Isle of Wight Council Corporate Peer Challenge

8/12/2019 Isle of Wight Council Corporate Peer Challenge

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Local Government House, Smith Square, London SW1P 3HZ T 020 7664 3000 F 020 7664 3030 E [email protected] www.local.gov.ukChief Executive: Carolyn Downs

Dave Burbage,Interim Managing Director

Isle of Wight CouncilCounty HallHigh StreetNewportIsle of WightPO30 1UD 14 July 2014

Dear Dave

Isle of Wight Council - Corporate Peer Challenge

On behalf of the peer team, thank you for your invitation into the Isle of WightCouncil to deliver the recent corporate peer challenge. The team felt privileged to beallowed to conduct its work with the helpful support of you and your colleagues whowere open and engaged with the process. It was clear that a significant amount ofeffort had been committed by the council in support of the peer team.

You asked the peer team to provide an external view of the council and give recognitionof progress made; and supportive challenge and feedback on how you are prepared tomeet future issues and opportunities for the Isle of Wight.

You also asked the team to provide specific feedback by testing the councils thinking onthe following:

1. To consider alternative delivery models that would enable delivery of the councilsvision and priorities in a difficult financial environment. [This was not a detailedoptions appraisal on services and models. Rather it was a review of current thinkingand activity to propose additional areas for the council to consider.]

2. To review what more the council might do, by itself and by working in partnership, topromote and ensure the delivery of economic growth for the island, its residents andbusinesses.

In addition the peer team considered the ability, resilience and capacity of the councilto deliver its future ambitions by looking at:

o understanding of local context and priority setting: does the council understand its

local context and has it established a clear set of priorities?

o financial planning and viability: does the council have a financial plan in place to

ensure long term viability and is there evidence that it is being implemented

successfully?

o political and managerial leadership: does the council have effective political and

managerial leadership and is it a constructive partnership?


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o governance and decision-making: are effective governance and decision-making

arrangements in place to respond to key challenges and manage change,

transformation and disinvestment?

o organisational capacity: are organisational capacity and resources focused in theright areas in order to deliver the agreed priorities?

It is important to stress that this was not an inspection. Peer challenges areimprovement-focused and tailored to meet individual councils needs. They are designedto complement and add value to a councils own performance and improvement plans.The peers used their experience and knowledge of local government to reflect on theinformation presented to them by people they met, things they saw and material that theyread.

This letter provides a summary of the feedback that was presented at the end of ourrecent on-site visit. In presenting this the peer challenge team has done so as fellow localgovernment officers and members, not professional consultants or inspectors. Ourintention is to provide recognition of the progress the Isle of Wight Council has made inrecent years while also stimulating debate and thinking about future challenges.

Overall message

The council is working to an Independent administration elected in May 2013. Theadministration is working without overall control, having 20 of the 40 seats on thecouncil. This makes continued working with other political groups essential.

The Independent administration set out its programme in a manifesto Framework forChange. This includes a commitment to openness and working with others. The yearsince the election has been an important one to establish the future direction of thecouncil, now contained in the Corporate Plan for 2014-2017.

Political leadership is well regarded at the council. The wish to be transparent andinclusive is widely recognised and valued and the active representation of islandinterests with principal partners is evident. However, as an Independent administration,operating without a group whip, uniting behind issues can be difficult and affect thecouncils ability to make decisions. It is potentially damaging if the delivery of priorities

is weakened by local issues taking precedence over corporate priorities and this will bean area to manage in the future. The Corporate Management Team (CMT) will have animportant role to support Members on this.

The Independent administration has to address a significant financial gap of 28m forthe three year period 2014-2015 to 2016-2017. Making a budget for 2015-2016 is likelyto be most challenging with the requirement to bridge a gap of 13.293m. This willrequire a great deal of preparatory work on how and where savings will be achieved andsome difficult decisions to be made in a very short timeframe. The CMT will have animportant role to support Members on this.

The team has identified stretched capacity and capability at all levels of theorganisation. There is an urgent need to ensure that the council has the necessarystrategic and operational skills and capacity to deliver savings and corporate priorities.


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Funding pressures will require the council to rethink its future role and priorities withreduced resources. This will limit ambition but does provide the opportunity to rethink

and recast the councils future role. One clear message from partners was their wish tosee the council assume a role in bringing partners together and being the voice of theisland to represent island interests more widely.

To be the voice of the island will require strong leadership and effectivecommunications. Internal communications are primarily delivered through The Vine a weekly electronic newsletter. However, internal communications are not provingsufficient, at a time of great change for the council and its staff, and need to bebolstered. Improved external communications to the island population will also beimportant.. It would be worth the council considering reintroducing the One Islandcommunity newsletter on the basis that this be cost neutral.

The opportunities for disseminating and celebrating the positive messages from much ofthe good work being done - people and achievements are being missed.Acknowledgement of what the council and its Members and staff are delivering isimportant during the period of recent upheaval and with the many challenges that lieahead. These issues could be addressed by strengthening the communicationsfunction, with elements currently dispersed in different services. Combining thesewould provide greater capacity for coordinated communications and marketing. In thefuture both communications and marketing will be important functions of the council andwould benefit from clear direction set out in a communications strategy.

The island has an ageing population with more than 24 per cent over 65 years, wherethe national average is 16 per cent, and is expected to grow to 36 per cent by 2035.This has implications for the economy: both for the future housing and social careneeds of an ageing population and the shrinking proportion of the working agepopulation. The council will need to develop future housing plans for sheltered, extracare, residential care and other retirement housing options.

The council is moving to shared services, with different reasons for each service. Forexample, the strategic partnership with Hampshire County Council, to deliver childrensand education services, was prompted by an Improvement Notice issued after criticalOfsted inspections of child safeguarding services in 2012 and school improvementservices in 2013. Separately, the council entered into a twenty-five year highwaysprivate finance initiative (PFI) in 2013 with Island Road Services, with the benefits oflonger-term capital investment and taking cost out of the councils budget.

In moving to future strategic partnerships it will be important to consider what thecouncils core services will be in the future operating model and to be clear on whatbenefits will be derived from different partnerships. The imperative should not simply beon savings or response to service failure but a broader consideration of what the councilis able to offer, what it wants from any such arrangement, how this fits with the councilspriorities and the future operating model.

The term operating model is used throughout this letter. To avoid confusion over thisterm the working definition is how the organisation of complex systems operates toaccomplish its function. It can be described as the way an organisation does business.


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Moving to a new operating model will need a vision of what kind of council the Isle ofWight will be, in line with its priorities, and what decisions are made on the services tobe provided, how they are to be delivered and to what cost and standard.

In moving to a new operating model the council is developing some excellent initiatives,for example joint venture housing delivery, co-funding a destination managementcompany, joint funding of a tidal energy project etc. Important as these new models areit is also important to ensure that the learning from these is shared across the council.

The council has an adopted Core Strategy and this has an important role in providing aspatial vision to support economic growth. However, the council does need to producean economic growth strategy linking tourism, business, skills and housing. This will bean important piece of work to tie into the work of the Solent Local EnterprisePartnership.

At the same time the council will need to demonstrate that it is serious about economicgrowth and is open for business. Planning applications which would have contributedto inward investment have recently been refused against officer recommendation. Thisis an issue for the council to manage.

Similarly there is currently no forum that brings together principal tourism, business, skillsand housing partners. This is vital to coordinate activity and would contribute to the rolebusiness partners have identified for the council, being the voice for the island. It will beimportant to establish such an economic growth partnership.

The importance of the ferry crossings for business, residents and visitors makes it essentialthat strategic ferry transport issues are addressed and this can be achieved through theQuality Transport Group with issues referred back to the council for wider planningconsideration and to the LEPs Solent Local Transport Board, as appropriate.

Partnership working is essential to generate capacity to deliver on priorities. The councilhas a good record of partnership working and the new administration has particularlyfocused on building new relationships and strengthening partnerships and encouraging anopen door approach. This has delivered some strong joint outcomes with the third sector,town and parish councils and business partners. However, some historical partnershipsmay no longer be achieving what was intended and a review would be helpful to check this.This will ensure that resources are only committed to productive partnerships.

Finally, the council has made sound progress over the last year under the newadministration. The council recognises that it is in transition and is presented withsignificant challenges. It is intended that this peer challenge will assist the council to meetthese successfully.

The recent journey

Local context and priority setting

Pride of place is very evident in the Isle of Wight and is reflected in the work of electedMembers who are ambitious for the council to deliver for the best interests of residents andbusinesses. The new Independent administration is promoting cross-party working as part


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of its commitment to inclusive working and transparency. This is important in a context ofno overall political control but also important to bind Members to work for the interests ofthe island.

Political ambition is supported and directed by a Corporate Plan for the period 2014 2017,which will take the council up to the next council elections. There are seven corporatepriorities, including growing the economy and tourism and working in partnerships toimprove outcomes. These are both areas discussed further in this report.

However, the current iteration of the Corporate Plan implies that all seven priorities carryequal weighting and equal access to resources. It will be important to establish what canactually be delivered within the resources available, targeting resources in line withMembers greatest priorities. The opportunity exists for Service Plans to address this, withExecutive/Corporate Management Team (CMT) direction, and will be an important piece of

corporate financial management to get right. Clearer (re-)prioritisation and clarity aboutwhat will not be done will assist the council in its savings programme over the next twoyears.

There is evidence of strong social capital and enterprise arrangements on the island. Theteam were told of a number of examples where community ventures are operating leisureand other facilities and, separately, of a local housing association and Citizens AdviceBureau keen to work with the council on joint provision of housing and benefit advice. Thisis important as it shows that others can deliver on what might have been previouslyregarded as council activities. This may be even more of an advantage by virtue of thecouncil promoting self-reliance. The council has a vital role to nurture and to promote such

enterprise.

The council does receive a good deal of damaging and negative messages, particularlyfrom local media. It could consider a more proactive stance by developing acommunications strategy to support its response to such messages and to better enable itto promote much of the good work done by different services.

The council is involved in a lot of good work but this is not being positively promoted.Instead there is a danger that the attention on the funding gap the council is working toaddress could overshadow the good work being delivered. The inward focus on savings is,not surprisingly, causing staff to dwell on the financial future and there is a consequent riskof losing sight of delivering outcomes for residents/customers.

The peer team met a large number of council staff and were impressed by theircommitment, energy and goodwill. It is important to tap into this as it offers a firmfoundation for the council to build on.

There is a good clear planning framework in place, with the Core Strategy being adopted in2012, and the intention to develop Area Action Plans (AAPs), along with the council supportfor emerging Neighbourhood Plans. This provides a clear spatial vision and a firm base toplan economic growth and sustainable communities for the island.

However, the team did not find a longer-term economic vision for the island, with the detailof what it will look like in 5 and 10 years time. For example, what kind of future economicprofile is anticipated and planned for, what will be the skills base to support the economy


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and aspirations of young people and what kind of housing and where? It was also notclear what the timetable was for the development of AAPs and whether growth/inwardinvestment was contingent on these being in place. Similarly while the council has

identified sites for development, available with planning permission, there was no evidenceof the council marketing these sites to potential investors. To demonstrate it is open forbusiness the council needs to show that it is serious about economic growth and that it isactively enabling appropriate development that supports this.

Finally, the council does need to produce an economic growth strategy linking tourism,business, skills and housing. This will be important to set out a vision that chimes withbusinesses and residents and fits with the strategic priorities of the Solent Local EnterprisePartnership (Solent LEP). This is an opportune time to progress this with the councilhaving just submitted its Strategic Economic Plan (SEP) bid for Local Growth Fund funding.

Recommendations:

a) Develop a Communications strategy that is supported by the aggregation ofcommunication functions

b) Produce and implement an Economic Growth strategy linking tourism, business,skills and housing that includes a longer-term economic vision for the island. Involvebusiness and principal partners in the development of this.

Management and political leadership

The Leader is highly regarded, showing leadership through engagement with a number of

principal partners, including the Solent LEP, the Partnership for Urban South Hampshire(PUSH), and other external bodies and with staff. It was also clear that while he wasrepresenting the Isle of Wight he was also working with sub-regional agendas andpriorities.

The new administration was described by staff and partners as a breath of fresh air. Thecommitment to transparency and inclusive working has undoubtedly helped, as has theenthusiasm and energy evident in the eleven months since taking control. However, thecoming period will be critical to continue progress on the delivery of the Corporate Planspriorities. The new administration may have found its feet in its first year in office but nowneeds to find its voice and ensure it is clearly heard on and off the island.

This is supported by Members who are highly ambitious for the island and are focused oncouncil delivery. Members collegiate working was evident, for example the recent majorityvotes to approve a 1.99 per cent increase in Council Tax and to re-elect the Leader.Consensual working is essential for an administration with no overall political control, andfor the delivery of an ambitious programme, requiring cross-group support to implement.

The desire for consensus can, at times, delay and confuse political decision-making. Forexample, the council is making economic growth and tourism a priority but there was anrecent instance of proposed investment that had planning permission rejected, with local

views appearing to override wider council growth priorities. The council recognises theneed to manage its working arrangements to hold the line on agreed decisions andpriorities as not to do so will jeopardise its credibility with developers/inward investors.


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The council has undoubtedly lost capacity and some capability in the recent restructuring (areduction of 521 posts to the current level 2,129 posts). This reduction in capacity needs to

be managed with a realistic and focused set of priorities so that workloads for staff areequitable. Related to this is the absence of strategic knitting across the new structure andthe lack of time set aside for strategic planning. Strategic capacity is important to enablethe council to: consider new ways of thinking and doing; give time to focus on Memberpriorities; ensure joined-up working across disparate services to deliver priorities; shiftresources to priorities; plan proactively to shape the new operating model etc. Instead theemphasis appears to be on addressing the funding gap and taking an operational focus.

The councils short-term priorities are contained in the Corporate Plan and the focus onaddressing the funding gap. What is missing is a picture of: the most important outcomesfor the island, and those areas where the council can best add value to these; what the

future council might look like in light of this; the councils representative role for the island;new working approaches that might be utilised; and what will be the core council servicesprovided to the islands community to deliver the councils priorities. This longer-term visionis important, as decisions made on services in the short-term will have an effect on whatthe future council will look like and, hence, the ability to deliver on priorities. Thesedecisions should not be ad hoc but informed by a longer-term understanding of the futurecouncil and its role. Following a period of the new administration dealing with a number ofinherited issues attention will now be given to developing a longer-term vision for the future.The senior managerial leadership is working closely with Members to develop andimplement a shared long-term vision.

There is an urgent need for a Member/officer protocol to provide clarity and certainty onrespective roles and responsibilities and to describe the flows in decision-making and mostimportantly, the appropriate behaviours to be demonstrated. This is important because thecurrent working arrangements are not well understood by Members and officers. Forexample, members of the new administration had differing views on how the new hybridcommittee system would work and had received mixed messages from officers that led touncertainty on the role of Executive members on advisory committees. This may havebeen exacerbated by the high number of new Members (23) elected in May 2013 who willhave been on a steep learning curve on council working.

Work will be needed to ensure that all Members understand how council decisions aretaken, scrutinised and advised on. Similarly, work is needed to describe how theadministration, CMT, Overview and Scrutiny and advisory committees, feed into thisprocess. A decision flowchart is needed showing clearly who is responsible at each levelfor council decisions and scrutiny.

Recommendations:

c) Create strategic space, time and capacity for the Executive and CorporateManagement Team (CMT) to develop a longer-term vision for the council and theisland

d) Show an open for business outlook to developers and investors and ensure that thecouncil is serious about economic growth by actively enabling development thatsupports this.


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Alternative delivery models

Alternative delivery models are a major area of development for English local government.These are sometimes driven by necessity where severe funding pressures mean thattraditional forms of service delivery are unsustainable, but can also be used to improveservice outcomes for residents and businesses. This is leading local government toexplore new models, working in new partnerships and characterised by councils shiftingtheir approach to managing risk. Much innovative and transformational work is beingundertaken and the LGA would be pleased to support the council to explore this.

The council is open to new partnership working models and there are a number ofexamples where these have been introduced. There is some excellent joint venture workbeing delivered, for example the Pan Meadows housing provision in Newport where the

council is making available land, working with Spectrum Housing Association, the Homesand Communities Agency (HCA) and developers Barratt David Wilson Southampton. Theoverall scheme has 846 units with a mix of private, shared ownership and rented homes.The development incorporates a country park, public squares and play areas. Heating andhot water is to be provided by a bio-mass plant.

Similarly the council has considered invest to save opportunities, for example the My Lifea Full Life programme where investment in independent living support is designed topostpone costly residential/nursing care provision.

The council has worked with Surrey Fire and Rescue Service (FRS) to deliver Control

Room services which has resulted in an efficient service that also delivers value for money.It is now developing a business case for combining or merging its FRS with another. Therationale for this likely to cover: savings to each authority; additional resilience offered;sharing the specialist expertise on the Isle of Wight in providing a complete island serviceand mutual learning and expertise to be gained by working together.

Hampshire County Council is highly regarded as a strategic partner and has worked withthe council to recently adopt a Children and Young Peoples Plan 2014-2017. Thecouncils priority of keeping children safe is supported by a budget increase of 2.25m forthe current financial year. The Childrens Improvement Board is making good progresswhere the front door is safe and the service is preparing for an Ofsted inspection later inthe year. It is also gaining from the professional input of a high performing Hampshireservice, which is having a positive impact on council staff and outcomes for children.

However, such work on alternative delivery models appears ad hoc and opportunistic.There is no systematic methodology to rigorously identify and evaluate alternative deliverymodels and to share learning from existing models. This should be an essentialcomponent to aid the shift to the future council operating model and the council becoming alearning organisation. Sharing the learning from new working models can stimulatethinking in other services and offer a means to leverage capacity to deliver on councilpriorities.

The Isle of Wight Clinical Commissioning Group (CCG), Isle of Wight NHS Trust and thecouncil serve a population of just over 140,000 and the three organisations are comingtogether, in collaboration with the voluntary and private sector, to deliver a vision for


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integrated care and support. One outcome from this is the My Life a Full Life programme; acollaboration between the CCG, the NHS Trust and the council supporting interventions topromote independent living.

Health and Social Care integration is progressing well, for example, through work on theBetter Care Fund and the Urgent Care Hub. The latter locates 999 and 111 responses,crisis response, district nurses, hospital switchboard and Wightcare in one place. Therewas anecdotal evidence of this making a positive impact on users experience and ofachieving cost savings.

The island benefits from having the only combined hospital, ambulance, community, andmental health service in the country. This shared island boundary promotes closer publicservice working. A question for the council to consider is whether there are opportunities togo faster and to extend this model.

Such a public service model could be developed as an exemplar to test alternative and newdelivery models in line with the LGAs Rewiring Public Services. This could include otherpublic service bodies, all of which are facing financial pressures, combining resources tosupport the delivery of shared objectives and to maximise capacity in doing so. The LGAwould be prepared to work with the council on how this might be developed.

The council and the CCG are to receive 3.5m NHS Better Care Fund (BCF) resources in2014 -2015. Under the new arrangements for integrating health and adult social careservices the BCF in 2015-2016 will offer a pooled budget of 19.724m. It is intended thatthe council and the CCG work to pool resources to support existing core activity and

develop new ways of working. However, there is further work to be done to:

deliver service efficiencies from adult social care services

develop a demand management strategy for adult social care services

ensure that commissioning is being consistently and appropriately used

apply strong project and programme management principles to drive forward BCFplans

develop robust mechanisms for the appraisal of alternative delivery models/options

incorporate the required outcomes from the Care Bill in to council planning.

Despite the great deal of energy and activity within the council there can be a lack ofstrategic coherence and completion. Examples of this include the job evaluation processwhich seems to have been delayed for many months creating uncertainty amongst thewhole staff group, and the lack of strategic knitting between the actions of the council in itsapproach to procurement and its economic growth ambitions.

Another example is the root and branch review that informed the budget for 2014-2015. Itis generally accepted that some reviews were more robust than others, with the processnot achieving all of its objectives: the peer team heard it described as disappointing. Theshortcomings appear to include: insufficiently robust project planning, insufficientleadership, commitment, time and resources. It is important that project evaluation is

developed so that the lessons are learnt from future activity.


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The issue of project and programme management was a recurring theme. The councilacknowledges that this has been an area of weakness but the team saw little evidence thatthis was being addressed. For example, the programme to address the funding gap is still

sketchy with only a few of the projects developed with clear project management principles.The difficulty for the council is understandably one of capacity, and possibly capability, butif these are important areas, and the funding gap is a key area, then it is essential thatprogramme and project management skills are consistently and coherently applied toensure the delivery of intended outcomes and success.

The council would benefit from considering the use of external expertise to drive out costand deliver savings. There are a number of reasons why this could be beneficial:

a significant proportion of council spend is on goods and services (19m)

the council has lost capacity and skills in certain areas, which staff have

acknowledged the urgency of the task to meet the funding gap

external capacity and expertise would enable learning and skills to be captured bycouncil staff for future activity

there is potential to use a payment by results mechanism.

The council would need to identify the areas where there is high spend and possible lack ofinternal skills to drive out cost; for example, high value and specialist contracts. It will beessential that the council itself drives out costs and savings rather than these beingobtained by an alternative provider, in the event of the service/contract being outsourced.

Successfully meeting current and future challenges facing local government requires a shiftin risk appetite. For many councils, in the face of massive public spending pressures, thereis a trend to become more risk aware. To become more innovative and partnership drivenwill require the council to move to a more sophisticated approach to identifying andmanaging risks. This will be an important shift to enable the realisation of futureopportunities and progress to the future operating model.

Recommendations:

e) Develop and implement a robust methodology to evaluate potential alternative

delivery models, and ensure learning is shared across the councilf) Establish project and programme management training and developmentarrangements for those staff likely to be involved in key projects and programmemanagement

g) Utilise external expertise to drive out costs and deliver savings to the council. Thisshould be in high value areas to provide quick wins with payment by results.

Economic growth

Economic growth is a priority for the council: underlying unemployment levels are higherthan other parts of England and rising; many employment opportunities are seasonal only;

and access to mainland employment is contingent on ferry use. Earnings on the island are80 per cent of the South East average, with a low Gross Value Added (GVA) per capita of


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However, those who established these groups recognised a danger of muddying thewater of what the different groups were doing, with the potential for duplication. Instead

they identified an important role for the council to coordinate such working arrangementsand to assume a leadership role for island businesses.

The council does not gather information and intelligence of business activity and does nothave a detailed understanding of the various sectors within the local economy. This isevidenced by the above example of the island technology group and the lack ofunderstanding on the numbers of technology companies. Gathering intelligence on currentbusinesses and SMEs is essential to understand sectoral developments and therequirements and growth needs of businesses.

Partners are willing and ready to work with council on economic growth and have clearly

said they want the council to be the glue, which binds partners to work together, andprovides the focus and voice for the island. Partners are keenly aware of the financialpressures facing the council and are prepared to contribute resources to enable it to fulfilthis role.

The council has adopted a positive programme in supporting apprenticeships for islandbusinesses by providing grants of 1,500 to assist SMEs to recruit apprentices. This is notonly addressing an important need for young people on the island but it is also forgingpositive relationships with businesses that the council works with. This has been boostedby a further council commitment to allocate 150,000 in 2014-2015 to support youngpeople in pre-apprenticeships, apprenticeships and support for people over 50 years to

start their own business. This work constitutes notable practice and is an importantcontribution to the local economy. It would benefit from a strategy, including a councilstatement of intent, and a commitment to work with partners to extend the use ofapprenticeships by island businesses. The council has failed to celebrate this success and,as a result, has not received acknowledgement for its considerable achievement.

The council recognises the importance of high speed broadband to ensure island businessconnectivity and competitiveness and has invested 3m to support implementation. Highspeed broadband is expected to be implemented by October 2015 and should be regardedby the council as an important marketing aid for inward investment.

Tourism is a key sector of the local economy estimated at circa 630m per annum,delivering circa 30 per cent of GVA and employing an estimated 25 per cent of residents.Tourism growth is projected to increase by 5 per cent per annum. For the future economyit will be essential to attend to the sustainable development of tourism via a tourismstrategy aligned to economic growth, housing, use of assets and skills. The need for astrategy is confirmed in a discussion paper commissioned from consultants that argues thatthe focus should not be on increasing visitor numbers but spend per visitor.

Visit Isle of Wight (VIOW) is a destination management company established by the councilin a bold initiative that shows a clear sign of intent. The council is committed to a nine year

funding agreement of 340,000 per annum with the condition that VIOW attracts privateinvestment towards running costs. The investment is paying dividends with the visitoreconomy experiencing growth of 23m in 2013.


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The council recognises the need to change and update the tourism offer but this is notalways being followed through. For example, a recent application for an 81 bed PremierInn hotel at Lake, Sandown was recommended by officers but refused by Planning

Committee. The opportunity was for inward investment via a three storey hotel, creating 22full-time jobs with nearly half of these to be offered to young people not in employment oreducation (NEETs). The need for sustainable development is confirmed by ferry operatorswho state that development investment needs to be encouraged to improve visitoraccommodation along with enhanced visitor attractions.

Another example was where the council recently refused a planning application, against theofficer recommendation, at Atherfield holiday camp, Ventnor for a redevelopmentcomprising 95 units of holiday accommodation, clubhouse, two swimming pools andservice buildings. It will be essential for the council to make the shift to be open forbusiness and to demonstrate this to businesses and potential inward investors. This is

important to show that it is serious about growth and the benefits this can bring forresidents and businesses.

As in most areas there will be an anti-development lobby and local issues that can blockeconomic ambition. However, the councils response to such opposition needs to bemanaged so that opposition can be understood but not allowed to unreasonably blockeconomic growth, which ultimately is a corporate council priority. It is essential to achieve abalance between whole-island and local issues in decision-making to ensure that thedelivery of council priorities are not jeopardised.

Ferry operators provide a vital transportation link for residents, businesses and visitors.

This is highlighted by the net loss of 2,500 employees travelling from the island each day,principally to Southampton and Portsmouth and by a council motion (October 2013) thatexpressed concern for ferry cuts by Wightlink. An increase in economic growth and tourismwill not only benefit the island and achieve council objectives but will also increase ferrybusiness and profitability and enable them to consider extending ferry timetables frequencyand start/end times. The ferry companies see the council as not currently being open forbusiness to support island inward investment and this affects their business as well as theislands economy.

Business representatives told the team separately that they felt the council had a vital roleto liaise with, and to represent island business interests to, the ferry companies. Thecouncil has established a Quality Transport Group which includes the three ferry operatorsand business interests. This forum is important and the council will need to be assured thatthe Group is responding to strategic matters of mutual interest, and is making the councilaware of these so it can act as needed and can link issues into the strategic work of theSolent Local Transport Board.

There is a perception held by some businesses of the high cost of goods for delivery onand off the island. The team were told of cost effective shared pallet arrangements thatprivate companies were providing. The council could assume a role to promote low costalternatives for the transport of goods on ferries to counter misperceptions of this being

high cost and a potential barrier to inward investment.

The councils commitment to growth is evident from the priority in the Corporate Plan butthere is no economic growth strategy to support its delivery. With significant reduction in


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staff the number of staff focused on this priority may be insufficient to undertake thestrategic and leadership positions and lobbying roles required to deliver this.

In developing an economic growth strategy it will be important to define what is the uniqueIsle of Wight offer for economic growth to promote inward investment. It will be equallyimportant to set out the islands ask to support economic growth so as to be able to clearlypresent this to the Solent LEP and other external partners who may be able to deliver this.Clearly defining the ask and offer will be important to create an identity and brand for theisland as an employment and visitor destination.

It was acknowledged that the link between economic growth and housing has not beeneffectively made by the council. The services have tended to develop with separatestrategies and little other connection. The current housing strategy is currently out of dateand is scheduled to be updated following a Strategic Housing Market Assessment (SHMA).

This should provide an opportunity to more strongly align housing with economic growth.

Economic growth can only be achieved by ensuring a range of housing provision, frommarket to affordable housing. Housing need on the island is evident with a housing registerof more than 7,400 and an estimated affordable housing shortfall of 1,500 per annum. Thisis a major issue for the council and is emphasised by Office for National Statistics (ONS)data that suggests that council projections will need to be revised. If housing issues are notaddressed they will impact adversely on the ability of the island to achieve economicgrowth.

The council should develop a skills strategy that involves education providers, the Solent

LEP and local businesses and links into the LEPs Solent Employment and Skills Board toensure the councils skills objectives for the island are addressed at sub-regional level.

Educational attainment has been an issue for the islands schools, with the councilacknowledging that educational standards are the poorest in the country: the proportionqualified to NVQ level 4 is much lower than regional and England averages. There is alsoa business view that many school leavers lack the work skills that employers require andthat more senior positions are often filled by people from the mainland. This, and therecent economic recession, appears to have affected both student attainment andaspirations. Addressing the pre-16 years schools attainment will be particularly importantfor resourcing the future islands economy and strengthening the employment prospects forthe islands young people. This is a priority for the council and is being partly addressedthrough the strategic partnership arrangements with Hampshire County Council but theissue highlights the need for a skills strategy, with a focus and action plan.

Finally, the council would benefit from a better understanding of the local economic impactof council procurement of goods and services. As a major employer with significant spendon goods and services (nearly 19m), it makes an important contribution to the localeconomy. Reviewing this could identify opportunities for local procurement spend to bebetter targeted. There is also a statutory obligation under the Public Services (SocialValue) Act 2012 for local authorities and other commissioners of public services to consider

how their services can benefit people living in the local community.

Recommendations:


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h) Produce and implement an Economic Growth strategy linking tourism, business,skills and housing and involve business and principal partners in the development ofthis. Rather than separate strategies the council may consider combining economic

growth, housing, skills and tourism as single combined strategy.i) Define the unique Isle of Wight offer for economic growth and tourism to promoteinward investment. Also define its ask so as to clearly present this to the SolentLEP and other external partners.

j) Produce and implement a skills strategy that ties in education providers, the SolentLEP and local businesses and links into the LEPs Solent Employment and SkillsBoard

k) Establish an economic growth partnership with principal tourism, business, skills andhousing partners

l) Develop, in consultation with island businesses, the councils leadership and co-ordinating role in economic growth partnership working, becoming the voice for the

islandm) Ensure that the Quality Transport Group responds to strategic transport issues,

raised by the three ferry operators and island business interests, which affecteconomic growth and tourism. Strategic matters of mutual interest must bereported to the council and the Solent Local Transport Board.

Financial planning and viability

The council has a strong record in achieving savings (33.8m over the last three years; therecent restructuring reducing senior management costs by 2.3m and total staff savings of14.4m) and has done well in recent years to manage the significant reduction in

Government core funding without detriment to frontline services.

A bold and difficult decision was made by the council to increase Council Tax by 1.99 percent for 2014-2015, particularly for an administration with no overall control and when thecouncil tax had been frozen for the previous three years. This provided a base budgetuplift of 526,000 and was important at a time of great financial pressure. The council isalso aware that it may need to consider similar increases in future years.

Budget engagement events were arranged by the council across the island and this wasconsistent with the new administrations approach to openness and discussion. This wasalso exemplified by a Facebook live session to consult on budget decisions.

A strategy to use reserves has been developed by the council to ease transition throughthe three year period of savings. This will be important to provide time to consider what thefuture council might look like, what the principal partnerships might be and what coreservices will be retained. However, this transition will see a reduction in the General Fundreserve from 9m to 6m over the three year period, with the councils minimum GeneralFund reserve balance set at 5m. Although in 2016-2017 this will be above minimumbalance level, its reduced level will inevitably limit council options and will be relatively lowcompared to other councils.

The council has an immense challenge to address a financial gap of 28m over the threeyear period 2014-2015 to 2016-2017. This is made more difficult by a reduction ofGovernment grant of 14.4m, over the same period, out of a net revenue budget of 129m.


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However, this is a challenge faced by local government across England and one beingturned into an opportunity by councils rethinking their role and means of delivery.

The additional and immediate challenge is not just the 28m savings but the 1.4m in yearsavings required for 2014-2015. There is a risk that the income/savings target may not bedeliverable and this will require close monitoring. The savings proposals are highly detailedbut:

there are few references to managing the future demand for high cost services, forexample childrens, adults and social care

there is uncertainty on how robust the savings proposals are and, therefore, howlikely they are to be achieved

project management of the savings programme is not yet comprehensivelydeveloped.

It is essential to address these issues quickly as this programme will need urgency andpace.

Significant as the funding gap undoubtedly is there is a damaging perception internallyand externally - that savings will come mainly from discretionary services of circa 36m.This is inaccurate and should be addressed by senior managers and Members, as staff seethe prospect of their services being decimated (in addition there is a risk of communicatingunhelpful messages in the community). Instead the emphasis should be on efficiencies tobe achieved across all services and rethinking what the future council will look like.

The council has adopted an approach to more closely monitor its contract and procurementarrangements. It has established a central Procurement and Contract Management teamand adopted a Procurement Strategy. However, the procurement function is weakened bysome aspects being located in different service areas, for example ICT, leisure etc. Therewould be benefit in combining these to scale up the procurement function with the skillslocated in one place to deliver efficiencies.

There is scope for procurement and contract savings; with some of these potentially quitelarge: for example the re-let waste contract from 2015 is expected to save circa 1m.Understanding and identifying the areas for further savings will be essential and should

begin urgently. Due to reduced capacity and the urgency in realising savings, this is likelyto require some external expertise and input.

The focus on savings could be leading the council to miss opportunities for innovativeworking. The outlook seems to be on worrying on what we cant do rather than about whatwe can. Innovative thinking and new delivery models can achieve council priorities,contribute savings and assist in repositioning the future council. The shift of emphasisshould include:

consideration of the additional contribution of economic growth and use of assets toaddress the financial gap. For example, economic growth can be an important lever

to grow business rates, build the council tax base and increase New Homes Bonus,and the creative use of assets may be able to generate an income stream.


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reform and transformation: consider how to manage and reduce demand pressures,beyond meeting existing levels of demand more efficiently. This is true particularlyfor Adults Services, with demand due to increase with an ageing population: there is

potential to invest further in preventative services and early interventions (such aspromoting healthier lifestyles, signposting to community networks, extra carehousing) that will reduce future demand on resources. Collaboration with PublicHealth around lifestyle choices and encouraging behaviour change will be critical.

alternative delivery models: building capacity in communities, designing andcommissioning new solutions, commissioning partners to deliver services, enteringstrategic partnerships to deliver where appropriate etc.

focusing on additional income generation opportunities.

There is an absence of an up to date strategic asset management strategy. It will beimportant to update this strategy and strengthen this function so that use of assets can

enable the development of new delivery models. The council has a substantial propertyportfolio that could be important not only to assist in meeting the budget gap but also beused to leverage funding, provide income and investment streams and support the deliveryof council priorities.

There is an opportunity to consider the use of assets not only as a source of capitalreceipts from disposal but also as a future revenue opportunity by retaining and sweatingassets. For example, the freedoms of the Localism Act 2013 enable councils to becomehousing developers and landlords, which could both address some local housing issues,addressing a council priority, as well as providing a future revenue stream.

Recommendations:

n) Implement communications to address the misperception that savings will comemainly from discretionary services

o) Instil rigour within the savings programme to address the issues raised in thissection

p) Consider combining all areas of procurement within a the central Procurement andContract Management team to scale up the procurement function with the skillslocated in one place to deliver efficiencies

q) Implement an updated strategic asset management strategy.

Capacity

The council has lost a good deal of capacity due to the funding pressures and recentrestructuring. This has led most staff assuming additional responsibilities and functionsleading to stretched capacity and capability at all levels. Added to this is an over relianceon the goodwill of staff, illustrated by a long hours culture. For some this is leading topressures that are not sustainable and will need to be addressed. It will require Membersand senior managers to:

understand where the capacity pressures are greatest and need to be addressed

identify the important priority areas of activity that must continue identify those areas of activity that are less important that will be either stopped,

done differently, deferred or discontinued.


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Only then can organisational pressures be relieved and the staff capacity released andshifted to address agreed council priorities and ensure the delivery of further savings.

A consequence of the loss of capacity is insufficient pace to meet budgetary challenges.With the emphasis being given to addressing the financial gap it was unclear what staffresources and capacity had been shifted to this programme and, as a result of resourceshifting, what decisions had been made on what does not get done or is done less.

The council benefits from well-motivated staff that have energy, ideas and imagination.However, this capacity is not being fully utilised. If the above work referred to above toaddress pressure points is undertaken it will release capacity that can then be directed tocouncil priorities. This would need to be managed and could take the form of cross-service task and finish project groups and structured senior manager working forums.

There are good working relationships between officers and Members based on trust andmutual respect. This is supported by an acknowledgement by staff and Members of thefinancial pressures and the need for new ways of working. Similarly, big strides have beenmade in political cross-group working arrangements.

In repositioning the future council it will be important that there is a workforce strategy thatensures Members and employees have the necessary skills for future ways of working.

The council has moved to a flatter service structure in the recent restructuring andreduced from 42 to 28 work offices since 2008, with the plan to cut this to 8 by 2015.

However, closer staff working is not, so far, promoting improved corporate and strategicworking. This may be due to the capacity pressures, which reinforce a service focus, andthe attention given to the financial gap. The result is the council does not appear to valuestrategic skills in planning ahead, with strategic planning and thinking time largely absentfrom the current CMT working arrangements. This needs to be addressed so thatstrategic direction can inform an understanding of what the future council might look like.

The council will need to establish succession planning arrangements. The interimManaging Director is working to a contract which ends in April 2015. It will be essentialthat advance preparation is undertaken to profile the skills and experience required from afuture Chief Executive/Managing Director and to allow time for recruitment.

Potential recruitment difficulties lie ahead with the loss of key personnel and skills. Oneeffect of the recent restructuring is that some senior officers have had their salariesreduced. The council may experience difficulty in the future to recruit the calibre ofperson required, to some posts, based on current salary levels.

Performance Development Reviews (PDRs) are an important part of the performancemanagement framework and provide the opportunity for staff to have one-to-onediscussions with their manager on: their performance, their training and developmentneeds and next years targets. The council recognises the importance of PDRs but there

are significant gaps in their completion, with the functionality of SAP referred to as ablockage. A solution to this should be sought to correct the current break in theperformance golden thread.


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The councils commitment to partnerships is commendable and is included in itsCorporate Plan priorities. Many external partners are signed up to the priorities, set out inthe Corporate Plan; have a good understanding of the councils financial pressures and

many have shown goodwill to work with the council and add capacity. This should be aproductive area for discussion, which could include: supporting the third sector andcommunity delivery of services; pooled budgets; new commissioning models; jointventure models and new forms of collaboration, which could uncover new opportunities.

The willingness to work in partnership will be vital to leverage resources at a time whenthe council is facing significant financial pressures and is considering what it stops doingand what partners might pick up. There is an opportunity for the council to takepartnership working to the next level. This could include a reconsideration of the councilsrole and relationships with partners so that time and resources are focused wherepartnership working adds most value.

The council is involved in a large number of different partnerships. It is likely that anumber of these will no longer be productive or beneficial and may no longer be alignedto council priorities. Participation in partnerships that have outlived their usefulness is adrain on capacity and resources. It will be important to review partnerships with a view tothese being rationalised and refocused. This could involve:

reviewing the cost/resource inputs of current partnerships againstbenefits/outcomes

ensuring that partners know who to talk to and how to access the council. (This iscurrently difficult following the recent restructuring and a quick win solution would

be to provide contact information on the councils website.) initiating new partnerships where needed. It was striking to the team that there is

no forum that brings business, housing providers, skills providers and the councilaround a table.

beginning a dialogue with partners on the future needs of the community and whatpartners might contribute to, and where they might lead, with the council assuminga more enabling role

considering how to work with partners on a jointly owned programme of publicservice reform, which can develop new models of investment across organisationalboundaries, along with interventions and programmes that reduce demands on

services considering how the council continues to have a leading partnership role for the

island, as community leader and the only partner with a democratic mandate

strengthening partnership working by developing an overarching partnershipframework and strategy.

Taking partnership working to the next level will involve redefining the council role so thatcontrol and direct delivery is exchanged for influence and enabling others to deliver. Theprinciple of helping partners do more so the council can to do less will be an importantfuture model feature.

Recommendations:


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r) Develop a workforce strategy to support employees to have the necessary skills forfuture ways of working

s) Make Performance Development Reviews (PDRs) mandatory and review the

efficiency of current support systems for PDRst) Establish succession planning arrangements for senior officersu) Review partnerships with a view to these being rationalised and refocused to be

effective to deliver the councils prioritiesv) Provide contact information to ensure that partners know who to talk to and how to

access the council: a quick win solution would be to provide contact information onthe councils website

w) Produce an updated partnership framework and strategy incorporating the principlethat control and direct delivery are exchanged for influence and enabling others todeliver. This shift should place emphasis on the council role of bringing partnerstogether and being the voice of the island.

Governance and decision making

The Corporate Plan clearly sets out the councils vision, priorities and objectives and iscomplemented by the administrations commitment to transparency and inclusive working.One outcome from this is the ending of Executive Member delegated decision-makingwith more decisions referred to full council.

This is supported by evidence of quick and difficult decisions made, for example thedecision to form the strategic partnership with Hampshire County Council to deliver thecouncils childrens services and education service. Although the former was a

requirement from the Secretary of States Improvement Notice it is clear that the councilmoved quickly to the new arrangements.

Scrutiny is holding Executive to account and is using task and finish groups on a range ofareas, including: the councils asset management policy; the use of reserves to balancethe councils budget and, more recently, the cross Solent ferries.

Despite this there is a lack of understanding of roles and responsibilities at Member andsenior officer level. The team were given examples of when individual Members hadrequested service change or decisions at junior officer level without proper authority orconsideration of the appropriate level of officer/Member engagement. This can lead toconfusion about decision routes and potential frustration for Members who feel theirrequests are not acted upon.

More work is needed on political management and the role of the Leader/ Executive andCMT in overseeing such requests through a clearly understood process. Clarity isneeded on respective roles and responsibilities for decision-making for both officers andMembers to avoid ambiguity, uncertainty and delay. The development of a set ofprotocols and decision flow charts would assist on this.

The commendable desire for democratic openness and transparency will need to be

balanced to avoid limited capacity being even more stretched by having to service andsupport a wide range of meetings and initiatives. . The peer team considers that, from itsexperience, the council has a high number of meetings that take up a great deal of seniorofficer time. This has a productivity cost to the council and it is recommended that a review


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of meetings is undertaken to release capacity for other priorities. Establishing committeesand working groups should be governed by the condition that they add value and supportthe achievement of one or more council priorities.

As an independent administration decision making operates by consensus and this hasmany strengths. It has been possible so far for the administration to make decisions butwhen there is a need to make a decision that supports the councils declared priorities and/or make more challenging decisions then consensus can be more difficult to achieve. Anexample is the decision-making discipline to meet the statutory requirement to make alawful budget, which was acknowledged to be difficult for 2014 -2015. This difficulty islikely to be even greater for 2015-2016 with a funding gap of 13.29m more than twicethe previous year. The Independent group would benefit from considering how it needs toorganise itself to enable future difficult decisions for the council to be made. One way ofachieving this could be for the group to appoint a Member as a Business Manager.

There is a detailed performance management framework in place that is still developing.This includes quarterly reporting to the Executive, CMT and Scrutiny. This is encouragingbut the framework would be beneficially adapted to consider measures to monitor morequalitative outcomes for the island. This will be increasingly important as financialpressures will require increasing focus on achieving objectives and measuring outcomes.One area to consider would be greater use of benchmarking, comparing serviceperformance with other councils in order to learn from those with higher performancelevels. The LGAs LG Inform provides a means for authorities to compare performance:https://knowledgehub.local.gov.uk/web/lginform

Recommendations:

x) The Independent Group will need to devise means to ensure that groupindependence does not inhibit decision-making or result in decisions contrary tocouncil priorities. One way of achieving this could be for the group to appoint aMember as a Business Manager.

y) Devise a Member/officer protocol to provide clarity and certainty on respective rolesand responsibilities and describes the flows in decision-making.

Moving forward - priority recommendations

Throughout this letter there are a number of suggestions for the council to consider with aview to implementation.

Based on what we saw, heard and read we suggest you consider as a priority thefollowing key actions to build for the future operating model. These are things we thinkwill help you improve and develop the effectiveness and capacity to deliver your futureambitions and plans.

1. Prepare for the new operating model by reviewing priorities in light of diminishingresources and determining what will be the future core services delivered by thecouncil. It will be essential for the Executive and Corporate Management Team tocreate strategic space, time and capacity to focus on developing this model.

2. Begin work to establish succession planning arrangements for the current position ofManaging Director. Advance preparation will be required to profile the skills and


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experience required from a future Chief Executive/Managing Director and to allowtime for recruitment.

3. Review organisational capacity to identify:

where the capacity pressures are greatest and need to be addressed

the important priority areas of activity that must continue

those areas of activity that are less important that will be either stopped, donedifferently, deferred or discontinued.

This to be supported by a workforce strategy to ensure staff have the necessaryskills for future ways of working

4. Use external expertise, operating by payment by results where possible, to drive outprocurement and contract costs and deliver savings to the council. This could look

at initially high value areas to provide quick wins.5. Produce and implement an Economic Growth strategy linking tourism, business,

skills and housing. The council could combine economic growth, housing, skills andtourism as single strategy. This should be developed in consultation with islandbusinesses and consolidate the councils leadership and co-ordinating role ineconomic growth partnership working to be the voice for the island.

6. Develop and fully implement a Communications strategy, supported by theaggregation of communication functions, to address internal and externalcommunications.

We have attached a set of slides that summarise the above feedback. The slides are the

ones used by the peer team to present its feedback at the end of the onsite visit.

Next steps

You will undoubtedly wish to reflect on these findings and suggestions made with yoursenior managerial and political leadership before determining how the council wishes totake things forward.

As part of the peer challenge process, there is an offer of continued activity to supportthis. The LGAs Principal Adviser will be pleased to work with the council to address any

and all of the other issues mentioned in the letter.

In the meantime we are keen to continue the relationship we have formed with you andcolleagues through the peer challenge to date. [paragraph with LGA contact informationdeleted]

In the meantime, all of us connected with the peer challenge would like to wish you everysuccess going forward. Once again, many thanks to you and your colleagues for invitingthe peer challenge and to everyone involved for their participation.

Yours sincerely


23/23

Andrew WinfieldPeer Challenge Manager (Local Government Support Team)

Local Government Association[contact information deleted]

On behalf of the peer challenge team:

Gillian Beasley, Chief Executive, Peterborough City Council

Tony Clarke, Independent regional lead peer, LGA

Councillor Alan Jarrett, Deputy Leader and finance portfolio holder, Medway Council

Sarah Richards, Strategic Director Regeneration, Housing and Resources, Slough

Borough Council

Harry Downie, Assistant Director, Business Redesign and Development,Communities and Wellbeing, Bury Metropolitan Borough Council

Mark Poppy, Project Director for Local Partnerships, LGA

Documents

Isle of Wight Council Corporate Peer Challenge