Savings? What savings?
A report has been published today by SWAP internal audit services for Somerset West & Taunton. It investigates the process by which Taunton Deane Borough Council and West Somerset District Council came together. The merger was supposed to lead to significant annual cost savings.
The SWAP report itemises a catalogue of poor management, lack of control and poor execution of the project. It comes after a report to SW&T’s Executive on 22 January revealed £2.45m will have to be set aside for extra staffing costs during 2020/21 alone.
The savings that were supposed to come from the merger now look increasingly unlikely
The SWAP report merely concludes “the expected benefits from the Transformation Programme have not been realised as expected at the 1st of April 2019 and the programme has gone significantly over budget.”
The report suggests that a lot of that failure is due to the way the redundancy programme was handled. Redundancy costs are now running at approximately £6.35 million compared to the original estimate of £3.7 million. The extra cost of £2.7m to the new SW&T authority of this failure to control the redundancy programme compares with a total budgeted spend on services of £14.15m for 2019/20. That is over 20% of the spend on services lost through mismanagement.
The report may use temperate words but the conclusions are damning:
- The decision to allow voluntary redundancy for all staff ultimately undermined the Transformation Programme There was also a high degree of uncertainty in the level of savings that could be delivered through the efficiencies;
- Redundancies should have been staggered as the new services were brought on board so that as efficiencies were realised that would inform redundancy decisions.
- There was also no allowance for retaining staff beyond the 31st March to deal with the transition period while new processes continued to be created and introduced.
- By removing the staff before new processes were in place additional pressure has been put on the remaining staff to deliver services to customers following the old processes but with less resource.
The idea that £2.92m of annual savings could be made is also greeted with some scepticism. The report notes “Where a business case is based on high-level subjective assumptions these should be regularly reviewed during the implementation stage to ensure they are realistic and achievable. If not projected savings could be unachievable as expected efficiencies through customer self-serve, reduced failure demand, technology and process reengineering have been over estimated.
We are told that “The original business case itself stated that the assumptions were high-level and there would be a need to revisit assumptions during the implementation stage. We found no evidence that assumptions were revisited to ensure the ultimate end saving target was achievable through the anticipated increase in efficiencies.”
In the end the report seems to find that there was a sad inevitability about the outcome. Without efficiencies being realised “There would be no choice but to employ additional staff and use agency staff that would then offset the anticipated on-going revenue savings predicted by that 22% reduction.”
This appears to be exactly what has happened. It is worth remembering that Ignite were paid a lot of money for leading this initiative. It remains to be seen if SW&T will now look to negotiate a repayment of those fees or to pursue Ignite through the courts.
For now SW& T Council Leader Cllr Federica Smith-Roberts, is sanguine about it all “The SWAP audit report paints a very stark picture of the unreasonably ambitious and intrinsically risky programme the former councils embarked on. It has been important for us to understand how this process was implemented and why it went wrong so that we can focus our efforts as a new Council to deliver the services residents need. We need to draw a clear line between what happened at TDBC and WSC, and what is happening now at SWT. It’s not about the past, it’s about learning lessons and looking forward.”