SUMMARY/PURPOSE
1.
To
receive the report by Tony
Hall, Paul Wilkinson and John Lawson into the externalisation of Wight
Leisure and to adopt a response, in the form of an action plan.
2.
To
determine to halt the planned externalisation of Wight Leisure.
BACKGROUND
3.
At
its meeting on 4 June 2003 the Executive resolved to endorse the proposal by
the Monitoring Officer and Chief Financial Officer to undertake a short
investigation designed to establish:-
·
the
amount and legitimacy of spending on the project to date;
·
whether
any recommendations can be made to the Council in relation to either the
corporate or service specific management of the externalisation process.
4.
Due
to the number and complexity of the issues, and due to the number of
individuals involved in assisting in delivering this task, the report detailing
the investigation and the recommendations which arise was published, later than
anticipated, on 12 January 2004.
The report has been circulated to all Elected Members, to the press and
other interested parties. The report is
available on the Council’s website.
5.
The
external auditor, in his annual management letter (elsewhere on this agenda),
having had the benefit of a pre-publication draft of the report commented:-
“There are many important messages arising from this inquiry that the Council must have a regard to in relation to any procurement project that it undertakes in the future. For our own part we are satisfied that the Council has undertaken a full and searching enquiry into the circumstances of the externalisation and has supplemented its own enquiries where appropriate with independent legal advice.
The Council now must:-
·
decide on the future of leisure services and whether the externalisation
model originally proposed is a viable one;
·
in doing so, consider all the relevant facts and ensure that a decision
is based on a clear business case linked to corporate priorities and the
community plan;
·
ensure that where a vehicle needs to [be] established for the purpose of
externalisation it is properly constituted;
·
avoid conflict of interest at all times in relation to Members, officers
and all related parties;
·
maintain total transparency and openness in decision making;
·
adopt a robust approach to project management.”
This report is a key step in
delivering all these recommendations by the external auditor.
STRATEGIC CONTEXT
6.
One
of the aspirations of the community strategy, under the theme of Improving
Access to Services and Facilities is to “encourage physically and/or
mentally stimulating activities as a route to staying healthy and a foundation
for a full and active life”.
7.
The
Council’s own key objective of improving health, housing and the quality of
life for all identifies the promotion of healthy living as being of particular
importance and refers to encouraging the uptake of physically and mentally
stimulating activities; as referred to above, as a key priority.
8.
Working
with the tourism industry to promote the Island as an all-year holiday
destination, particularly seeking to develop sustainable tourism initiatives
and improving standards of customer care in the industry is a particular
priority for the Council within the context of its objective to encourage job
creation and economic prosperity.
9.
Services
provided by the Council through the Wight Leisure, and the areas for
improvement identified in the best value improvement plan in particular, can be
seen to clearly link with these strategic themes, objectives and aspirations.
CONSULTATION
10.
Given
the inward looking nature of the report into the externalisation process,
consultation beyond Members and officers of the Council and with the external
auditor has not been undertaken. External challenge to the investigative
process was invited from Grainne O’Rourke, Monitoring Officer for New Forest
District Council.
FINANCIAL/BUDGET IMPLICATIONS
11.
The
recommendations set out in the report, of themselves, carry no identifiable
financial consequences. Whatever development plans for leisure services are
agreed will involve procurement decisions informed by detailed financial
advice. The net effect of staffing costs (including any job evaluation
exercises), investment and changes in income will be entirely dependent on the
aggregate effect of those future decisions.
LEGAL IMPLICATIONS
12.
Most
of the services grouped under the Wight Leisure are discretionary. There is, nevertheless, a need to procure
their delivery in such a way as to deliver best value services as defined in
the 1999 Local Government Act. The
advent of the Local Government Act 2000 and the prudential borrowing code will
assist in the lawful, innovative development of the service.
13.
Counsel
has advised that the legitimacy of the spending to date be confirmed in order
to avoid any doubt as to the legality of that expenditure.
OPTIONS APPRAISAL/RISK
MANAGEMENT
EXPENDITURE TO DATE
14.
In
accordance with Counsel’s advice (reproduced in full as an appendix to the
substantive report) it is recommended that the Executive, for the avoidance of
doubt confirms that the expenditure set out in Appendix 2 was incurred as, in
effect, a grant to Wight Leisure Limited (WLL) in reliance on section 2 of the
Local Government Act 2000.
15.
In
considering this recommendation, the Executive needs to:
i.
have
regard to the Community Strategy, and
ii.
be
satisfied that, at the time of this decision (rather than on the date of any
previous decisions) to affirm the expenditure is in the economic, social or
environmental well being of the Island or of some or all of it’s inhabitants.
16.
Authorisation
of the expenditure, even after the event can be said to be consistent with the
Community Strategy, as set out under the Strategic Context side heading above.
17.
Authorisation
at the time of the decisions in question, in reliance on section 2 of the Local
Government Act 2000 would have been easy to justify as pursuing the economic
and social advantages which were expected to accrue from the externalisation
process.
18.
The
contribution to the well being of the Island at the date of this decision is
more can legitimately be argued to be:
·
the
avoidance of damage to the Council’s trading reputation of not reneging on the
contracts under which liability for payments arose;
·
the
avoidance of legal disputes and/or complaints to the ombudsman by aggrieved
commercial partners, and
·
diminishing
the risk of adverse comment by external auditors
This will all be achieved by the affirmation of the funding as recommended and that each of these will contribute to the well being of the Island and it’s local tax payers, for the purposes of section 2.
19.
It
should be noted that, as the costs in question have already been incurred, this
recommendation might be seen as being of limited practical effect. Certainly
the decision will have no financial consequences as there are no grounds for
recovering any of the monies. It is nevertheless a significant step in ensuring
that there are no further legal, financial or audit issues outstanding from the
externalisation project.
ACTION PLAN
20.
The
report into the externalisation process sets out a large number of
recommendations. These are presented,
with proposed responses, accountability and timescale are set out in the action
plan at Appendix 1. It is entirely a
matter for the Executive, taking into account the information set out both in
this covering report and in the substantive report to determine whether or not
to adopt the action plan proposed.
21.
Although
rejecting the substantive report and/or the action plan is, theoretically, an
option it is not one which the Executive can be advised to adopt, given the
comments of the external auditor.
Therefore the only viable options are to adopt the action plan as
drafted or to make improvements to it in order to strengthen the response of
the Council to the recommendations.
22.
The
clear recommendation of this covering report is that the Action Plan is adopted
as drafted.
THE FUTURE DELIVERY OF LEISURE
SERVICES
23.
The
substantive report is drafted on the basis that an externalisation process will
continue. The external auditor, as
quoted above, is clear that deciding the future of leisure services, in the
light of all the relevant facts on the basis of a clear business case, is a
priority. This long-term decision
cannot be taken immediately. However,
it is important for all concerned, and particularly users of Wight Leisure
services and the staff involved, that the immediate and medium term future of
that service delivery arm is determined.
24.
There
are a number of reasons why an externalisation is not viable in the current
climate:-
·
the
adoption of a community strategy and corporate plan, as well as the passage of
time and introduction of new legislation, the best value review conducted in
2001 carries decreasing weight and needs to be revisited;
·
new
rules to prevent the establishment of a two tier workforce challenge one of the
financial assumptions which underpin the best value review and its
recommendation to externalise;
·
the
’Every Child Matters’ Green Paper, and the Council’s initial response to it,
make a fundamental realignment of the existing Directorate of Education and
Community Development, within which Wight Leisure sits, inevitable. This is not a cosmetic change but a
fundamental reassessment of the priorities for delivering service to children
and the manner in which those services will be delivered. The future of an important contributor to
that agenda, such as Wight Leisure, cannot be determined in advance of or in
isolation from those structural changes;
·
the introduction of the potential code of borrowing, creating the
opportunity for local authorities to borrow for capital investment purposes
where a sound business case exists further undermines a core assumption of the
externalization proposal;
·
it is far from certain that previous prospective commercial partners
continue to be in a position to engage with the Isle of Wight Council in
developing this service on an externalized model;
·
the appointment of a Head of Tourism will create opportunities to
develop delivery of tourism and leisure services in a more joined up manner.
·
As the CPA and Peer Review processes illustrate, the Council must
clearly prioritise what it wishes to achieve with it’s available resources. The
capacity of the Executive, strategic management team and project managers are
all finite and also need to be prioritised. The recommendation from the
Directors Group is that, although important in terms of service delivery and in
contributing to corporate objectives, an externalization project should not
take high priority at this time.
25.
Therefore, in seeking to secure the short to medium-term future of the
delivery of leisure services, the two key priorities become, firstly, securing
the quality of service over a six to twelve month period and, secondly,
responding to the challenge to eradicate any sense of isolation or dislocation
of Wight Leisure from the mainstream of Council operation (described elsewhere
as a ‘them and us’ culture).
26.
It is, therefore, proposed that no further steps be taken to externalize
Wight Leisure and that those responsible for developing that service develop
proposals to deliver that range of services in ways which are complimentary to
the developing agenda for children’s services, adult social and health
services, tourism and economic development.
27.
A powerful project group, comprising the relevant portfolio holders and
nominees from the Chief Financial Officer, the Head of Legal and Democratic
Services and leisure service managers will be a useful vehicle to drive and
deliver improvements in the delivery of leisure services. In order to ensure
that there is an open development of the service, a member from each of the
opposition groups will be invited to sit on the group.
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RECOMMENDATIONS 28.
It is recommended that the Executive:- (i)
receive the report into the Wight Leisure externalisation process; (ii)
For the avoidance of doubt resolves to confirm that expenditure to date
was undertaken in reliance on Part 1 Local Government Act 2000 and amounted,
in effect, to a grant to WLL. (iii)
endorse the Action Plan at Appendix 1; (iv)
determines not to proceed with the externalisation of Wight Leisure; (v)
to develop and deliver, through a project group, within 12 month
period, long-term service development proposals for leisure services, on the
application of normal best value and procurement principles. (vi)
The project group be established with immediate effect, to include: ·
Such members of the Executive as have a particular interest in the
development of leisure services ·
Member(s) of the opposition group(s) ·
Representative of the Chief Financial Officer and Head of Legal and
democratic Services ·
Leisure Services Managers (vii)
That the Economic Development Select Committee be asked to consider
adding to their work programme the following terms of reference: That the Economic Development Select Committee be
asked to consider adding to their work programme the following terms of
reference: · As an exercise in
policy development, to receive information about the work of the project
group and make recommendations to the Executive to assist the work of that
group in the development and delivery of leisure services · As an exercise in scrutiny, to receive information
from those responsible for implementing the action plan at appendix 1 to this
report and make recommendations as to whether sufficient steps have been
taken to achieve the objectives of that plan |
BACKGROUND PAPERS
29.
Report
by Tony Hall dated 23 May 2003.
30.
Report
by Tony Hall, Paul Wilkinson and John Lawson dated December 2003.
31.
Wight
Leisure Best Value Review dated May 2002.
32.
Audit
Commission Inspection Report dated October 2002.
Contact Point : John Lawson, ( 823216, e-mail: [email protected]
|
M FISHER Chief Executive Officer |
S SMART Leader Of The Council |