Agenda item
Contracts 2023 - Merits & obstacles of bringing services back in-house
This report examines the process for establishing terms and the merits / obstacles to bringing the Business Rates service back in-house when the existing contract expires and makes recommendations accordingly.
Minutes:
The Chair advised that the committee would consider this item in two parts: first the committee would review the report from the Strategic Director of Resources regarding the merits and obstacles to bringing the Business Rates Service back in house; secondly; the committee would receive a presentation from the Strategic Director of Regeneration and Lead Member for Environment on a proposed programme of work to design, deliver and integrate a range of front line environmental services due to be recommissioned for implementation in 2023.
At the invitation of the Chair, Margaret Read (Director of Brent Customer Services) introduced the report from the Strategic Director of Resources. Members heard that the Business Rates Service and associated IT Support had been retendered, with the contract award made to Capita Business Services Ltd following Cabinet approval on 12 November 2018. The contract was due to commence from 1 May 2019 and was for a period of five years. The report detailed an evaluation of the options for delivering the Business Rates Service, including advantages and disadvantages of in-house, shared service and outsourced delivery models. It was highlighted that a detailed options appraisal had been undertaken in 2017, at which time Cabinet had decided against bringing the service back in-house, noting that this would introduce a number of risks. In particular, as a small, specialist service with a big financial impact, it was prone to resilience issues. A key benefit of outsourcing the service was that it allowed services to be run at a larger scale therefore minimising vulnerability of the service to staff absence. Additionally, to bring the service back in-house would require investment in various specialisms including IT support. It was emphasised that the Scrutiny review was extremely timely as the council was now due to start planning for the next five year period.
The committee subsequently questioned whether better use of technology could address resilience issues. Members requested details of the number of businesses in the borough, queried whether relief was still offered for London Living Wage employers and questioned how the council supported the growth through mixed use developments. The committee further questioned whether contractors were incentivised to address hard to reach companies and whether the council made use of civil enforcement officers to aid debt recovery.
Responding to the queries raised Margaret Read advised that it was not possible to automate the service due to the complexities involved and the need for judgement in decision-making. The Council’s Finance Department did monitor the number of businesses in the borough and this had not increased, though it was likely that the nature of Brent’s businesses may have changed. Councillor McLennan (Deputy Leader) confirmed that the council continued to offer Business Rates relief to London Living Wage employers. Amar Dave (Strategic Director, Environment and Regeneration) confirmed that the council pursued mixed use developments but also sought to tailor the mixed-use offer as appropriate for specific sites. Margaret Read advised that the council ran a scheme under which the contractor helped identify businesses that may have been missed. The council also operated several initiatives to ensure that Brent’s businesses received the assistance to which they were entitled. Civil Enforcement Officers were used where it was considered appropriate.
The Chair thanked the officers for their contribution to the discussion.
Members’ attention was then drawn to the presentation on Environmental Services contracts, introduced by Councillor Krupa Sheth (Lead Member for Environment), Amar Dave (Strategic Director of Regeneration and Environment) and Chris Whyte (Operational Director of Environment). The committee heard that a purposeful strategy had been adopted to synchronise the end dates of existing delivery models for Environmental Service contracts to enable the council to determine their future status before recommissioning for implementation in 2023. In doing so, the council had the option to design and integrate a range of frontline services, including Arboriculture Services, CCTV maintenance, Highways Maintenance, enforcement activity, Parking Enforcement Services, SEN Transport, Street lighting maintenance and Waste and Public Realm Services.
Highlighting key elements of the strategy, Chris Whyte explained that this included an outcome based delivery model with a clear commissioning strategy and clearly defined specifications regarding the level, quality and timing of delivery. The programme had five key objectives: establishing the services to be included; determining service standards and specifications; designing an integrated Environmental Services delivery model for Brent from 2023; establishing the duration of any new arrangements; and, establishing how the council would manage any new arrangements. It was explained that all delivery options and contract timescales would be considered, allowing for radical thinking and innovation. Outlining the next steps, Councillor Krupa Sheth advised that a members’ away day would be held as an important early means of establishing the scope and key principles of the programme of work. Amar Dave emphasised that in order to have everything in place for 2023 implementation, work needed to be undertaken in the next three to six months to support contract awards no later than 2021.
In the following discussion, Members endorsed a joined-up approach and sought comment on related commissioning models, HR issues and how soft boundaries with neighbouring boroughs could be addressed. The committee questioned how social value would be accommodated within delivery models and queried whether a phased approach would be considered. Questions were raised regarding accessing expertise necessary to get the best out of contracts and whether exit clauses were written in to all contracts if contractors did not deliver as expected. Members questioned whether consideration would be given to supporting local businesses via the programme.
In response, Chris Whyte advised that early thinking around themes for the programme, included an on-street enforcement presence, with potential to pull a number of services together under an ‘eyes and ears’ initiative. Members further heard that the approach to commissioning was clear and the council wanted to encourage use of a supply chain to support this work going forward, optimising opportunities for local people. It was acknowledged that when considering options such as in-house delivery, the council had no recent history of delivering these services directly and there were challenges associated with that, not least HR support. These contracts could encompass between 400 to 500 members of staff. Amar Dave explained that he had prior experience of running such services in house and advised that in many ways it worked very well and had lots of flexibility, but in such circumstances it was important to foster the right culture. It was highlighted that in addition to a thematic approach, consideration could be given to focussing on a geographical approach, or even by size or value of contract. A phased approach could also be applied if felt beneficial. Addressing members comments on social value, Councillor McLennan advised that a report was due to be submitted to Cabinet regarding broadening the definition of social value and increasing the percentage weighted for social value when assessing tenders for contracts. Amar Dave advised that there were best practice models, such as those provided by the New Economic Foundation, with regard to social value which could be utilised.
Chris Whyte explained that in view of the scale of the exercise, outside expertise would be brought in to help guide the process. Technical, financial and economic insight was also critical and such support would be drawn from Local Partners, a company owned by the LGA and the Treasury, and from other teams in the council including Procurement and Legal. It was also often useful to gather bidders and suppliers together to gather their views on what would work for Brent in practice and it was necessary to be mindful of the planning of neighbouring boroughs. A project manager had recently been appointed to take forward the project and specialist legal advice was currently being procured via the legal team.
Members were advised that all the council’s main contracts were underpinned by a complex performance framework, which was subject to monthly monitoring performance reports. Any failures recorded against contracts would be dealt with via a financial deduction. Councillor Krupa Sheth advised that she met with different contractors every two weeks to review performance.
The Chair thanked everyone for their contribution to the discussion and emphasised the importance of this piece of work.
RESOLVED:
i) That the Strategic Director of Regeneration and Environment ensure a role is established for Scrutiny Members with regard to the Member Away Day and the scope and expectations relating to that role be detailed and circulated to members.
Supporting documents:
- Cover report - Contracts 2023, item 7. PDF 71 KB
- Report - Contracts 2023, item 7. PDF 117 KB
- Appendix 1, item 7. PDF 186 KB
- Appendix 1B, item 7. PDF 33 KB
- Appendix 1C, item 7. PDF 170 KB
- Appendix 1E, item 7. PDF 41 KB
- Appendix 1F, item 7. PDF 58 KB
- Appendix 1G, item 7. PDF 69 KB
- Appendix 1H, item 7. PDF 39 KB