Consider radical 'arms-length' company for legal services, says tri-borough report

Hammersmith & Fulham Council should consider creating a radical ‘arms-length’ company structure for legal and other services, a review of the authority’s membership of the tri-borough partnership has said.

The review board, which was chaired by former Labour minister Lord Adonis and whose members included Professor Tony Travers of the London School of Economics, said certain services lent themselves to a shared service model in the context of the broader London landscape.

“This would enable the streamlining of governance, terms and conditions, management and accommodation whilst maintaining sovereignty through structured service level agreements,” the board argued.

“It would reduce the perceived and actual complexity from the outside looking-in, enabling others to join-in and benefit. To a lesser extreme, combined authority approaches may work with an accompanying single investment pot – this too would improve the terms of business and enable progress at scale on common purpose.”

Hammersmith & Fulham currently shares a Director of Legal, Tasnim Shawkat, with the Royal Borough of Kensington & Chelsea. The other member of the tri-borough partnership, Westminster, has a separate head of legal.

The comments on legal services arrangements came in a wide-ranging report commissioned by Hammersmith Leader Cllr Stephen Cowan, with the board asked to review the workings of the tri-borough partnership through which it has shared services since 2010.

The report, which can be viewed here, said: “Despite the challenges, it is apparent from the work carried out for this review that joint working has delivered benefits for LBHF; and further benefits are in train for the future.

“However, the joint working arrangements should not continue as they currently are, as improvements need to be made and a number of challenges addressed; regardless of whether there is less, the same or more collaboration between the three boroughs in the future. Further, we see addressing these challenges as a prerequisite to enabling LBHF to be in a stronger position to work more closely with other London boroughs in the future.”

The report’s findings included that:

• The term ‘tri- borough’ was a confusing term used to describe what was “actually a wide ranging mix of service led collaborative working arrangements, which now display varying levels of organisational and operational integration, and one commonality – shared management resources”.
• Atypically the tri-borough had implemented shared management in front line services (adults and children’s social care) first. “This has created a complex organisational and structural model, which still lacks the supporting systems, governance routes and coherent vision required for its future success.”
• Shared management had since 2010 delivered in excess of £5m, or 54% savings, by cutting senior management posts (Tiers 1-3) across LBHF from 106 to 54. “However, there are concerns that, although officers are working to their brief within the current operating model, the resulting joint officer management structures pose challenges in terms of retaining sovereignty and individual borough accountability and independence.”
• The tri- borough arrangements allowed LBHF to operate ‘at-scale’ – benefiting from a larger geographical footprint, shared resident pool and increased operational flexibility and resilience.
• Creating a trusted network of sharing had been a mechanism “for more innovative cost savings, increased revenue generation, service delivery improvements as well as providing staff with new working experiences”.
• The tri- borough services had delivered some specific improvements in front line delivery for residents and there was potential to create additional benefits through further alignment. “However, the way in which joint teams currently link into the procurement (and wider commercial) process has seen mixed success and has resulted in some service level challenges.”
• In relation to joint procurement, although some bottom line cost savings had been delivered, there were some major ongoing contractual, procurement and end-to-end commercial challenges.

The tri-borough outcomes to date appeared to be down to the determination and commitment of members, officers and staff to make the collaboration work on a practical, pragmatic basis, the board found.

Its report said the key issues were operational and organisational and resulted from what had been a “gradual and piecemeal” implementation of supporting back office infrastructure.

It also suggested that the complex operating model was difficult to navigate internally and caused uncertainty and misunderstanding outside the three boroughs.

The enabling infrastructure was seen as inadequate as well. “On the ground, officers working in most shared teams are operating from largely independent and separate IT and support systems, with three different reporting and governance structures and associated timetables,” the review board said.

“Staff (often doing the same roles) still remain on different pay, terms and conditions across the three boroughs. From the high-level, the currently complex organisational structures lack the aligned and effective processes, governance and leadership required to drive the required behaviours and information flows.”

The report also identified risks to the maintenance of individual borough sovereignty and accountability.

“Key risks have to date originated within the procurement and end-to- end commercial management of joint services, but shed light on the future risk of critical individual borough needs ‘slipping through the net’ during complex shared service implementations,” it said. “These must not be overlooked particularly as the progress towards further collaborative working, on any level across London, gathers pace.”

The review board made a series of recommendations on how to improve the shared service arrangements, with one of the headline changes being for Hammersmith & Fulham to appoint its own chief executive.

It also called for the three cabinets to reach a consensus on the future vision of collaborative working, which should develop thinking on how joint working with other London boroughs could be more easily achieved. The three councils needed to make it easier and clearer for other authorities to join the collaboration.

The report called for an aligned and formalised governance model to help ensure compliance, reduce risk and increase agility. “These governance arrangements need to oversee joint working arrangements on a service by service basis and need to be much more visible both inside and outwith the council than at present.”

A strengthening of Hammersmith & Fulham’s procurement and commercial capabilities was also recommended.

Publishing the board’s report, Lord Adonis said: “Massive cuts in funding pose a huge challenge to local government. Shared working among councils is important and it should continue in West London. However, the tri-borough arrangements needs to be improved to promote leaner management and stronger accountability. 

He added: “Building on the tri-borough arrangement, it should also be possible for other councils to share services with the three West London councils to promote further efficiency, provided this does not jeopardise the gains already achieved.”

Lord Adonis added: “It is important that the sovereignty of the individual boroughs be respected. We recommend that each of the boroughs appoints its own chief executive to ensure the best possible value for money in future joint working.”

Commenting on the report, Cllr Cowan said: “Sharing services with more councils could save us money and exchange good practice. We don’t want others to be put off because they think Hammersmith & Fulham belongs to a closed and exclusive ‘tri-borough’ arrangement.

“I hope this report marks the start of a new generation of shared services that includes the three councils but reaches across London and delivers better savings, greater value and services that work for residents.”

He added: “The Board also recommends having a leaner senior management structure to free up resources for front-line services, and it calls for important new safeguards to the individual democratic mandates of each council. We will deliver that.”