Agenda item

Report of the Corporate Director for Finance and Resources

James Rhodes, Head of Analysis and Insight, introduced the presentation of the paper on the Together for Nottingham Plan, Theme 1 (MTFS) and Theme 8 (Council Plan). The following points were highlighted:

(a)  the Council’s Recovery and Improvement Plan, the Together for Nottingham Plan, was first published in 2021, with a refresh required within the first three months of the statutory intervention set out in the ‘Statement of Requirements’ received by the Council on 2nd September 2022. The Together for Nottingham Plan was refreshed in October 2022, building on the original Plan by adding an update on the position at the end of year one;

(b)  one of the priorities within the Together for Nottingham Plan was the creation of a new Performance Management Framework, joining up the Strategic Council Plan with Service Plans and linking this to the Medium Term Financial Plan;

(c)  the report gives an overview of the progress of Theme 1, Medium Term Financial Strategy (MTFS), and Theme 8, Council Plan, as the two are closely linked. The Council Plan is aligned with Divisional and Service Plans, which are fully costed and aligned to the Medium Term Financial Plan (MTFP), ensuring that activity in the Council Plan is kept within the Council’s budget;

(d)  there is a ‘golden thread’ running through the structure, by which the Strategic Council Plan (SCP) structures the Medium Term Financial Plan (MTFP), the MTFP Delivery Plan, Divisional Plans, Service Plans, and down to Individual Performance Appraisals;

Fiona Marsh, Interim Team Leader – Financial Strategy, presented the section of the report about Theme 1 (MTFS), and made the following points:

(e)  the key objectives are to achieve a balanced budget and a sustainable MTFP; reducing the Council’s reliance on commercialisation to fund core services, ensuring core services are affordable in the long-term and removing fluctuating dividend income from core funding; improving budget oversight and accountability with the promotion of CIPFA financial management standards;

(f)  work on the latest MTFP process commenced in June 2022, with discussions with senior leads, both officer and councillor; early agreement of key dates; early agreement of strategic priorities; clear decision-making ensuring that governance structures are followed; with robust challenges throughout the process; and to provide the Improvement and Assurance Board with reassurance that the MTFP provides a good strategic financial framework for maintaining sustainability;

(g)  a number of key activities underpin the MTFP process: the Transformation Programme is critical to developing business cases for future savings; business as usual savings; review of growth; review of fees, charges, and commercial income; and the review of reserves;

(h)  the Chief Executive led an ‘85% challenge’ exercise, asking officers to consider what could be delivered within 85% of their base budget resources, as a means of identifying saving proposals, which have fed into the MTFP;

(i)  two key documents have been used to standardise the information provided when making the case for new savings and new growth for inclusion in the MTFP, known as ‘R1’ and ‘R2’ documents. ‘R1’ gives high level summaries of proposed items, while ‘R2’ includes more in-depth information about the financial implications and each service's ability to deliver each item. These are critical tools to support the effective monitoring of delivery.

James Rhodes presented the section of the report about Theme 8 (Council Plan), and made the following points:

(j)  the two themes are closely linked, as there cannot be a Strategic Council Plan (SCP) that is not within the cost envelope of the MTFP;

(k)  the refreshed SCP is due to be presented to Full Council on 6 March 2023. The SCP provides for consistency across the whole organisation, and gives citizens clarity about what the Council’s key outcomes are, alongside the library of policies and strategies available on the Council’s website. The SCP contains a strong focus on statutory duties and other key projects the Council is committed to. There are ten high level outcomes in the refreshed document, and there is a ‘golden thread’ by which high level outcomes are linked to individual performance;

(l)  Divisional Plans sit underneath the MTFP Delivery Plan. They are much wider, integrated plans that include all the elements the Council should be delivering, including savings and transformation, risks and critical indicators. Service Plans and Individual Performance Appraisals sit beneath these, providing more granular plans at Service level and the level of the individual’s role;

(m)there is an enhanced process of performance management this year. Each Director holds a monthly ‘performance clinic’, operating on a three-month rolling schedule, which allows for consistency and flexibility;

(n)  the Council uses Pentana as an online performance management system which allows the production and submission of standardised reports and is fully auditable;

(o)  there is a quarterly performance cycle. After the SCP commitments and Critical Indicators are discussed at the performance clinics, they are shared with all four Directorate Leadership Teams (DLT) for discussion, and taken to the Corporate Leadership Team (CLT). Then there are individual performance meetings with Portfolio Holders, the Corporate Directors and other officers, and finally Portfolio Holders present information at Executive Panel. This is supplemented by regular Overview and Scrutiny Sessions and annual reports to Audit Committee.

In the discussion which followed, and in response to questions from the Committee, the following points were made:

(p)  Members felt it is useful to look at the performance management theory, but that the crucial point is for this to be permanently embedded in order to improve the accuracy of forecasting and avoid the ‘curve of pessimism’, whereby the budget seems to be on track in March but then later in the year problems are identified. They noted that the Council still faces problems with a shortage of finance staff, and issues with forecasting and accounting systems. It was also noted that the performance and budget management clinics would be key to improvement;

(q)  James Rhodes confirmed that the plans outlined are an articulation of the framework and the principles which will enable improvements to be made. There is a plan and a timeline, and an allocation of resources, to make progress towards best practice and reduce avoidable variation in financial forecasts;

(r)  Members suggested that it would be useful to have a clear Communications plan alongside the processes outlined, as a key method of meeting the aim of a Best Value culture. Internal communications, external communications are important for shifting the system and highlighting what the team are trying to achieve. Opinion polling is useful for showing relative performance improvement against previous years and comparative improvement against other local authorities. An annual or bi-annual poll was suggested;

(s)  James Rhodes confirmed a lot of performance management components are monthly already, but some data doesn’t change on a monthly basis, for example the citizen survey is annual. The Council is already at the higher end of performance management activity compared with benchmarking comparators and there is a balance to be struck between efficiency and bureaucracy. As much of the activity would be automated a possible. There would be further reflection about communications;

(t)  Members asked how social value was recognised in performance measurement. James Rhodes confirmed that social value is considered to be a part of Best Value, and the Council would aim to bring it into performance reviews using a standard methodology for Best Value reviews, the aim was not just keeping costs down, to ensure that the Council is maximising the positive impact it can made with its resources. Members asked to be updated on the chosen mechanism for measuring social value;

(u)  officers gave further detail about the ‘golden thread’ linking the SCP with individual performance. All directors have divisional plans that have been tested against the MTFP and budget allocation. Underneath the divisional plans there are service plans, led by Heads of Service. This expands on divisional plans and outlines staff activities for the next two years. Underneath service plans are individual performance appraisals, which are inputted into Oracle Fusion. On a monthly basis managers will speak to staff about their progress, and conduct end of year reviews. This gives a clear link between individual activities and high level outcomes in the SCP;

(v)  the Committee discussed the opportunities for Member involvement in divisional plans throughout the process. Throughout the cycle, Portfolio Holders meet with Corporate Directors monthly, and below that, service activity is classed as operational. The general principle follows the Officer-Member Protocol, that officers operationalise the policy agenda as set by the Executive. Councillor Williams confirmed that member involvement was typically through the Portfolio Holder meetings, and it was also confirmed by officers that there was a collective overview at Executive Board meetings;

(w)Members expressed the opinion that it is unfortunate that the current situation affecting Councils across the country is one of crisis management, rather than growing budgets tied to a sense of mission, and that exercises like the ‘85% challenge’ are necessary. There would be the capacity to deliver much more positive outcomes for citizens through public service if the Council enjoyed growing budgets.

Resolved to:

(1)  Note the process undertaken in constructing the MTFP for 2023/24 to 2026/27;

(2)  Note the progress made on the Council’s new Performance Management Framework (PMF) to date and improvements in performance reporting across the Council;

(3)  Note the progress on developing the new Strategic Council Plan and alignment with the MTFP through Divisional Business Planning.