Review of the Shared Resource Service - Torfaen …Review of the Shared Resource Service Monmouthshire County Council, Torfaen County Borough Council and Gwent Police Authority Audit

Review of the Shared Resource Service

Monmouthshire County Council, Torfaen County Borough Council and Gwent Police Authority

Audit year: 2013

Issued: May 2015

Document reference: 288A2015

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Status of report

Page 2 of 22 - Review of the Shared Resource Service - Monmouthshire County Council, Torfaen

County Borough Council and Gwent Police Authority

This document has been prepared for the internal use of Monmouthshire County Council,

Torfaen County Borough Council and Gwent Police Authority as part of work performed in

accordance with statutory functions, the Code of Audit Practice and the Statement of

Responsibilities issued by the Auditor General for Wales.

No responsibility is taken by the Wales Audit Office (the Auditor General and his staff) and,

where applicable, the appointed auditor in relation to any member, director, officer or other

employee in their individual capacity, or to any third party.

In the event of receiving a request for information to which this document may be relevant,

attention is drawn to the Code of Practice issued under section 45 of the Freedom of

Information Act 2000. The section 45 Code sets out the practice in the handling of requests

that is expected of public authorities, including consultation with relevant third parties. In

relation to this document, the Auditor General for Wales (and, where applicable, his

appointed auditor) is a relevant third party. Any enquiries regarding disclosure or re-use of

this document should be sent to the Wales Audit Office at [email protected] .

The team who delivered the work comprised Richard Harries, Nick Selwyn, Gareth Jones,

Janet Villars and Anthony Ford.

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mailto:[email protected]

Contents



The strategic vision for the Shared Resource Service was not formally established at the

outset, which contributed to weaknesses in how the emerging service was managed and

governed. Partners have acknowledged these issues and are addressing them as part of an

ongoing internal strategic review.

Proposals for Improvement/Recommendations 6

Detailed report

There was a clear rationale for developing the SRS but, whilst the service has

evolved overtime, there were some weaknesses in how it was established

7

There was a clear rationale for developing the SRS 7

The final decision to set up the SRS by Torfaen County Borough Council

was approved by Members but was not fully supported by a sufficiently

detailed business case

8

The decision to join the SRS by Monmouthshire County Council and

Gwent Police Authority was supported by appropriate information

although there were some gaps on the likely cost implications

9

A memorandum of understanding and agreement is in place that clearly

sets out how the SRS is constituted

10

The SRS is now providing some benefits for all partners but the initial

plans were often too optimistic

11

A strategic review has been completed which is addressing the weaknesses

identified in performance management, oversight and scrutiny

13

The effectiveness of the SRS Board in overseeing the management and

development of the SRS has been mixed

13

Some of the initial weaknesses in scrutiny and oversight of the SRS have

been addressed but further work is needed

15

Sound budget management arrangements are in place, but more work is

required by the SRS to demonstrate it is delivering value for money

17

Appendices

Glossary 20

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Summary



The strategic vision for the Shared Resource Service was not formally established at the outset, which contributed to weaknesses in how the emerging service was managed and governed. Partners have acknowledged these issues and are addressing them as part of an ongoing internal strategic review

1. The Shared Resource Service (SRS) is a collaboration between Torfaen County

Borough Council (TCBC), Monmouthshire County Council (MCC) and the Gwent

Police Authority (now the Gwent Police) to deliver shared IT services to the three

organisations. Data Centre Hosting services are also provided to other public bodies

including the NHS Wales Informatics Service (NWIS) by TCBC as part of the Shared

Resource Centre (SRC) located in Blaenavon in northern Torfaen.

2. In the early stages there was initial investment of public money in excess of

£2.5 million in the SRC. The largest investment was from the Welsh Government in the

form of a £1.8 million grant with the balance coming from the constituent authorities.

The Shared Resources Centre was officially opened by the First Minister on 14

February 2011 who cited the SRS as a great example of what can be achieved

through collaboration by public sector bodies.

3. The Auditor General for Wales and Appointed Auditor received a number of items of

correspondence relating to the establishment and running of the SRS. In response to

this correspondence, we have reviewed the establishment of the SRS. Our review

sought to answer the question: Was the SRS properly established and is it effectively

managed and governed by its partners? We have concluded that the strategic vision

for the SRS was not formally established at the outset, which contributed to

weaknesses in how the emerging service was managed and governed. Partners have

acknowledged these issues and are addressing them as part of an on-going internal

strategic review.

4. We came to this conclusion because we found that there were some weaknesses in

how the SRS was established. There was no single business case setting out what all

partners wanted to achieve from SRS and the service arose via a complex decision

making route over time involving many different stakeholders. The final decision to

approve the setting up of the SRS by TCBC was not fully supported by a sufficiently

detailed business case.

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5. The decision to join the SRS by MCC and Gwent Police Authority was supported by

appropriate information although there were some gaps in fully identifying the likely

cost implications. A memorandum of understanding (MOU) and Agreement is in place

that clearly sets out how the SRS is constituted. The SRS could provide potential

benefits for all partners but the initial plans were often too optimistic. There was no

strategy for the SRS until late 2012 and despite recognising that a formal business

plan is required, the SRS has yet to adopt such a plan.

6. A strategic review was established in January 2013 by the partners to improve joint

working and address issues in performance management, oversight and scrutiny. The

strategic review had 14 work streams. These included identifying the core SRS

service, strategy, governance, human resources and finance. Considerable change

has taken place within the SRS because of the strategic review and an internal

improvement project, Project Phoenix has been established to implement the

conclusions of the strategic review. One of the key elements of the strategic review

has been the identification of the costs of the „core service‟ that SRS provides to each

of its partner organisations.

7. A further task and finish group was established in late 2013 and this had three main

strands, namely:

reviewing key aspects of the service to support further improvement in respect of

governance, finance, core service, culture/identity and people development;

establishing more appropriate and clearer measures to enable a judgement on

Return on Investment; and

maximising added value from the SRS in relation to the local economy, the

community, and education.

8. The SRS does not consider the strategic review as a one off time bound project; rather

it views this as an on-going process of self-evaluation. The initial phase of the review

focussed on strengthening the SRS operating environment. Since April 2014, the

review group has focussed on the medium to long-term business strategy and

development plan for the SRS.

9. The effectiveness of the SRS Board in overseeing the management and development

of the SRS has, to date, been mixed. Initially, scrutiny and oversight of the SRS were

not possible because of weaknesses in the performance management framework and

limitations in reporting activity. Some improvements have been made in this area,

particularly in respect of budget management arrangements, it is still difficult for the

SRS to demonstrate if it is delivering value for money.

10. It is acknowledged that the SRS has encountered some serious and unanticipated

setbacks over the last three years, which have caused instability for the workforce and

a need to focus on limiting reputational damage. This includes the arrest and trial of

the senior director, a situation that continues because of unconcluded disciplinary

issues. This has also resulted in a delay in the delivery of this audit.

11. We have identified several areas for improvement for the SRS, which are set out

below.

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Proposals for Improvement/Recommendations

Recommendations

P1 The SRS Board should develop a new strategy post 2015, which takes account of the

changing public service landscape and opportunities this presents. The strategy should

be:

fully informed by all partner organisations;

drafted and subject to consultation before the end of September 2015;

approved by the SRS Public Board before the end of November 2015; and

aligned to the SRS Performance Framework.

P2 The SRS Performance Framework should be reviewed to ensure that it aligns to the

SRS strategy and is fit for purpose. The framework should be:

focussed on the outcomes of the SRS strategy;

clearly identify value for money measures for all elements of the service;

reported consistently and regularly to all partner organisations‟ scrutiny and/or

audit committees;

reported consistently and regularly to all users; and

used to underpin staff management and development within the SRS.

P3 The SRS Board should improve its governance and accountability arrangements by:

Communicating clearly to all stakeholders the role of the board.

Improving decision making by:

‒ ensuring that agreed action points have timescales attached to them and

those actions are reviewed at subsequent board meetings;

‒ ensuring that attendees‟ roles, their responsibilities and which organisation

they represent are recorded in minutes;

‒ ensuring that risk registers are regularly reviewed and mitigating actions

are delivered on time;

‒ ensuring that management information is presented regularly and subject

to robust challenge; and

‒ reviewing and updating the scheme of delegation.

P4 The SRS should complete its unit costing research with a view to strengthening the

demonstration of value for money.

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There was a clear rationale for developing the SRS but, whilst the service has evolved overtime, there were some weaknesses in how it was established

12. SRS Services are delivered from the SRC in Blaenavon in North Torfaen. Through

TCBC‟s (the Council) and the SRS there are a range of contractual arrangements

relating to the service which involve a range of parties. Some of these arrangements

are between individual councils and Welsh Government Departments and other public

sector bodies. The SRS has two operational arms, SRS Public Services and SRS

Business Services - Exhibit 1.

Exhibit 1 – The Shared Resource Service has two Operational Arms:

SRS Public services - public sector collaboration between TCBC, MCC and Gwent Police

designed to deliver public sector service integration in the provision of information and

communication technology (ICT) services. Services include resources (accommodation and

staff) which provide shared services in three teams - Infrastructure, Development and

Network; Helpdesk; and ICT Training Teams.

SRS (Business Services) - A trading company limited by share capital, entitled SRS

Business Solutions Ltd, wholly owned by TCBC and MCC that sells surplus SRS capacity to

the private sector, with profits again being invested in public services. This Company is

focussed on selling surplus capacity to third parties and reinvesting any profits in public

services.

13. Our review focussed on two key elements:

the establishment of the SRS, in particular the information and business

presented for agreement by TCBC, and then the involvement of Gwent Police

and then MCC in the project; and

the way the SRS has been managed and governed.

There was a clear rationale for developing the SRS

14. The development of the SRS is a very complex project and has arisen over a number

of years dating back to 2009. Consequently, the SRS did not start as a fully formed

concept but has developed over a period time with a variety of different aspirations and

intentions. Both councils were faced with the need to vacate County Hall at Cwmbran

due to structural issues within the fabric of the building, and the two councils were

searching for new premises to relocate their ICT and data hosting services. Torfean

County Borough Council had used an „outsourced model‟ for its ICT provision in the

past, which the Council did not consider effective or successful and had been brought

back in house well before the inception of the SRS.

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15. The SRS therefore offered the Council the opportunity to address a number of

operational and strategic risks. The resultant project provided an improved building

with more modern equipment and secure facilities with significant financial input from

Welsh Government to meet some of the costs due to its own requirements for high

quality data storage for NWIS and its wish to see a more strategic approach to the

provision of public sector data storage across Wales.

16. Torfean County Borough Council‟s engagement with this process began when it

tendered to develop Data Centre services in 2009. This tender had been advertised by

the Public Sector Broadband Aggregation (PSBA) Board1 on behalf of the Welsh

Government, which invited submissions for the provision of Data Centre facilities to

support a public sector co-location service in Wales. The original plans for the Data

Centre was to make the service available to all public sector end user organisations as

part of the Welsh PSBA Network Services Agreement2. However, whilst the Council

and its partners have actively sought to encourage other public sector organisations to

use the SRS, take up to date has been limited.

The final decision to set up the SRS by Torfaen County Borough Council

was approved by Members but was not fully supported by a sufficiently

detailed business case

17. The Council submitted its bid on the 31 August 2009 and were then notified in October

that their bid had been successful. It was later in October (Cabinet meeting on 20

October) that the Council‟s Cabinet approved the setting up of a SRC in Blaenavon.

The report to Cabinet followed a series of member‟s briefings and seminars on the

new service. The report Members approved, notes that the SRS will use a Welsh

Government grant of £1.8 million to provide accommodation to host data storage, ICT

infrastructure and establish a SRC for the region via the PSBA programme. The report

highlights that the service will also enable the Council to provide a suitable

replacement to the server room facilities at County Hall i.e. relocating its current ICT

service and mitigating that risk.

18. The Cabinet also approved funding of £100,000 from its ICT Revenue budget and

£50,000 from Corporate Reserves to enable the development. The report also states

that Gwent Police would provide £225,000 to develop the new data centre service,

although at the time the approval was given by the Cabinet this had not been formally

agreed to by Gwent Police and, although this did happen subsequently, it was not until

April 2010.

1 The PSBA Board is responsible for making Strategic decisions relating to the PSBA network and is

comprised of Senior Officials from Welsh Government and the Chair of the PSBA Management Board. 2 The PSBA Network Services Agreement (the legal contract between the Welsh Assembly

Government and Logicalis (UK) for the provision of the broadband network infrastructure development and support.

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19. Our review has identified a number of gaps in the information provided to members to

initiate this process. It is acknowledged that at the time of the Cabinet report there was

a need to move quickly in order to take advantage of the opportunities presented.

However, more detailed information would have been helpful to members in coming to

their decision:

The Cabinet report notes that a revenue model will be developed to cover the

operational running of the centre but at the time, Members approved the

establishment of the SRC this was not in place (and from the information we

reviewed, has never been provided to Members). This means Members were

being asked to decide upon a course of action without being clear what the full

cost implications would be for the Council.

The Cabinet report also notes that the long-term decision was expected to be

cost neutral to the Council but interim funding may need to be made available. It

is not clear what the anticipated interim levels of expenditure were likely to be,

what this money was to be used for, when payments were likely to be needed or

for how long these interim payments would be required.

The Cabinet report also notes that there was “reasonable expectation” that

additional external funding would be provided by Welsh Government and quotes

an additional £1 million potentially being made available from the PSBA

programme, although the report makes clear that this was not required for the

initial proposal.

Finally, the report also lacked a detailed baseline, which set out the cost and

performance of current ICT service provision and the anticipated cost benefits

that would arise from the new service. Without this information, it is difficult for

Members to challenge performance and determine at a future point in time

whether this new service is more cost effective and represents value for money.

20. We acknowledge that the Council took the opportunities that were presented and was

operating in a fluid environment on which to base decisions and therefore had to

balance the opportunities and risks of acting against the risks of non-action. However,

this meant that the full implications of the decision, in particular the financial costs,

were not entirely supported by all the relevant data, although, a complete strategic

plan across the partners came later in the process.

The decision to join the SRS by Monmouthshire County Council and

Gwent Police Authority was supported by appropriate information

although there were some gaps on the likely cost implications

21. Gwent Police and MCC were not party to the initial discussions between Welsh

Government and TCBC and only approved joining the SRS in 2010. The decision to

join the SRS followed a similar approval process in both organisations.

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22. Gwent Police agreed to join in April 2010. The business case paper to the Audit

Committee clearly set out the strategic rationale for the proposal, including reference

to the Gwent Police ICT Strategy, and sought in principle agreement to participate in

the SRS. This was further supported by approval of the transfer of staff to the SRS

(under TUPE) and provision of funding in the 2010-11 budgets.

23. With regard to MCC, the Council‟s Cabinet gave in principle approval to join the SRS

in June 2010. This was supplemented by a detailed business case in September 2010,

which identified the broad economic and service benefits arising from the integration of

ICT services. The business case also identified potential savings of £358,000 in year

one for the Council, primarily because of the merger of services which would remove

layers of service and staff duplication. This would be achieved through the integration

of MCC ICT staff with TCBC staff and it was anticipated that the number of full time

equivalent Monmouthshire ICT staff would reduce.

24. However, in both instances the business cases lacked detail on some key aspects of

the financial implications of the integration. For example, whilst the Gwent Police

business case provided a broad overview of likely costs to establish the new services

such as the cost of leasing Victoria House in Blaenavon and likely on-going revenue

costs based on per rack and per workstation charges, it did not include a clear

summary of the total anticipated cost of the new service model. Similarly, the

information presented to cabinet in MCC also makes it clear that the financial

assessment included in the report was “not a detailed and in-depth audit of the

associated finances of MCC‟s existing ICT function”; again this has never been

provided to the Council.

A memorandum of understanding and agreement is in place that clearly

sets out how the SRS is constituted

25. The partnership operated via a contractual agreement for the setting up and operation

of a SRS between the three parties pending development of an appropriate and fully

constituted Governance Model in which all were full (and/or equal) partners. This

agreement is supported by a MOU that was drafted in discussion with external legal

advisors (Geldards LLP).

26. The MOU was approved by each organisation in May 2011 and sets out how the

partners will work together, the constitution for decision-making and provides the broad

framework for operational service delivery. It also sets out the requirements and costs

exiting from the SRS including TUPE arrangements and associated infrastructure and

hardware costs.

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27. Governance arrangements are outlined in Schedule 2 of the MOU and we found clear

evidence that the MOU was considered and approved by the respective partners. The

governance strand of the SRS Strategic Review was concluded in the summer of 2014

to add to and improve those arrangements. As part of that work, a number of options

in relation to the organisational status of the SRS were considered in depth. One

option was for SRS to become a joint committee, however, Gwent Police were unable

to join such a model. Therefore, the SRS has decided to retain its current

organisational model and in 2014, seven of the schedules to the MOU were updated to

improve arrangements and better reflect current operational practice. Because of

these changes, the MOU has been strengthened and is fit for purpose.

The SRS is providing some benefits for all partners but the initial plans

were often too optimistic

28. Shared Resource Services are delivered from the SRC in Blaenavon in North Torfaen.

Through TCBC and the SRS, there are a range of contractual arrangements relating to

the service that involve a range of parties. Some of these arrangements are between

individual councils and Welsh Government Departments and other public sector

bodies. As noted above the SRS has two operational arms: SRS Public services -

public sector collaboration between TCBC, MCC and Gwent Police Authority; and SRS

(Business Services) - A trading company limited by share capital, entitled SRS

Business Solutions Ltd, wholly owned by TCBC and MCC.

29. In relation to the SRS Public Services, the plan for the development of the three

partners shared ICT services covered five key stages:

co-location of services;

an integrated staffing structure;

a new joined up Governance Model;

developing common approaches for applications, sharing licences and assets;

and

offering services to new partners and customers.

30. We identified some gaps in the SRS‟ initial plans. For example, the partnership did not

at the outset seek to gain accreditation against recognised industry standards such as

ISO 27001 information standard and the Tier 3 Data Centre Standard. These provide

assurance that information security management systems and arrangements operate

under explicit management control and would be a pre-requisite to satisfying many

organisations to participate in the SRS. These were secured in February 2013 and

subsequently retained on renewal.

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31. Similarly, infrastructure requirements were not completely identified at the start of the

SRS and further investment has been required for additional unplanned costs in

relation to accommodation; Business Continuity/Disaster Recovery; infrastructure

monitoring software; and close circuit television. These are all prerequisites to

establishing an integrated service of this nature and should have been identified in the

initial business planning exercise as distinct priorities. A disaster recovery plan has

now been put in place by the SRS.

32. We have identified some evidence of good progress being made in addressing these

issues because of the strategic review conducted by the SRS. For example, the SRS

has created a shared staff structure that became fully integrated with the transfer of

Gwent Police staff to the TCBC via TUPE3 on 1 January 2014, although harmonisation

of terms and conditions continues. There are now around 140 staff working for the

SRS who are now all employed by TCBC. Likewise, the service has achieved co-

location in Blaenavon and has created a new joined up governance structure

underpinned by an updated MOU.

33. Progress is also being made on planning the creation of common approaches for

applications but further work is required to fully share software licences and make

better use of assets. With regard to increasing the collaboration to include further

partners and customers, no additional partners have joined the SRS since it was

formed:

All staff are now located at Blaenavon and have transferred to TCBC under

TUPE.

The Governance model has been reviewed with amendments made to the

original MOU in 2014.

The SRS has introduced a single change management process through Project

Phoenix.

Financial Procedures have been updated and approved by the Board in May

2014 covering financial management, financial planning, risk management and

control, financial systems and external arrangements.

The SRS has made some progress in creating common approaches for

applications but further work is required to fully share software licences and

make better use of assets. A single project management tool was approved by

the SRS Board in June 2014.

3 The Transfer of Undertakings (Protection of Employment) Regulations 2006 protect employees whose business

is being transferred to another business.

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34. The SRS has considered its future direction in 2014 in light of changes to the external

political environment and technological changes. In June 2014, the Board considered

reviewed a roadmap for future development produced by the Chief Operating Officer,

which retains the five strategic objectives as set out at the creation of the SRS. The

roadmap identifies a series of future areas of focus for the SRS including cloud

computing and cyber security. However, this falls short of a fully developed and

adopted business strategy for the SRS and whilst we recognise that this is a rapidly-

changing industry and that there is a need for organisations to be nimble to respond to

changes, it is difficult to effectively scrutinise and hold decision makers to account and

ensure the service is providing value for money without a clear adopted strategy being

in place.

35. It is acknowledged that the SRS has encountered some serious and unanticipated

setbacks over the last three years, which have caused instability for the workforce and

a need to focus on limiting reputational damage. This includes the arrest and trial of

the senior director, a situation that continues because of unconcluded disciplinary

issues, and negative press following the withdrawal of Newport Council from the i-learn

Wales project leaving the SRS with a large number of unused laptops4. These issues

have tested relationships, diverted a lot of organisational energy and managerial

capacity from being able to focus on the key matters to be addressed, and have made

it more difficult to engage other public sector agencies in the original vision. In addition,

the SRS have recently received confirmation from Welsh Government that data hall

two, which was originally funded through grant for education purposes and has not

been filled on that basis, can now be used for any public sector purposes, which

provides scope to explore further public sector partnerships.

A strategic review has been completed which is addressing the weaknesses identified in performance management, oversight and scrutiny

The effectiveness of the SRS Board in overseeing the management and

development of the SRS has been mixed

36. There are two Governance Boards in operation covering the two distinct strands of

working – the SRS Public Board and the SRS Business Solutions Board. From our

review of the minutes of the SRS Public Board there are a number of issues that need

to be addressed:

It was not clear what the remit of the SRS Public Board was at the outset; and

how its work was integrated with each partner‟s established governance systems

– for example, Cabinet, scrutiny and audit committees.

4 We have not looked at the procurement of the laptops as part of this work. This was previously

reviewed by the external auditors.

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SRS Public Board papers do not identify an attendee‟s role, their responsibilities

or which organisation they represent. Some SRS Public Board members have

also not regularly attended meetings, such as the Welsh Government. The terms

of reference we reviewed were also draft and dated July 2010 and were only

formally agreed in May 2014.

Board meetings have also not been consistently held and it is only since

February 2012 that regular monthly meetings have taken place. We have

reviewed those quarterly Public Board minutes provided to us from late 2013

onwards. We note that during the strategic review in 2013 Board meetings were

changed to a quarterly basis to focus on progressing and fulfilling the strategic

objectives of the SRS. In addition an operational board was established with

revised membership to address operational issues.

We note that in May 2014 the Board decided to revert back to a single board that

would meet on a quarterly basis with a clearer scheme of delegation to the Chief

Operating Officer. That scheme was agreed in June 2014.

37. Our review of the SRS Public Board papers also highlights some inconsistencies in the

quality and coverage of reports. Up until September 2012, management information

was inconsistent in coverage and not detailed. From September 2012, the SRS Public

Board Agendas starts to follow a more formal structure with set items such as

resources, financial update and business opportunities. Indeed, from our review of

minutes we consider that there is now a more robust financial challenge of expenditure

against budget, especially since September 2012.

38. However, decisions are often very slow, not supported by good quality information and

key decisions are deferred, such as agreement of the SRS Strategy. The SRS

Strategy was presented to the SRS Board in late 2012 but did not receive formal sign

off. The strategy was then updated following the strategic review in early 2013. Some

standard agenda items we would expect to see included are also absent, such as

monitoring progress against improvement and action plans, and the approach to risk

management has been variable. Initially there was a strong focus on risk but this was

not routinely reviewed during 2012 and some key risk issues are not reported to the

Board – for example, incidents of power outage. The risk register has not been

included on the SRS agenda for meetings in late 2013 and 2014 that we reviewed.

39. From our review of minutes, we consider the Board to be focused too much on day-to-

day operational arrangements rather than addressing key strategic issues, risks and

decisions. The SRS recognised this tension in April 2013 when it created an

operational board to run alongside the strategic board.

40. It is also not clear from Board reports and the minutes of meetings how the SRS Public

Board is improving performance in the SRS and ensuring the new integrated services

provide value for money. This has not been helped because of weaknesses in

performance management information noted above. A scheme of delegation was only

introduced in mid-2014 which clearly outlines the decisions that can be made by the

Chief Operating Officer and those that are reserved for the board.

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41. The original intention was to deliver efficiencies by sharing resources and reviewing

staff numbers as staff transferred to SRS. This has been achieved, staffing structures

have been revised several times and further changes were planned in September

2014. The resources requirements for the 14-16 i-learn Project were not realistically

assessed; this has affected SRS core resources and contract staff have had to be

used to provide additional project support.

42. As the Board matures, the SRS themselves are currently reflecting on the role that the

individual board member should play; should they represent their own organisation or

should they represent the SRS as a unique entity? In a presentation to MCCs

Economy and Development Select Committee in September 2014, officers stated that

“Governance needs re-purposing as examples have been missed - Board has worked

well for project management and well chaired but each appointee represents their own

organisation and single work programmes which has driven a lack of integration”.

Some of the initial weaknesses in scrutiny and oversight of the SRS

have been addressed but further work is needed

43. The SRS Strategic Review identified that a performance management framework

needed to be developed and implemented to underpin and support effective

governance, accountability and decision making arrangements. At the time of our initial

review, the SRS lacked an appropriate suite of performance indicators to judge current

performance against and many areas of operation and activity were not subject to

appropriate and effective monitoring and challenge. The SRS also lacked minimum

Service Standards, which are essential in judging value for money, effectiveness and

improvement. Steps have been taken to address this since that time.

44. Because each organisation has entered into the SRS under different circumstances,

no agreed baseline was established at the outset. Consequently, this made it difficult

to judge performance and identify whether services are improving, remaining the same

or deteriorating.

45. The partners acknowledged these weaknesses and they have sought to address this

by developing a set of minimum service standards and a suite of Key Performance

Indicators (Critical Success Factors) to cover full functionality of the SRS (financial,

operational, customer and employee). These Critical Success Factors have been

reviewed and updated by the board on an annual basis to reflect changes in the

operating environment.

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46. However, whilst the SRS has developed both Key Performance Indicators and service

standards as part of the strategic review, some weaknesses remain. The measures

within some of the service standards and the Critical Success Factors (Key

Performance Indicators) that have been developed, are not aligned to allow for

effective oversight of performance. For example, the measures are often reported

independently but have different targets - help desk call resolution and equipment

replacement. Similarly, the Performance Framework does not link individual staff

objectives to the overall strategic objectives. The Critical Success Factors for 2014-15

did not include a measure of employee satisfaction but did in 2013-14 but it is not clear

why this has been dropped. These weaknesses make it difficult to effectively monitor

performance and hold people to account.

47. We have reviewed the most recent Performance Update provided to the SRS Board in

2014. Whilst that document details considerable activity that the SRS has undertaken

towards achieving its strategic goals, the Performance Update does not provide a clear

report on the SRS‟ own performance against its Critical Success Factors and service

standards. We have also reviewed the update provided by SRS to TCBC‟s cabinet in

September 2014 on SRS performance and note that of the four examples of

performance data provided only one of those was a Critical Success Factor or service

standard.

48. Given that the performance framework is viewed by the SRS as critical in achieving

the strategic goals of the SRS, clear presentation of performance information is vital

for elected members and board members to firstly understand and then challenge the

SRS performance. The inconsistent presentation of key performance information

weakens governance and accountability arrangements.

49. Overview and Scrutiny in public bodies has a key role in promoting improvement,

efficiencies, and collaboration across public services. This is especially important

where a public service does not rely on competitive choice and highlights the need for

independent scrutiny of service delivery being undertaken thoroughly and rigorously.

This is increasingly the case in seeking to improve services at a time of reducing

resources and in developing effective joint scrutiny arrangements for new and

emerging collaborations. Our initial review of arrangements found some weaknesses

in practices with much of the activity of the SRS not being subject to regular, effective

and appropriate challenge by the partners‟ scrutiny and audit committees. However,

this has since been partially addressed.

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Detailed Report



50. Since the inception of the SRS, the quality, coverage and timing of reporting to the

member bodies scrutiny and audit committees have been inconsistent. For example,

the Audit Committee of the Gwent Police have received regular updates at meetings

and three annual reports have been presented. However, little information has been

reported to the individual Council scrutiny committees. In Monmouthshire, three

reports have been presented on the SRS to the Economy and Development Select

Committee (February 2013, October 2013 and September 2014). These reports have

provided members with updates on the development of the SRS and in October 2013

provided some budgetary information, as well as information about the performance

framework. The minutes of the meetings indicate that members have expressed

concerns about quality of the performance information. The paper presented to the

Committee in September 2014 was also not circulated in advance of the meeting

which did not afford members an opportunity to engage in effective scrutiny.

51. Likewise, members of the Resources and Corporate Business Overview and Scrutiny

Committee in Torfaen have only received two reports on the SRS (May 2013 and June

2014). Those two reports have focussed on progress made in implementing the

recommendations of the Wales Audit Office‟s 2011-12 audit of information technology.

The reports have highlighted how the role that SRS has played in addressing those

recommendations as well as the development of the SRS performance framework.

52. The quality of scrutiny reporting was also initially poor. Reports were often inconsistent

in coverage and included limited operational and performance information. Likewise,

limited budget data is included and it is not clear what the true position on expenditure

for the SRS collectively or individually by partner, overtime is. No information

evaluating performance against the various Business Cases was included to be able to

judge progress and no information on the performance of the ICT services pre and

post integration were included to enable members to be able to judge on a like for like

basis what the benefits of the partnership have been and in which areas it needs to

improve.

53. Because of weaknesses that still need to be addressed with respect to the information

provided, the scrutiny process is still not fulfilling its potential to offer real challenge to

the SRS.

Sound budget management arrangements are in place, but more work is

required by the SRS to demonstrate it is delivering value for money

54. The SRS operates an annual budget setting process that sets out its forecast

operating costs for the year based on the predicted activity of the three constituent

bodies. Budget reports produced by the three partners shows that in the early years

between 2010-11 and 2013-14 the SRS budget has fallen overall but actual

expenditure on SRS services has increased – Exhibit 2.

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Detailed Report



Exhibit 2 – Budget and actual expenditure of the SRS

SRS Base Budget 2010-11 2011-12 2012-13 2013-14

Monmouthshire CC £1.664m £1.826m £2.312m £2.491m

Torfaen CBC £3.227m £3.300m £2.987m £3.266m

Gwent Police5 £4.344m £3.699m £3.497m £3.012m

Total SRS budget £9.235m £8.815m £8.796m £8.769m

SRS Actual Spend 2010-11 2011-12 2012-13 2013-14

Monmouthshire CC £1.606m £2.103m £2.354m

Not available

at time of

review

Torfaen CBC £3.072m £3.179m £2.903m

Gwent Police £5.065m £5.739m £6.013m

Actual SRS spend £9.743m £11.021m £11.270m

55. The reason for overspends in expenditure (from budget) is not always clear and only

from May 2012 did the financial reports provide adequate detail as to the underlying in

year position. However, the reasons for the overspends in previous years were not

always clearly set out or reported to the SRS Public Board or the constituent

authorities. For example, resources have been provided to address in year revenue

deficits.

56. To monitor and control expenditure, the SRS Public Board at its May 2012 meeting,

requested that monthly management accounts need to be presented to each meeting

(subsequently amended to quarterly account reporting). This has resulted in improved

reporting to the SRS Public Board on financial matters although there are still gaps in

the frequency of production of this information. For example, from our most recent

review of SRS Public Board minutes in 2013 and 2014 we noted that monthly

management accounts are not always presented and it is unclear as to whether this is

as a result of a change in the frequency determined by the SRS Public Board or simply

not adhering to the established procedures. Notwithstanding, the budget monitoring

information received by the SRS Public Board is starting to provide appropriate detail

as to the underlying in year budget financial position of the SRS.

5 Information is taken from draft budget presented to SRS Board for 2013-14.

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Detailed Report



57. Within each partner, there has been varying levels of scrutiny of the overall financial

performance of the SRS. Partners lack key financial information to fully understand

current performance. For example, no analysis of the total costs of developing the

SRS (and associated services) that compares current performance with pre-SRS

services has ever been undertaken. This consequently makes it difficult to judge

whether the SRS has delivered any savings; is operating more efficiently; or is cheaper

than previous service models. The SRS is about to undertake a market testing and

benchmarking exercise to establish how its unit costs compare against other public

and private sector providers.

58. The services purchased and the level of expenditure on core activity such as staffing,

buildings and equipment has changed. This consequently makes a like for like

comparison between pre and post SRS services difficult especially since no baseline

of costs, performance and activity was established when the SRS was first set up.

Without this information, it is not possible to analyse performance to determine

whether the SRS represents value for money. The partners acknowledge that the full

benefits of integration have not yet been realised and work was being undertaken

through the Strategic Review of the SRS to develop a clear understanding of the „core

service‟ that each organisation pays for from the SRS. The partners have found that

budgets were not aligned to the „core service‟ and that there was no business plan to

guide or prioritise investment. A paper was presented to the SRS Board in May 2014

on the core service and in June 2014, a further paper was presented outlining the

underlying reasons for the difference in service provision to each organisation.

59. In the autumn of 2014, the partners have presented a series of commissioning papers

to SRS for 2015-16. Those papers outline each partner‟s expectations of the SRS as

well as offering the opportunity to identify opportunities to maximise the benefits from

the SRS. However, given the lack of clear and robust data on costs prior to the

establishment of the SRS this may not prove possible to evidence.

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Appendix 1



Glossary

Reference Table heading

Shared Resource

Centre Building also known as the Blaenavon Data Centre, comprising of 4 data

Halls:

Data Hall 1 – Owned by SRS rented to NWIS. Reduced rental because

of £1.8 million Capital investment.

Data Hall 2 - Owned by SRS built using WG grant for the i-learn Wales

pilot project.

Data Hall 3 – Owned by SRS Used by MCC and TCBC. Costs pro rata

across SRS.

Data Hall 4 – Owned by SRS used by GP Costs pro rata across SRS.

Shared Resource

Service (SRS) Staff resource providing the support and development from TCBC, MCC

and Gwent Police.

Operationally managed by the SRS Board.

Employed by TCBC.

Informing

Healthcare (IHC) Body set up to develop Strategic use of ICT in the Welsh Health Service.

Now consolidated within NWIS.

National Welsh

Informatics

Service (NWIS)

Provides integrated digital information services to Wales IT in partnership

with Health Boards, Trusts, GP Practices and other supporting

organisations. NWIS supports the strategic development of ICT, the

delivery of operational ICT services and information management. Has a

national role to support NHS Wales and make better use of IT skills and

resources.

PSBA Refers to the Welsh public sector broadband aggregated network used by

all public sector bodies across Wales which is developed and managed by

a third party Logicalis through the WG PSBA team.

Logicalis Company that was awarded the contract to implement and manage the

public sector broadband network, and previously the lifelong learning

network worth £170 million over 7 years. To be renegotiated March 2014.

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Documents

Review of the Shared Resource Service - Torfaen …Review of the Shared Resource Service Monmouthshire County Council, Torfaen County Borough Council and Gwent Police Authority Audit