with one management structure.
The respective Human Resource Teams have considered options for employee models
in relation to hosting arrangements for a shared management team.
The recommendation is that any shared team should be seconded to the hosting
authority.
7.2.
Both Authorities have expressed willingness and have the ability to host the application
software. However with regards to the hosting arrangements for the shared
management team BCKLWN have not expressed a wish to host. This decision has been
taken on the authority’s strategic position not to increase the head count of the
organisation.
7.3.
It would seem appropriate that to equalise risk and responsibility across the two local
authorities, that the Partnership should develop a service level agreement with BCKLWN
to provide the application support for the revenues and benefits software and NNDC will
host the shared management team.
8.
Customer Services and Other Support Services
8.1.
Customer services in BCKLWN receive all telephony contacts and face to face enquiries
through a corporate customer service team. Scanning and Indexing through another
corporate team. NNDC receive all customer telephone contacts directly into the back
office and face to face enquiries and scanning and indexing are currently delivered by
the corporate customer service team.
8.2.
As part of the ongoing work to develop a shared service organisational model, NNDC’s
telephony system will be reviewed and the delivery of scanning and indexing will be
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28 November 2011
reviewed generally for the partnership.
8.3.
It is being recommended that Service Level agreements are developed between the
customer service team at BCKLWN and NNDC to continue to deliver the services they
currently provide.
8.4.
It is proposed that service level agreements are put in place with other support services.
9.
Formal Partnership Agreement
9.1.
At the Joint Partnership Board meeting on the 14th September The Borough Council of
King’s Lynn and West Norfolk and North Norfolk District Council reaffirmed their
commitment to moving ahead with the partnership to develop and deliver a shared
service arrangement.
9.2.
It was agreed at this meeting that it was necessary for a formal partnership agreement
to be in place in order that the software procurement could be finalised.
9.3.
Members are asked to agree to delegated authority being given to the Portfolio Holder
for Revenues & Benefits and the Deputy Chief Executive to continue to develop the
Partnership Agreement. The Agreement to be completed for approval by Council.
10.
Development of the Shared Service model.
10.1. Over the next few months the project team will work together to plan and deliver the ICT
infrastructure needed to allow a shared service to be set up; develop an implementation
plan with the preferred supplier to deliver the software and ensure the shared service
can operate efficiently and effectively; develop a model for the shared service and
consult widely on how this may work.
10.2. In order to do this, delegated authority is requested from Cabinet for the Leader of the
Council, Portfolio Holder and Deputy Chief Executive to develop with BCKLWN a
workable shared service model and consult on this.
10.3. In order to formalise the working partnership between both authorities, members are
asked to agree to the attached Partnership Agreement and give delegated authority to
the Leader of the Council, Portfolio Holder for Revenues & Benefits and Deputy Chief
Executive to continue to develop the agreement as necessary.
11.
Risks
11.1. The project work to date has highlighted a number of risks and sought to minimise these
risks. An analysis of these risks to the project is included at Appendix J.
11.2. Any ICT project carries a level of risk that performance will be affected during the period
of implementation and there will be serious service disruption if the system does not
operate as intended. The Council has well developed project management skills in this
area and the specification of the system has been clear in the services requirements.
11.3. Disruption to the service could impact on the performance of the service in relation to
benefit processing times, collection of council tax, business rates and the collection of
overpaid housing benefit. The tables below show current performance.
11.4. There is the additional risk that changes in legislation around Universal Credit, and
Localised Council Tax support scheme place demands on limited resources during
implementation. Whilst the implementation plan has considered the need for additional
resources, it does not take into account additional demand that may be placed on the
service following government changes across the next financial year.
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28 November 2011
Performance figures for Housing & Council Tax Benefit
Q1
2010/11
Q2
Q3
Q4
Q1
2011/12
Q2
New Claims
BCKLWN
NNDC
19
35
15
26
14
29
16
28
19
18
19
17
Change of
circs
BCKLWN
NNDC
20
15
14
10
14
12
7
5
23
14
18
11
Percentage Collection Rates 2007/2011
12.
% Collection
2007/8
2008/9
2009/10
2010/11
Council Tax
% Collection
BCKLWN
NNDC
2007/8
98.2
98.5
2008/9
98.0
98.5
2009/10
98.1
98.4
2010/11
98.1
98.6
NNDR
BCKLWN
NNDC
99.8
99.4
99.0
99.1
98.6
99.2
98.6
99.1
Next steps
Following agreement of the recommendations, the implementation stages are shown
below:
Actions
Dec 2011 – Jan
2012
Agree and sign contract for supply and
implementation of the ICT software for Revenues
and Benefits
Develop implementation plan and prepare for
commencement
Develop ICT infrastructure requirements and
implement
Jan 12 – July 12
Implementation of infrastructure and business
system
Ist authority to go live in July 12
Develop management structure proposals
July 12 – Oct 12
Consultation on proposals, reports to Cabinet,
Council and Scrutiny panel
Individual consultation
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28 November 2011
Actions
13.
Nov 12 – Dec 12
2nd authority to go live
Recruitment to new structure
Feb/Mar 2013
Notice periods for unsuccessful candidates
01 Apr 2013
Go live with new structure
Financial Implications
13.1. The total estimated savings per annum from 2013/14 for the Partnership are estimated
at £561,877. These savings have taken into account an estimated saving on employee
costs, supplies and services and a reduction in the overall cost of the software licenses.
The saving to NNDC is £ £249,473 calculated at 44.4% % of the total employee costs.
No savings have been assumed in the level of support costs.
Some further financial modelling of Universal Credit has been carried out which still
forecasts a net saving of £438,000 over five years between the two authorities. Gross
savings of £1,525,306 are forecasted over the five years taking into account capital
investment.
13.2. The ICT implications of NNDC not hosting the business system will be an ongoing
revenue cost of £28,312. This will be able to be used to work on other projects identified
in the ICT strategy e.g. the procurement and implementation of a new HR system
upgrading the financial system, expanding the use of the website and work on existing
and new systems that has been identified to support a number of efficiency projects
across the organisation.