Agenda item

The Chairman explained that this item had been identified under the work programme and so report HR&OD 85 had been circulated in advance of the meeting. This was presented by the Corporate Head of Corporate and Customer Services. He explained the history of how the council had managed its staff budget:

·          It had been the practice of the authority to manage staff budgets corporately. This is quite unusual and had advantages and disadvantages.

·          Advantages: the council has greater control over its major area of expenditure. There was also comfort in that one person was responsible for managing it. It gives a solid backbone against which to prepare a budget.

·          Disadvantages: it took away from individual managers their right to manage their area of work. All management aspects are currently channelled through the Corporate Head. This is very global management and can therefore be very difficult to be involved at a detailed level and therefore to plan ahead effectively. Council is therefore not getting the most benefit from the managers.

·          The idea was formed a few years ago to disaggregate staff budgets to managers. There was some initial reluctance because it would give up control and the advantages outlined above. However, it would create a more robust process by developing service plans supported by new accounting software.

·          The decision had then been taken that because of certain risks identified in this approach, the management of the staff budget would remain corporate for 2006/07. Now looking to see budget disaggregated to managers for next financial year. This would be a logical time because it will be during the preparation for the next budget.

Some members of the panel were very concerned because, as they recalled, council had taken the decision that for the 2006/07 financial year staff budgets were to be disaggregated to managers. Upon checking the minutes of the relevant council and cabinet meetings no formal decision was found, although it was noted that this decision had been widely understood by members. Members were concerned that this decision had been reversed without consultation or informing them. The Corporate Head was scrutinised on this, and asked why the risks had not been identified at the time the original decision to disaggregate was taken. The Chairman was particularly concerned that he had not been notified until very recently when the reversal of the decision had been taken several months ago. [In order to clarify the matter, the Chief Executive was asked to attend the meeting]. The Corporate Head was then asked about his involvement in the service plan preparation. He explained that he had provided detailed guidance for managers in budgeting for human resources.

The panel expressed its concerns to both Corporate Heads present that there was not sufficient funding for the finance section and that this should have been address some time ago.

The Chief Executive was then asked to clarify the points raised earlier in the meeting. He explained that the risks of disaggregating staff budgets had been identified during the management restructure and following the appointment of the Corporate Head of Finance and Resources. Disaggregation was a process and would be delivered according to management capacity. He added that the previous section 151 officer had not thought it necessary to recruit additional staff. The Use of Resources assessment results had been published after the appointment of the Corporate Head, who was now in a better position to assess the level of service provision required in the finance section. He was satisfied that a robust plan, with provision for contingencies, was in place. 

The portfolio holder added that with hindsight, there had been insufficient management capacity to disaggregate staff budgets for 2006/07. However, he was satisfied that the current section 151 officer was keeping him informed at every stage and that if mistakes had been made in the past, the council should look forward to improvement. He added that any move to disaggregate staff budgets should be done so when appropriate skills were in place.

Members discussed the advantages and disadvantages of disaggregated staff budgets. It was fundamental to a zero-based budgeting approach that service managers, who knew their service best, budgeted for staff.  However, the overarching strategic management of an overall management was important.

Conclusion:

To recommend to the Resources & Assets Portfolio Holder that the salaries budget continues to be disaggregated to establish individual service plans, with an overview of aggregated budgets to enable corporate budgeting, subject to suitable controls and training.

To request that any strategic decisions taken by the Strategic Management Team or the Operational Management Team on financial matters be reported to the Chairman of the Resources DSP for dissemination to the panel.

To include on the panel’s work programme for the meeting on 28^th September 2006: scrutiny of disaggregation of salaries budget.