Agenda item

This report advises the Committee of a notice of call-in received from six Members of the Council of the Cabinet’s decision (174/2017 and 175/2017) to approve the establishment of a subsidiary of Medway Commercial Group, to be called MCG Health and Wellbeing, or a suitable alternative, to commission and deliver public health services as set out in the attached Cabinet report (attached as Appendix 1).

The Committee must consider the Cabinet decisions and decide either to take no further action, to refer the decisions back to Cabinet for reconsideration or to refer the matter to full Council.

Reason for Urgency

The Chairman is asked to accept this report as urgent because the next meeting of the Committee after 24 January takes place on 16 March 2017. Consideration of the report by the Committee at this meeting would risk a delay to the establishment of a subsidiary of Medway Commercial Group from 1 April 2017, as per the Cabinet decision. In accordance with Chapter 4, part 5, paragraph 15.4 of the Council’s Constitution, once a decision has been called in, it must be considered by the next available meeting of the relevant Overview and Scrutiny Committee.

Discussion

The Labour Spokesperson introduced the call-in of the Cabinet decision numbers 174/2017 and 175/2017 to approve the establishment of a subsidiary of Medway Commercial Group, to be called MCG Health and Wellbeing, or a suitable alternative. This would commission and deliver public health services, as set out in the attached Cabinet report.

Labour Councillors had called in the decision in order to seek reassurance and, as such, they did not oppose the principle of creating traded services or of such services seeking to make a profit. It was acknowledged that Public Health in Medway was performing relatively well.

The call-in had been made in order to test the level of confidence that there was in the capacity for a traded service to be established with there being no resulting detriment to existing services. It was stated that the service would be delivered as a short term contract with defined timelines for services being delivered and that this would lead to a variety of difficulties. These included the transfer of staff, how performance of staff would be effectively managed, what the safeguarding arrangements would be and how redundancy and performance management procedures would be implemented effectively. There needed to be investment in safeguards to ensure that workable contracts were established. It was requested that further information be provided along with details of set up costs and how they would be recovered. Medway Norse’s limited ability to make a profit or to obtain contracts from external organisations gave cause for concern that a Public Health traded service could experience similar difficulties.  It was considered that the taking on of new provider contracts would increase pressure on partner organisations with a risk being that performance could decline as a result and that insufficient information had been provided to enable a decision to be taken.

In response to the reasons for the call-in set out by the Labour Spokesperson, the Interim Director of Public Health stated that he understood the concerns raised and that these had been taken into account. There were substantial pressures on the Council’s budget, with a reorganisation of the Public Health team having been undertaken in order to help address this. Management costs had been reduced by 10% and the cost of some commissioned services had been reduced. However, this would not be enough to meet the financial challenges faced. It was considered that the establishment of a traded service represented an almost unique opportunity to make a profit by providing services elsewhere, with the Council being considered to have an advantage over other potential providers in bidding for contracts. This was due to the Council having delivered the public health provider arm since this responsibility had been moved from the NHS to local authorities in 2011. Medway was one of the few local authorities to have retained direct provision of the provider arm and its performance was very good. With regards to health inequalities, the Provider Arm had performed well in relation to the numbers of people giving up smoking, losing weight and reducing risk factors for cardiovascular disease.

It was acknowledged that there was a risk that other local authorities may be looking to commission fewer services in the future than were currently provided. However, there was a need to test the market, which could only be undertaken by bidding for services. One factor to mitigate against risk was that it would be possible, if required, to bring the provider arm back under the direct control of the Council. Initially, services would only be provided locally. This would also help to reduce the risk of performance of the traded service deteriorating. It was confirmed that the aim was for existing staff to be transferred to the traded service and noted that there had been examples elsewhere in the country of where performance had improved significantly following the establishment of a traded service, particularly in relation to drugs and alcohol. In addition, Public Health had monitored services of an existing separate provider of drug and alcohol recovery services. Work had been undertaken with the provider to address deteriorating performance, with performance having improved. A Recovery Plan would be developed if performance declined subsequently.

A more robust approach had been introduced in relation to performance management in Public Health and a Recovery Plan would be put in place where performance was inadequate. Lessons to be learned from good performance were also being identified. The Director of Public Health would be the contract manager of the new traded service and would be responsible for the close monitoring of performance. It was suggested that performance of the Traded Service should be reported to Overview and Scrutiny and that a future report could provide assurance with regard to the transfer plans.

In the event that the traded service was not established, it would be difficult for current service provision to be maintained at a time when there was a case for expansion and it would also be difficult for existing performance to be maintained.

A Member stated that the Council had a duty to maintain services and that the Committee, therefore, had a duty to accept the Cabinet decision. He also considered that other Members of the Committee were nervous of the traded services proposal because of the private sector element. Another Member disagreed with this, stating that it was duty of the Committee to provide scrutiny to ensure that significant decisions were implemented correctly. They also asked for further details of how performance management would be improved. The Interim Director of Public Health advised that the monitoring of 0-19 services key performance indicators demonstrated how a different approach was now being taken to performance management. Monitoring was more robust, which enabled the monitoring of outcomes, rather than a simple measuring of processes. The same approach would be adopted with the traded service, with the fact that it would be a commissioned service ensuring that performance monitoring would be even more robust than it would be for some in-house Council services.

Following a statement made by the Chairman regarding the options available to the Committee in relation to the call-in, the Democratic Services Officer advised that, in accordance with the Council’s Constitution, the Committee should only normally only use the power to refer a matter to the full Council if the decision was considered to be contrary to the Council’s policy framework, was not wholly in accordance with the budget or where the call-in had been made by Councillors representing at least two political groups. As the call-in had been made by Councillors representing a single political group, only compliance with policy framework and budget were relevant factors for the Committee to consider.

It was confirmed that the Labour group were requesting referral of the decision to full Council on the basis that it was a matter of substance, insufficient detail had been provided in order for a decision to be made and that there was not sufficient time for the traded service to be effectively established by 1 April. Referral to the full Council would provide Public Health with sufficient time to make preparations for the introduction of the traded service and enable full detail to be provided to Members.

The Democratic Services Officer further clarified the circumstances under which a referral could be made to full Council and asked if the Members of the Committee proposing referral to the Cabinet could provide further detail to explain how the Cabinet decisions were considered to be contrary to the policy framework or not in accordance with the budget. The Members advised that there was no intention to prevent revenue raising where is was not to the detriment of existing services and would be affordable in the future. However, the changes being proposed were considered to be significant and had associated risks, with safeguards being needed and further information and time being required before a final decision was taken. It was considered that there was a risk that performance targets would not be met and that the establishment of a traded company could be financially costly to the Council if it was unsuccessful.

The Committee considered a proposal that the matter be referred to full Council on the grounds outlined above. On being put to the vote, the proposal was lost.

Decision:

The Committee accepted the Cabinet decisions 174/2017 and 175/2017, as set out in paragraph 2.6 of the report and agreed to take no further action.