APPENDIX D

Hampshire Fire and Rescue Authority Item

15/03/200514 February 2007

Error! Bookmark not defined.Hampshire and Isle of Wight Fire and Rescue Services Options Review: Results of Consultation Exercise

Report by the Chief Officer

Contact: Chief Officer John Bonney 023 8062 6834 [email protected]

1	Summary
	This report summarises the findings of the consultation exercise commissioned by the Service following the Authority’s consideration of the Hampshire and Isle of Wight Fire and Rescue Services Options Review. The consultation with the public, which ran in parallel with our IRMP consultation, sought to gauge the public’s opinion in Hampshire on the possibility of a formal merger, closer collaboration with the Isle of Wight Fire and Rescue Service or retaining the status quo.
2	RecommendationError! Bookmark not defined.s
2.1	That in recognising a merger would be best and more successfully achieved if it was entered into willingly by both partners, this Authority's position is such that it would be willing to negotiate on the arrangements for an enlarged combined fire and rescue authority covering Hampshire and the Isle of Wight areas if that is something the Isle of Wight Council itself wishes to pursue.
2.2	That, notwithstanding the outcome of stakeholder consultation, the Authority concludes that it would not be in its best interests to pursue the more formal collaboration option, but would be quite prepared to continue to support and assist the Isle of Wight Fire and Rescue Service on an ad hoc and cost neutral basis.
3	Introduction Error! Bookmark not defined.and Background
3.1	Members will recall that an extra ordinary meeting of the Fire Authority was convened on 4 October 2006 to consider the joint Isle of Wight/ Hampshire Fire and Rescue Service Options Review (report of 4 October 2006 entitled ‘Hampshire Fire and Rescue Service and the Isle of Wight Fire and Rescue Services – Options Review’).
3.2	The review considered the options for merging the two services, greater collaboration or retaining the status quo. At that Authority meeting in October, members were minded, before making any decision on future steps, to consult with the public of Hampshire, including Portsmouth and Southampton. A similar decision had been taken by the Isle of Wight executive a number of days earlier. To ensure the process was conducted in a consistent and transparent manner, both Services, with the support of DCLG, agreed to align the format and structure of the consultation and the questions posed. To facilitate this process, an independent consultation agency was used (Opinion Research Services – ORS) by both fire and rescue services to carry out the consultation process.
3.3	Listed below are the consultation methodologies undertaken in Hampshire (further detail is included in Appendix A.
	Public Consultation:-
	Five public focus groups seeking the views of a representative sample of the population of the County ‘IRMP extra’ leaflet sent to all stakeholders, providing details of how to express their views. One open public meeting Questionnaire sent to 3,500 randomly selected Hampshire residents
	Staff Consultation:-
	Briefing note for staff included in ‘Exchange’ magazine A ‘face to face’ meeting between the Chief Officer and ‘Direct Reports’ Three staff ‘forum’ sessions On-line questionnaire available to the public and employees to vote on their preferred options and give comments Forum for Representative Bodies Briefing for Fire Authority Members
3.4	It may be useful, before considering the results of the consultation, to remind members of the results of the analysis undertaken as part of the Options Review. They applied the scoring matrix used by Devon and Somerset to evaluate their proposed merger. The matrix considered the strategic, operational and financial benefits/disbenefits of three options:
	3.4.1	Full Merger – the establishment of a single combined fire authority covering Hampshire and the Isle of Wight with a similarly combined Service.
	3.4.2	Greater Collaboration – a more formal collaborative arrangement, possibly akin to a Service Level Agreement whereby Hampshire Fire and Rescue Service run either all, or part, of the service provision and back office activities.
	3.4.3	Status Quo - continuation of general, ad hoc collaboration activities between the two authorities.

4	Results of the Consultation
4.1	Full details of the results of the process can be found in Appendix A, however the key findings are listed below.
	4.1.1			Public The Public Focus group sessions found that opinion was broadly divided between the options of merger and collaboration.
	4.1.2			Staff Staff recognised the potential benefits to the IoW of a merger – they were however concerned whether this would affect Hampshire’s ability to maintain its current performance status and aspire to the new strategic aims.
	4.1.3			Representative Bodies The FBU have submitted a written response dated 25^th January 2007. Their principal comments concern
			(a)			the speed of the decision making process and consultation
			(b)			rationalisation of Control Room
			(c)			increase in council tax for Hampshire residents
4.2		The results show that broadly both public and staff base these views on the perceived benefits to be gained for greater economies of scale and consistent operational practices. There is also a sense, quite understandably given the performance records of the two Services, of the need to assist the Isle of Wight. This motivation appears not only to be on the basis of altruism but also because of the importance of the services provided and the impact this has for the health and well being of a community.
4.3		This willingness to assist others though is underpinned by a strong sense that it should not be at the cost (financial and quality of service perspective) of Hampshire. Noticeably, this was most forcefully felt, not in the area of finance/council tax rises, but in the quality of service provided. Members of the public and particularly staff felt the option pursued should not jeopardise the range or level of service here in Hampshire. Particularly for staff, the sense was that merger or collaboration should not be at the cost of the speed of progress made by HFRS in terms of its own improvements. This has particular implications for the view the Authority may wish to take in relation to which option it pursues.
4.4		With regard to financial impact, there was less concern from the public or staff as to the potential for a rise in Council tax for Hampshire residents. To remind members, this could be up to £2.16 per annum on a Band D property, were combination to occur and no savings were achieved. Although the absolute figures are comparatively small, given the capping regime in place, any increase would impact on the new CFA’s ability to raise council tax still further to meet future demands. A £2.16 per annum increase would equate to a 4% rise in Band D Council Tax.
4.5		Exceptionally, the Fire Brigades Union did raise the adverse financial impact for Hampshire residents and their general resistance to merger.
5		Overview of Previous Research
5.1		Operational Case
		5.1.1			This evaluated seven areas, with a weighted maximum score of 600.
					1. Operational Planning
					2. Major Incident Planning
					3. Incident Command and Control
					4. Risk Assessment
					5. Fire and Incident
					6. Operational Standards of Special Interest
					7. Monitoring Performance

		Isle of Wight	Hampshire	IoW and Hampshire
5.1.1	Option 1: Status Quo	265	290
5.1.2	Option 2: Greater Collaboration	320	285
5.1.3	Option 3: Merger			435

			5.1.2		Noticeably for this Authority, whilst the greatest benefit would be gained from merger, there is more of a disbenefit for Hampshire Fire and Rescue Service if we adopt the option of greater collaboration rather than from retaining the status quo. This is partially explained by the additional resources greater collaboration would require from Hampshire. There is also the increase in risk created by the larger number of opportunities for different operational practices and/or systems of work to converge at incidents. Obviously, with a merged organisation, those processes would be unified.
5.2		Strategic Case
			5.2.1		This evaluated the impact of each of the three options in terms of being able to:
					Provide capacity to accelerate the rate of progress on delivery of the NFD Improve organisational performance, which will be reflected in an improved CPA rating Improve standards of service delivery by adopting best practice already in place in other FRAs Improve performance against BVPIs and KLPIs Achieve Gershon efficiency targets Minimise impact on council tax Increase organisational resilience Make a positive contribution to RMB work streams
			5.2.2		Again with a weighted maximum score of 600.
									Isle of Wight			Hampshire	IoW and Hampshire
					5.1.1	Option 1: Status Quo			265			275
					5.1.2	Option 2: Greater Collaboration			370			280
					5.1.3	Option 3: Merger							400
			5.2.4		Again the scores for Hampshire for 1 and 2 are very similar. The benefit of greater economies of scale, ability to improve resilience and the contribution to regional working almost completely nullified by the complexity in governance arrangements and contractual relationships required to deliver services.
5.3		The Financial Case
			5.3.1		The cost and benefits of the three options, with the summary of net saving, is shown in the table below:
							Option A Status Quo £			Option B Closer Collaboration £		Option C Merger £
				Cost			0			150,000		435,750
				Benefit			0			(600,000)		(1,687,662)
				Net Effect			0			(450,000)		(1,251,192)
				Net Present Value						£0.313m		£1.11m
			Note: The net present value (NPV) has been calculated over the agreed six year accounting period for the project using the Treasury Green Book advised discounted rate at 3.5%.
	5.3.2		Inevitably there is considerable detail which underpins these figures but for simplicity only the bottom line figures are provided. Clearly a number of assumptions have been made, particularly around such costs that are incurred by the Isle of Wight Fire and Rescue Service being absorbed by the Isle of Wight Authority as a whole. Similarly, a staffing structure has not been finalised and hence more work would be needed to refine the accuracy of these figures.
	5.3.3		Significantly, these figures do not include the costs and savings of merging the two fire controls prior to the wider merger required as part of the Regional Control Project. The technical and financial implications of this earlier merger are being examined by a dedicated joint team. The report however suggests some indicative figures of between £300-£350k savings, based on the assumption that the RCC project rolls out on time. Clearly delays would increase the savings by up to 30-40k per month. Although not insignificant in terms of financial savings, the project to merge control centres earlier would have a significant drain on current resources.
	5.3.4		Of great importance is the impact on council tax, here there would need to be an equalisation of sums currently being paid.
	5.3.5		Assuming no efficiency saving, the analysis show a national council tax at band D of £55.80 per annum. This amounts to a reduction £24.77 per annum on the Isle of Wight and an increase in Hampshire of £2.16. However, these figures alter according to any efficiency savings realised.
						New CFA with no savings 2006-07 £		New CFA with £250k saving 2006-07 £	New CFA with £500k saving 2006-07 £		New CFA with £750k saving 2006-07 £		New CFA with £1m Saving 2006-07 £
			Cost to Hampshire Tax Payers			2.16		1.78	1.41		1.03		0.65
			Saving to Isle of Wight Taxpayers			-24.77		-25.14	-25.52		-25.90		-26.27

			These figures do not incorporate any savings that would be derived from a combination of control rooms prior to the movement to a regional control centre in 2009.
	5.3.6		Table B – Costs and Benefits of Full Combination - shows a more detailed breakdown of cost and benefits of full combination.
					Costs/ Savings			2007-8	2008-9	2009-10	2010-11	2011-12	2012-13	Total
					Staffing			0	(100,000)	(200,000)	(200,000)	(200,000)	(200,000)	(900,000)
					Support Service Charges			(34,012)	(150,730)	(150,730)	(150,730)	(150,730)	(150,730)	(787,662)
					ICT Costs			28950	53360	53360	53360	53360	53360	295,750
					Branding			20,000	20,000	---	---	---	---	40,000
					Change Management			50,000	50,000	---	---	---	---	100,000
					Total			64,938	(127,370)	(297,370)	(297,370)	(297,370)	(297,370)	(1,251,192)
				Note:		1	Savings are shown in brackets
						2	Service charge savings exclude £0.083m per annum of fixed costs to the Council
						3	ICT figures are based on the minimum initial investment and annual charge required for convergence
						4	Change Management provides for a fund for two years to help manage the transition
6		Next Steps
6.1		The Options Review evaluation indicated that for Hampshire the most feasible options are status quo or full merger, whereas greater collaboration with its complexity of contractual and governance arrangements for no tangible operational benefit and marginal improvement in achievement of the strategic objectives, has little attraction (although this is not the case for the Isle of Wight).
6.2		Although the results of the consultation are divided between all three options, the evidence appears to favour either collaboration or a full merger. In pursuing the latter option there would need to be clarity on how the costs of transition would be met and also how the newly combined Fire Authority would reconcile any council tax equalisation, without detriment to its financial ability to address unavoidable growth costs. To do this, it would need support from the DCLG in the equalisation process and most probably, exemption from the 5% capping regime.
6.3		If the Authority was minded to pursue the merger option, it would be necessary to protect its interests, both financially, strategically and operationally by undertaking a more detailed analysis of the process of merger and the fixed arrangement would be necessary. However, this would be undertaken as part of the merger project plan. This in itself would have a financial cost, but as a means of evaluating both the risk and associated viability of a newly merged Service, it would be essential. This process would also include the implementation plan in much the same way that Devon and Somerset undertook in their voluntary merger.
6.4		Pursuing the merger requires the consent of not just Hampshire, but also the Isle of Wight Authority. The experience of Devon and Somerset demonstrates the considerable obstacles that need to be overcome and the importance of political will in achieving progress.
7		Contribution to the Corporate Aims and Objectives
7.1		The Options Review indicates that there are operational and strategic benefits to a larger combined Service, both in terms of efficiency and effectiveness. For that reason, it would seem appropriate if the Authority seek to pursue merger that we examine in more detail the extent of those benefits.
8		Risk Analysis
8.1		From the experiences of Devon and Somerset’s voluntary merger, a key element in the success of such projects is the positive commitment of both parties to the venture. The risk of failure rises considerably if there are unwilling partners. However, in pursuing the merger option, the Authority will need to undertake a more detailed analysis of the strategic, operational and financial implications.
8.2		Failure to declare a clear position on how it wishes to work with the Isle of Wight Authority in the future may expose the Authority to criticism from the public and DCLG and weaken its position if it was subsequently required to enter into those discussions.

9	Resource Implications
9.1	Human Resources
	To undertake further analysis of the merger option, it is considered necessary to initially dedicate an officer of Group Manager level to work full time on this project. This staff member would work in the new established Strategic Projects Directorate, headed by DCO Alan House.
9.2	Physical Resources and Information and Communications Technology Resources
	A further detailed review will be necessary when the chosen option has been agreed. Members should be aware that it may be a substantial project.
9.3	Financial Implications
	Cost of pursuing the merger option is anticipated to be in the region of £440k. The anticipated savings for the IoW Fire and Rescue Service and ultimately the Combined Authority are in the region of £1.11 m with a further £300 k if the mobilising control on the island was closed ahead of the implementation of the Regional Control Project.
10	Equality Impact Assessment
10.1	The proposals within this report are considered compatible with the provisions of the European Convention on Human Rights, the Human Rights Act 1998, and the Race Relations (Amendment) Act 2000.
11	Consultation
11.1	Details of the consultation process are outlined in the report.
12	Conclusion
12.1	The Authority now has before it a high level analysis of the strategic, operational and financial impact of the three options, together with a number of general principles emerging from the public/staff consultation. The Authority clearly will need to satisfy itself that in formally committing to a merger, it is protecting both its own interests and that of the communities it currently protects. However, it can only do that by a more detailed analysis, effectively the drawing up of a business case linked to an implementation plan. This could only proceed with the assent of the Isle of Wight Fire Authority, but it will be important for Hampshire to declare its own position before discussion with other parties.
Background Information (Section 100D of Local Government Act 1972)
The following documents disclose the facts or matters on which this report, or an important part of it, is based and has been relied upon to a material extent in the preparation of the report: Appraisal of options for greater collaboration or full merger with Hampshire FRS IRMP extra issue 9 http://www.hantsfire.gov.uk/servicenews.htm?newsid=22248&stdate= Note: The list excludes: (1) published works; and (2) documents that disclose exempt or confidential information defined in the Act.

Secretarial/WP/W/Corporate/HFRA HFRA 14 2 07 Results of Hampshire and IOW Consultation PW/JMW/5/2/2007

Appendix A

Error! Bookmark not defined.Hampshire and Isle of Wight Fire and Rescue Services Options Review:

Results of Consultation Exercise

Results of the Consultation

Event	Overall result	Comments / Concerns
Public Focus Groups Five were held – Basingstoke Redbridge Southsea Eastleigh HQ x 2	Opinion was divided between merger and collaboration	· Concerns over the ability of Hampshire to sustain current response times and high scoring on assessments after a formal relationship has been agreed between the two Services. · Increased Council Tax costs was one of the main reasons for respondents preferring the collaboration option. · The importance of the maintenance of the independent nature of the Island and its Community was stressed by some participants · Some participants felt that the main decision regarding the future working arrangements should lie with the Islanders. · It was felt that the views of the staff within the two Services should be treated as very important. · Concern over job losses on the Isle of Wight. Whether there was a need for HFRS officers to move to the IoW and any added pressure this might bring.
Open Public Meeting (Bellemoor School)	Unanimously felt merger was not a good idea.	· Concern over re-badging costs and whether these costs would come from projected savings. · Devon and Somerset merger costing 10 times the estimated costs.
‘On-line’ questionnaire (feedback from Public)	Of 22 responses:- 10 voted for a full merger, 3 for closer collaboration, and 9 for the status quo.	· The most consistently defined advantage of the merger option was ‘better standards of service for the communities’. · The most consistently defined disadvantage of the merger option was ‘more costs.’

Event	Overall result	Comments / Concerns
‘On-line’ questionnaire (feedback from staff)	Of the 26 responses:- 13 voted for merger 8 for closer collaboration, and 5 for status quo	· Concern over what benefits there are to the HFRS from merger or collaboration. · Why should Hampshire subsidise the IoW Fire and Rescue Service. · Service on Island may suffer.
3 x Staff Forums: St Mary’s Redbridge Direct Reports	Overall the views were split between merger and greater collaboration.	· Will a merger with the IoW reduce HFRS efficiency? · What benefits are there for HFRS if we merge with the IoW? · Is this Government driven? · Can the impact on Hampshire Council Tax be staggered over, say, 3 years?
‘On-line’ questionnaire feedback from Staff	Of 26 responses:- 13 voted for merger 8 voted for closer collaboration 5 for the status quo	· The most consistently defined advantage of the merger option was ‘better standards of service for the communities. · The most consistently defined disadvantage of the merger option was ‘more costs’.
Feedback from Representative Bodies	FBU not in favour of merger at this time. They would prefer to delay implementation of the options to permit the IoW FRS to improve	The FBU have commissioned a separate report from IPF which accepts the Option Appraisal report follows best practice but which raises some concerns. Their principle concerns are: · the speed of the decision making process and consultation · rationalisation of Control Room · increase in council tax for Hampshire residents
Public questionnaire (3500 households)	Early indication (290 responses) is that Option B (collaboration) comes out as most popular.	Final report awaited.

Secretarial/WP/W/Corporate/HFRA HFRA 14 2 07 Results of Hampshire and IOW Consultation PW/JMW/5/2/2007