Agenda item

[Report of the Chief Digital and Information Officer. To be introduced by the Cabinet Member for Corporate Resources.]

 

To receive a detailed report considered by the Shared Digital Joint Committee meeting of 30 October 2017 and consider any recommendation(s) made by the Joint Committee around the future governance model for the shared service, including any required changes necessary to move from the current governance arrangements to any proposed new governance model.

The Cabinet Member for Corporate Resources introduced the report which sought approval for the Joint Committee model to be refined to address the issues set out in paragraph 5.4 and that the service be governed under a ‘lean’ Joint Committee model.

 

The interim ‘secondment’ arrangement for the shared service currently in place, comprising Camden, Islington and Haringey Councils Digital and ICT services was not considered sustainable in the long term and would not establish a high-performing single team that retained and attracted the best Digital and ICT staff.

 

The ‘do nothing’ option was not recommended for the reasons set out in paragraph 5.4 below.

 

The Shared Digital Governance review model was being considered by all three boroughs involved in sharing Digital and ICT services. Islington Council had agreed the report at their meeting on the 4^th of January 2018 and Camden Council were due to consider the attached report at their meeting on the 24^th of January.

 

The following decisions, which were by necessity technical in nature, would in summary, for all three Councils, achieve the following:

 

§  Transfer the ICT function of both Haringey and Islington to Camden including staff who will TUPE on 1 April 2018.

§Transfer the decision making for the ICT functions for Haringey, Islington and Camden to either a new and reconstituted lean Joint Committee or via Camden’s usual delegation arrangement to the Executive Director Corporate Services to be undertaken by the Chief Digital and Information Officer.

§To approve the underlying consultative management arrangements noting that these will develop as the service itself develops.

§  Delegate authority to allow the necessary further supporting documentation to be completed in support of the arrangements.

 

Therefore, and further to the recommendations from the Shared Digital Joint Committee at Appendix 3, the Cabinet,

 

 

RESOLVED:

 

1. To note the options set out in the detailed ‘Shared Digital Governance Model Options’ report at Appendix 1 prepared by Activist Group following extensive work since March 2017 with Councillors and senior officers.

 

2. To approve the adoption of the governance model for Shared Digital set out as Option 1 (a ‘lean’ Joint Committee model in paragraphs 4.5 to 4.14 of this report and paragraphs 4.5 – 4.9 of Appendix 1) based on the outcomes framework at Table 2.4, paragraph 2.26 of Appendix 1 with a commencement date of 1 April 2018 (throughout this report ‘the Commencement Date’ means 1 April 2018).

 

3. To approve, pursuant to Regulations 9 and 11 of the Local Authorities (Arrangements for the Discharge of Functions) (England) Regulations 2012 (‘the Regulations’), that as from the Commencement Date:

(i)         those parts of Haringey’s ICT service and function (including the procurement of ICT related services, equipment and software) specified in paragraphs 6 to 16 of the attached terms of reference set out at Appendix 4 be jointly exercised with the London Boroughs of Islington, Haringey and Camden by a Joint Committee

(ii)       that the current Joint Committee be reconstituted with the terms of reference at Appendix 4 with effect from the Commencement Date

(iii)      that the Joint Committee will consist of two elected Executive/ Cabinet Members from each Council, normally for an annual term, with the term and appointment to be decided by the Leader.

 

4. To approve, pursuant to Regulation 5 of the Regulations that those parts of the executive function of Haringey’s ICT not transferred to the Joint arrangements specified in paragraph 3.5(I) above and Appendix 4 be delegated to and discharged by the Executive of the London Borough of Camden as from the Commencement Date subject to the arrangements set out in paragraph 4.7.

 

5. To approve Camden as the host Council and note the impact on the proposed staffing arrangements set out in section 4.16 of this report as a result of the decisions at paragraphs 3.4 to 3.6 above namely that Haringey and Islington ICT staff will transfer to Camden (as the host authority) under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) and to agree that as a result Camden will be responsible for employing staff engaged to deliver the Shared ICT service.

 

6. To approve the creation of a Shared Digital Management Board, accountable to the Shared Digital Joint Committee, to manage the service, with an appointed Director from each Council amongst other key members of staff to be appointed from each Council and the Chief Digital and Information Officer (or suitable alternative). Terms of reference for the Shared Digital Management Board set out in Appendix 6.

 

7. To give due regard to the equalities implications as summarised in paragraph 8.16 – 8.18.

 

8. To note that the Cabinet of Camden are considering a recommendation to be the primary host authority in the Shared Service, and to accept the delegation from Haringey and Islington. The Executive of Islington are also considering a recommendation to delegate to Camden (as the primary host authority in the Shared Service) the delivery of ICT services in like terms and that the recommendations set out in this report, if agreed, will only be implemented if the Camden Cabinet and Islington Executive agree the equivalent and related recommendations that they are considering.

 

9. To note that a memorandum of understanding will accompany the Inter-Authority Agreement and will set out the boroughs commitments to partnership working behaviours and to note the shared ICT service success factors in Table 0.1 of Appendix 1. The Inter-Authority Agreement and memorandum of understanding will be in keeping with the intentions and agreements of this report and appendices.

 

10. To delegate authority to the Director, Transformation and Resources, in consultation with the Assistant Director of Corporate Governance/ Monitoring Officer, to take all necessary steps to put arrangements for the new governance model into effect as set out in this report including but not limited to finalising the terms of the inter-authority agreement and any changes to it and for the operation of the 3 way Shared Digital service.

 

11. Further to recommendation in paragraph 3.5 (iii) above, the Leader is asked to appoint the Cabinet Member for Corporate Resources and the Cabinet Member Finance and Health to the reconstituted Shared Digital Joint Committee from the commencement date of 1 April 2018 until the end of the 2017/18 Municipal Year.

 

 

Reasons for decision

 

Camden, Haringey and Islington Councils recognise that sharing their Digital and ICT services efficiently and effectively will bring many benefits, including saving money, improving performance and resilience, and sharing learning to support better digital services to citizens and residents.

 

Shared Digital was established using a Joint Committee governance structure. The terms of reference for the Shared Digital Joint Committee required that the Joint Committee, by October/ November 2017, receive and consider a detailed report setting out Governance Model Options for Shared Digital and to make recommendations to the Cabinet/ Executive of each of the Councils in respect of the report. Options to be evaluated to include the Joint Committee model as well as company models.

 

The current governance of Shared Digital is underpinned by a legal agreement and terms of reference for the Shared Digital Joint Committee. The legal agreement works within the framework of the Local Government Acts 1972 and 2000, and the Localism Act 2011, which give Local Authorities powers to delegate the discharge of functions to another Local Authority or to a Joint Committee, and to make staff available ('place' staff) in order to discharge the functions in accordance with s113 Local Government Act 1972. Section 113 of the Local Government Act 1972 enables staff of local authorities to be placed at disposal of other local authorities, subject to consultation. Staff are essentially shared by a form of secondment, in which staff remain employees of their original authority for employment and superannuation purposes, but may also take delegated decisions on behalf of the authority they have been seconded to. At the inception of Shared Digital, ICT staff in the Councils were issued with a Section 113 notice and have received recent confirmation that this arrangement continues indefinitely pending any further decision stemming from the conclusion of the review undertaken by the Joint Committee or change to the shared service which impacts on this arrangement.

 

From March 2017, a Governance Model Review Project was set up to fulfil the commitment to find the right governance model for Shared Digital in two phases:

Phase 1 was completed in July, and focused on exploring the future and helping the three partner boroughs to develop a shared understanding of the options available for the governance of their shared service, and to confirm their future ambitions (narrowing down options for detailed review in the options report).

Phase 2 has investigated the options from Phase 1, and set out in detail an assessment of the two main options (a ‘lean’ Joint Committee and a public service company) for the Joint Committee to consider. This is set out in the discussion report attached as Appendix 1 to this report.

 

On 30 October 2017, the Joint Committee considered the report attached as Appendix 1 and agreed to recommend the more efficient and effective lean joint committee model to the Camden, Haringey and Islington Cabinets and Executive. The implications of this are set out in the paragraphs that follow.

 

In this model Haringey and Islington will directly delegate their Digital and ICT services to Camden as ‘host’ authority under s101 of the Local Government Act 1972 (this is the model used by Brent, Lewisham and Southwark for their shared ICT service) but with strategic matters and high value procurements reserved to the Joint Committee as set out in the recommended terms of reference in Appendix 4. Haringey and Islington delegating their ICT service to Camden under s101 will trigger the transfer of staff, and TUPE will ensure that staff rights are protected in the transfer. An example of how this might work is shown in Appendix 2 (How typical decisions will be taken, and how responsibilities will work in the proposed governance model).

 

This delegation would include managing the service and making day-to-day operational decisions about the service subject to strategic direction by the Joint Committee and result in staff being employed by Camden as a result of the application of TUPE. The operational and day-to-day management of the service would fall to Camden, and would be managed as such. The delegation of the Councils’ ICT services to Camden would be subject to Camden’s cabinet agreeing to delegate responsibility for day to day management, operation, delivery of the shared ICT service and procurements not reserved to the joint committee, at the levels set out in paragraph 4.8 to the CDIO, via the Executive Director Corporate Services to whom the CDIO reports. Decisions on the delegated ICT functions will therefore be taken by the CDIO rather than by the Camden Cabinet or individual Camden Cabinet member. Camden would be required to exercise the delegated ICT function in accordance with the business plan, work plan and ICT strategy agreed by the Joint Committee and in accordance with the agreed budget for the Shared ICT service.

 

The delegation to the Joint Committee by Camden, Haringey and Islington has no financial ceiling. Digital or IT spend exceeding £2m for any one Council, or exceeding £6m for the three Councils (whether capital or revenue), is reserved for the Joint Committee. In the 2017/18 financial year 4 contracts are expected to exceed these thresholds. The governance proposed and set out in Appendix 4 would mean based on current levels 4 procurement strategy reports and 4 contract award reports for the Joint Committee to consider. Spend below £2m for any one Council, or below £6m for the three Councils, would be delegated to the CDIO and generally would not be a key decision under Camden’s constitution.

 

Staff would be transferred to Camden under TUPE Regulations and their existing terms and conditions will be protected under this arrangement. Pension fund arrangements will need to be examined and addressed by the three Councils as part of the transfer due diligence.

 

The arrangements would be underpinned by an inter-authority agreement which, amongst other matters sets out service descriptions and the roles and responsibilities of Camden as host authority, Haringey and Islington and the Joint Committee and mutual expectations generally.

 

The Joint Committee would approve business plans and strategies; monitoring high-level progress against the business plans and financial budgets.

 

Re-casting the arrangements to include consistent and specific delegations to Camden as the host authority and to the Joint Committee would streamline decision-making while retaining transparency and accountability. The principles of a governance framework to support the ‘lean’ Joint Committee are set out Table 4.1, paragraph 4.7 of Appendix 1.

 

The governance framework aligned with the lean Joint Committee is made-up of four key elements (see the graphical representation in Appendix 5):

 

                                          i.    The Shared Digital Joint Committee approves the service budgets, business plans and strategy. It monitors progress against the business plan and takes strategic decisions about the service and high value procurement decisions at a level to be decided by the three Boroughs. It maintains democratic accountability and oversight, avoiding the need for the service to work through three decision-making processes. It will be decision making.

 

                                        ii.    The Shared Digital Management Board is the strategic interface to the three Councils, advocating for the shared service and ensuring that key priorities are reflected and optimised in the portfolio. It is the portfolio board for shared programmes, resolving conflict and ensuring that transformation effort is focused and delivering effectively. The Shared Digital Management Board will support the development of the service and its strategies and decisions, ensuring borough interests are represented and responded to. It will oversee the realisation of savings and consider investment plans, ensuring that the CDIO has the support and resources needed to succeed. It is a consultative board which shall be informative to the CDIO and Shared Digital Joint Committee, where decisions will rest.

 

                                       iii.    Priority shared digital transformation themes/ programme boards for each of the key transformation themes. These are each jointly chaired by a senior officer from each of the three Councils. These boards will ensure that demand is managed and prioritised, and that service and digital resource is effectively allocated to the projects that matter most. The co-chaired programme boards ensure that sponsorship of each programme is distributed across the three Councils.

 

                                       iv.    The Shared Digital Senior Leadership Team is responsible for day-to-day delivery of transformation programmes and operational ICT services. The SLT reports operational matters to the Shared Digital Management Board on an exceptional basis, and coordinates regular monthly highlight reports for the Shared Digital portfolio to report to the Shared Digital Management Board. The SLT acts as a first point of escalation for programme boards.

 

Based on work undertaken with stakeholders across the Councils as part of the early Shared Digital engagement sessions, and refined through the Governance Model Review work led by Activist Group, primary and secondary outcomes were identified as shown in paragraph 2.26 (Table 2.4) of Appendix 1. These will shape the priorities for the service for the next 2 to 3 years.

 

What are the key impacts/ risks? How will they be addressed?

 

If the recommendation to adopt Option 1 is approved by the Cabinet/ Executive of the Councils, then Camden will be responsible for employing staff engaged to deliver the Shared ICT service. As a result of the delegation of the service under this model, as stated in paragraph 4.9, Haringey and Islington ICT staff will transfer to Camden (as the host authority) under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE), (as amended). Pension arrangements and liabilities arising from transferring staff will need to be determined. Camden, Haringey, and Islington will be required to comply with their obligations under the TUPE regulations. The Council’s respective procedures on managing change and informing and consulting with departments, staff and the respective unions will be followed in respect of all affected staff where applicable.

 

An increase in the number of stakeholders for the service can reduce the effectiveness and speed of decision making. The recommendation in this report is intended to counter this risk by proposing a governance model that balances transparency and oversight with simplified decision-making processes.

 

Differences in organisation strategies and priorities will limit the benefits that shared services can deliver. Early indications show that there is a high level of alignment across Camden, Haringey and Islington. The proposed theme boards will encourage closer working across service areas to support alignment, shared thinking and learning.

 

Different organisation cultures and a loss of local identity/ control of the service can result in increased intervention, reducing the efficiency of the service and compromising benefits. By opting for a Joint Committee model, and a layered governance approach, shared strategic leadership of the service is emphasised. Ongoing relationship development will, over time, strengthen ties and build trust.

 

The risk of a future change in direction from any of the boroughs would mean needing to untangle all or part of the shared service arrangement. This risk could be mitigated by moving to a ‘Shared Digital Late’ model, where the Councils share core infrastructure and commodity ICT, repatriating strategic Digital and transformation elements of the service.

 

What actions will be taken and when following the decision and how will this be monitored?

 

Camden and Islington officers are presenting reports to their respective Cabinets in relation to this delegation and future Shared ICT service. Subject to their approval steps will be taken to implement the lean joint committee with the implications set out in paragraph 4.5 to 4.14.

 

The report recommends the Cabinet delegate authority to the Director, Transformation and Resources, in consultation with the Assistant Director of Corporate Governance / Monitoring Officer, to take the necessary steps to put the arrangements into effect including but not limited to finalising the terms of the inter-authority agreement and any changes to it and for the operation of the 3 way Shared Digital service.

 

The Council’s respective procedures on managing change and consulting with departments, staff and the respective unions will be followed in respect of all affected staff where applicable.

 

If the recommendation to approve Option 1 is not agreed by the three Councils, then the status quo will be maintained as set out in paragraph 5.4 below.

 

 

 

 

 

 

 

Alternative options considered

 

There are three options, to adopt one of the two models: a ‘lean’ Joint Committee model or a company model as identified and evaluated in the detailed report (Appendix 1), or to maintain the status quo.

 

Option 1: to approve the recommendations of the Joint Committee and adopt a ‘lean’ Joint Committee, similar to the current arrangements, with some streamlining – see the following paragraphs of Appendix 1 for more detail:

·                discussed in paragraphs 3.7 to 3.14

·                specific detail on the model in paragraphs 4.5 to 4.8

·                evaluation in paragraphs 4.9

 

Option 1 is recommended as set out in paragraphs 4.5 to 4.14.

 

Option 2: not to approve the recommendations of the Joint Committee and instead opt for a public service company that would be jointly owned by the three partners – see paragraph 4.10 of Appendix 1 for more detail.

 

Options 2 is not recommended at this time as it is considered on balance that the lean JC model will be able to satisfactorily develop this project at this time.

 

Should the Councils wish to trade services in the future, a trading arm could be established to facilitate that. The three Councils could set up a publicly owned company (without requiring a procurement exercise providing they all take part in the control of the company (this is often called the 'Teckal exemption')).

 

The company could offer a proportion of its services commercially to external customers up to a maximum of 20% of its turnover. If that threshold is exceeded the company will lose its Teckal exemption and the work undertaken by the company on behalf of its owning bodies will need to be put out to tender by those owning bodies in line with public procurement regulations.

 

Legal arrangements for a company owned by local authority partners would need to be put in place and a board of directors would need to be established.

 

Option 3: do not approve the recommendations of the Joint Committee and maintain the current governance model.

 

Option 3 is not recommended. The current model cannot address the three fundamental issues that have been identified and which need to be resolved if the shared service is to meet the Councils’ ambitions (see Table 2.3, paragraph 2.25, of Appendix 1), i.e.:

Complex decision-making: current decision-making processes and delegations are complex and introduce unnecessary risks and delays.

 

Constitutional differences: there is currently a divergence in views as to the operation of the arrangements and some ambiguity over some of the provisions which should be addressed by the recommended option.

 

Diffuse employment arrangements: the current arrangements for employment (with three employers) adds complexity and impedes the formation of a cohesive and focussed organisation.

 

To meet the Councils’ ambitions, and provide stability for staff in the service, a new governance model is needed.