The Moray Council: 
the audit of Best Value and Community Planning – 
progress report

Published August 2007 for the Accounts Commission

The Accounts Commission
The Accounts Commission is a statutory, independent body which, through the audit process, assists 
local authorities in Scotland to achieve the highest standards of financial stewardship and the 
economic, efficient and effective use of their resources. The Commission has four main responsibilities:

•	securing the external audit, including the audit of Best Value and Community Planning
•	following up issues of concern identified through the audit, to ensure satisfactory resolutions
•	carrying out national performance studies to improve economy, efficiency and effectiveness in 
local government
•	issuing an annual direction to local authorities which sets out the range of performance information they are required to publish.
The Commission secures the audit of 32 councils and 35 joint boards (including police and fire 
services). Local authorities spend over £14 billion of public funds a year.

Commission’s findings
1. In February 2006 the Commission published the report on the Best Value audit of The Moray Council together with its findings. The report and findings identified a number of areas for action by the council and the Commission required a further report by the Controller of Audit on the steps taken by the council to address those issues.

2. The Commission accepts this report following up on the performance of The Moray Council’s statutory duty to secure Best Value and to initiate and facilitate the Community Planning process. The Commission recognises that the report gives a broad picture of the council’s performance based on the work of Audit Scotland and the findings of other scrutiny bodies such as Inspectorates and that it does not attempt a comprehensive review of all service delivery. We acknowledge the co-operation and assistance given to the audit process by members and officers of the council.

3. The Commission acknowledges that since the publication of the original Best Value audit report there has been improvement in the corporate leadership and strategic direction of the council, in particular:

•	publication of a Community Plan 
•	training programmes for elected members and senior officers
•	improvements to performance management arrangements
•	new political management arrangements
•	progress on strategic priorities such as flood prevention projects and agreement on single status.

4. There are, however, continuing areas of concern for the Commission as demonstrated in the report, particularly:

•	the need for consistent strategic leadership by elected members. (The Commission notes that almost all of the changes implemented have been driven by officers, with little clear evidence of member commitment)
•	the need to develop a systematic approach to demonstrating competitiveness
•	the need for a more systematic approach to prioritise and manage strategic priorities
•	the need to accept the value of external support to help deliver its improvement agenda.

5. The Commission believes that The Moray Council has made steady progress in a number of areas but still has a considerable way to go in delivering Best Value to ensure that improvement in corporate processes flows through to improved services for the people of Moray. A significant proportion of members elected in May 2007 are new councillors, which presents challenges for the council in making progress. The Commission wishes to see elected members in Moray demonstrate a commitment to delivering Best Value and developing their corporate role in all the council’s affairs.

6. The Commission accordingly requires a further report from the Controller of Audit on continued improvement in The Moray Council as at 30 June 2008.

Introduction

lThe Local Government in Scotland Act 2003 introduced new statutory duties relating to Best Value and Community Planning. The report on the Audit of Best Value and Community Planning, undertaken at The Moray Council, and the Accounts Commission’s findings, were published in February 2006.

The report described a council with a long way to go to respond to its statutory duties on Best Value and with significant work needed to create a culture of continuous improvement. Sound management practices, such as performance monitoring, had been weak, though the limited evidence available suggested that there were no fundamental weaknesses in service performance.

The report also noted that there were signs of improvement since 2004, but it was too early at that point to judge the effectiveness of these.

In its findings, the Commission stated that The Moray Council had lacked effective corporate leadership and direction, and had been an inward- looking and isolated organisation where small parochial issues overwhelmed any consideration of strategic direction.

The Commission highlighted important examples of weaknesses in leadership and direction by both elected members and senior management:

•	A lack of clear strategic direction based on knowledge of community and user needs.
•	A lack of effective systems for monitoring and reporting service performance.
•	Too many projects not effectively controlled.
•	Many DLO and DSO contracts not tested by competitive tendering since the early or mid-1990s. 
•	
The Commission reflected, however, that recent changes in leadership and direction indicated that a new approach was being adopted towards the leadership and management of the authority.

In conclusion, the Commission outlined a number of requirements which the council would have to meet if it was to deliver Best Value. These included:

•	identifying clear priorities and concentrating on the essential steps to achieve them
•	developing political and corporate leadership skills in councillors and senior management
•	implementing the consistent use of a comprehensive performance management framework.

The Commission also noted that it was unlikely that the council could undertake this task without securing appropriate external assistance, both on a consultancy basis and at a governance level, from elected member and chief executive peers.

The Commission required a formal statutory report from the Controller of Audit on the council’s progress as at 31 January 2007. In order to provide as up to date a report as possible, this report provides an update on the progress that The Moray Council has made up to May 2007. It focuses on the implementation of the council’s improvement programme and notes progress in service performance.

In May 2007, there were significant changes to the composition of the council; the members who were previously the convenor, the chairs of educational services, community services and environmental services, and the vice chair of policy and resources committee, are no longer members of the council. The administration group is now made up of a coalition of 12 Independent and three Conservative councillors, and
16 of the 26 elected members are new to the council.

We gratefully acknowledge the
co-operation and assistance provided to the audit team by The Moray Council, particularly the former Convenor, Eddie Coutts, the Chief Executive, Alastair Keddie and the Corporate Policy Unit Manager, Bridget Mustard. 
Progress in The Moray Council

The improvement programme

The council has made steady progress with its improvement plan, although many of the changes are relatively recent and have yet to fully bed in and flow through to improvement in service delivery and outcomes.

1. In April 2006, the council approved its improvement plan in response to the Accounts Commission’s findings and the issues identified in the February 2006 Best Value audit report. The plan is structured under three main headings:

Strategic Planning – ‘to develop clear priorities for Moray and the council’s services.’
Organisational Development –
‘to develop political and
corporate leadership.’
Performance Management and Reporting – ‘to develop the council’s performance management and reporting arrangements.’
2. The council has made steady progress on the 21 objectives, and 88 per cent of the 51 actions identified to support the objectives have been completed. The action plan addresses the majority of the issues raised in the first audit report, though it did not specifically identify actions relating to securing external support or programme management. This
report highlights the progress the council has made on the Accounts Commission’s findings, although it is more difficult to assess the impact of these changes at this stage.

Capacity

The council has demonstrated that it can deliver on priorities in its improvement plan when it focuses its efforts and resources. However, it is not clear that the capacity yet exists to sustain this across the full agenda of improvement objectives in the longer term and there has been some resistance from elected members to securing external support to strengthen capacity.

3. The council has used external consultants to support a range of activities, including member development seminars, community planning seminars, the development of the consultation and engagement strategy and the flood alleviation project. However, the council has not explored the full range of support options open to it and elected members have been resistant to commissioning consultancy services to support the wider improvement agenda.

4. Progress to date indicates that resources have been applied to priorities, for example, in the development of performance management. However, resources are stretched and it is not clear that the council has the capacity to sustain or increase the pace of change. It needs to consider how it can build capacity, including the use of external support, to deliver its challenging improvement agenda.

Strategic direction and leadership

5. In the first Best Value Audit Report, the Accounts Commission identified weaknesses in leadership and strategic direction by members and senior management, and highlighted the need for the council to develop political and corporate leadership skills in councillors and senior management.

Strategic leadership

The strategic leadership provided by officers is improving. The council has invested in management development and there have been improvements in corporate working. The strategic leadership provided by elected members has shown some improvement but is not yet fully effective. Many of the members who had been providing leadership are no longer members of the council and this loss of leadership capacity represents a risk to the council.

6. The strategic leadership being provided by officers has improved. Officers have driven forward new political management arrangements: the development of community planning, the 2006/07 budget process, a linked review of 80 activity areas and the development of a performance management framework.

7. The council has introduced a management development programme for all third-tier officers and above. Over 60 managers have attended the programme to date, 25 per cent of whom are working towards certification. The council is now rolling out the programme to cover head and deputy head teachers, and has introduced a course for first line managers. 

8. The council has developed more inclusive corporate management arrangements, which have helped
to improve communications and joint working between services. These include:

•	a programme of meetings involving the Corporate Management Team (CMT) and other senior managers to engage a wider range of officers in discussions about community planning priorities and the actions required to deliver on them
•	senior officer working groups working on performance management, public performance reporting (PPR) and consultation and engagement.

9. The council has an established personal performance appraisal process. In August 2006, the process was refocused to provide stronger links with corporate and service priorities.

10. The leadership provided by members in the period following the first Best Value Audit has improved, but it has not been consistent or effective across the full range of council activities. Leadership provided by the Service Development Group (SDG) and committee chairs has improved, but member engagement with community planning has been less effective and some members still focus too much on local issues. The most effective elected member leadership has been in respect of specific issues, such as flood alleviation, securing a single status agreement and the 2007/08 budget process. This has usually been provided by a core set of members, many of whom are no longer members of the council. This loss of leadership capacity represents a risk to the council. 

11. The SDG was already in existence at the time of the first Best Value Audit, and it is now playing a more significant and constructive role. The SDG is made up of the convenor, vice convenor and chairs of the council committees. Between March and December 2006, it met on 14 occasions and considered a range of issues, including: the preparation of the financial plan and budget; reports on Best Value and efficiency reviews; and over 200 service delivery and savings options for 80 areas which covered all council activity. The council has agreed to continue with the SDG, which now has a formal place in the new council’s committee calendar.

12. Options and performance information were presented for each of the 80 activity areas. By February 2007, this process had identified £2,375 million of savings for the 2007/08 budget. It is significant that the approach focused on a wide range of service areas and did not resort to ‘top slicing’ departmental budgets. 

13. Since December 2006, committee chairs have taken on a more defined role. Regular meetings are now held between chairs and senior officers to consider policy and performance issues for their service areas. The committee chairs are more active in responding to challenge on policy and performance issues at service committees, as well as presenting performance reports and responding to scrutiny at the Audit and Performance Review Committee (A&PRC). Although these arrangements have only been in place for a short period of time, members and officers report that committee chairs have more effective working relationships with the senior officers and are more aware of the issues affecting services.

14. Progress in developing the role of members in community planning has been mixed and their active involvement in setting strategic priorities has been limited. Though members agreed the Community
Plan in June 2006, most of the strategic direction and momentum has come from the chief executive rather than members. In June 2006, the council ran a training session for members on partnership working, which eight members attended. Following the May elections, only three of these elected members remain at the council.

15. Some members have remained reluctant to focus on the strategic agenda and have continued to focus too much on local issues. This is most apparent in respect of planning and development control. The first Best Value audit report identified a high number of planning applications that were dealt with by members rather than under delegated powers, and a high proportion of officer recommendations overturned at committee. This trend continued in 2006/07, and a report to the council in January 2007 indicated that elected members were involved in over 25 per cent of the decisions made in 2006. In 2006/07, 40 per cent of decisions referred to committee went against officers’ recommendations based on the council’s planning policy. In March 2007, the council agreed transitional arrangements under the Planning (Scotland) Act 2006, which should increase the number of planning decisions delegated to officers; the new council needs to ensure that it applies planning policy consistently.

16. The council’s improvement plan identified a range of objectives and actions to help members develop their leadership role and provide more strategic direction for the council. To this end, the council:

•	agreed a statement of the roles and responsibilities of members which focuses on strategic issues as well as ward priorities, and updated the remits and responsibilities of the chairs under the new committee structure
•	implemented a training programme, established training records for members and provided access to e-learning materials
•	reduced the volume of routine business being reported to committees and refocused agendas and reports.

17. Between March and October 2006, the council ran five sessions to promote better understanding and leadership of strategic issues. However, elected member attendance at these sessions was poor, at 47 per cent over the five sessions. Only two members attended all five sessions and neither stood for re-election. Low attendances for the sessions on partnership working and political leadership are of particular concern.

18. A comprehensive induction and development programme for members of the new council will run for 18 months following the election. This investment represents a significant opportunity for elected members to develop their leadership skills and capacity; its effectiveness will depend, in part, on better member attendance. 

Strategic direction and planning

The council has made steady progress in improving its approach to strategic planning. It has developed a range of mechanisms to identify the priorities of communities and these are informing the priorities of the community planning partnership. 

19. The council has improved its understanding of community priorities. In September 2006, the council published a new community plan covering the period 2006 to 2010. The plan was developed in consultation with partners and informed by a review of community planning which looked back over the lifetime of the previous plan for 2001 to 2006. The priorities were also informed by: two consultation exercises with adults and young people; review seminars held in January and February 2006 for elected members and senior officers from partner organisations; and, by Local Plans developed for each of the eight geographic areas of Moray.

20. The partnership has agreed priorities for each of its strategic themes and committed partners to a range of specific actions over the period of the plan. The themes are:

•	achieving a healthy and caring community
•	achieving a safer community
•	building stronger communities
•	improving travel facilities, choices and safety
•	investing in children and young people
•	protecting and enhancing the environment
•	working for increased prosperity.

21. The objectives are not as specific as they could be, but the theme groups are in the process of developing action plans which aim to be more specific.

22. In December 2006, the council finalised a Consultation and Engagement Strategy which includes a protocol for managing corporate consultation exercises and provides guidance on consultation at service level. To support consultation and engagement, the council has:

•	established eight local neighbourhood forums with community profiles for each area
•	agreed a youth strategy and participation framework 
•	set up The Moray Youth Council and youth forums to cover the eight local areas
•	carried out six surveys, through the citizens’ panel, on transport, community safety and achieving a healthy and caring community, and run focus groups on public performance reporting.

23. The council was committed to reviewing its corporate plan and service plans during 2006 to ensure that these were aligned with the community plan. This was not completed although a draft corporate development plan was developed in summer 2006. The council is currently considering whether a corporate development plan is required for the new council or whether the action plans associated with the community plan and supported by services plans will better serve this purpose. The 2007/08 service plans show clearer linkages with community plan objectives and the council recognises that further improvements are required to continue to strengthen the links.

Managing council business

The council has streamlined business management arrangements.

24. On 5 July 2006, the council agreed a number of changes to the administration and management of council business. These included:

•	a revised format for council and committee agendas, with reports organised under the main headings of ‘Policy/Strategy’, ‘Performance Management’ and ‘Other Matters’
•	the introduction of ‘Written Questions’ and ‘Question Time’ to agendas
•	a revised and more focused format for committee reports
•	a streamlined Policy and Resources Committee which is now made up of 12 members – the convenor, vice convenor, chairs of service committees and four opposition councillors. This committee previously included all members
•	the merger of the A&PRC and Standards Committees
•	agreement about which members would be represented on community planning theme groups and linkages between these groups and council committees.

25. There are early indications that the new arrangements are starting to have a positive impact. Members and officers report improvements in agendas and in the content and quality of reports.

26. In January 2007, the council agreed a new committee structure to be implemented after the May 2007 election, with revised remits and clearer links to the community planning themes (Exhibit 1, overleaf). The committee structure will also contain a Licensing Committee and retain an A&PRC. 

Performance management

The council has made significant progress in developing a performance management framework. Performance information is increasingly being used by members and officers to scrutinise performance.

27. There has been a significant investment in the council’s performance management arrangements over the period since the first Best Value audit, and the council has developed a range of service standards and performance measures. 

28. Performance information is being used more effectively by members to scrutinise performance and they have more ownership of the performance management agenda. In addition to quarterly performance reports to service committees, the A&PRC receives performance reports on all areas of council activity at its bimonthly meetings. The council recognised that, while this provided wide coverage of performance information, it meant that the A&PRC was receiving over 80 performance reports on a single agenda and would clearly limit the committee’s capacity to scrutinise in an effective way. From December 2006, the chair of each service committee has reported to A&PRC on service performance and taken questions from committee members. Although these arrangements are fairly new, they provide a solid foundation on which to build.

29. The council has published a range of performance information and is starting to address public performance reporting (PPR) more effectively. Publications have included:

•	an education performance report, published in April 2006
•	booklets setting out service standards for all services, published in May 2006
•	a public performance report for 2005/06, published in June 2006
•	statutory performance indicators (SPIs) for all services showing trend information for the previous three years, published in June 2006.

30. The council has implemented a PPR strategy and issued guidance for services, and is looking at more innovative ways to report performance publicly. Though not yet published, the 2006/07 draft public performance report is written in a more engaging plain language style, and the council plans to publicise relevant performance information on its vans, which is an innovative approach to public performance reporting. 

31. The performance management framework is supported by a performance management software system which is used by seven other Scottish local authorities. The council has invested significant time and effort in entering performance data and standards into the system. The system allows performance information to be monitored, analysed and reported in a number of different ways. From April 2007, performance reports were presented to members with ‘traffic-light’ indicators highlighting good and poor performance, and additional narrative providing explanations and planned actions to address poor performance.

32. Though the state of development varies across services, the performance management arrangements have come a long way in a short period of time and are increasingly becoming part of routine business for members and officers.

Managing competitiveness

The council has undertaken some market testing and has won external contracts, but it has yet to develop a strategic and consistent approach to demonstrating competitiveness.

33. The Accounts Commission noted that services delivered by the council’s DLOs and DSOs had not been subjected to competitive tendering since the early to mid-1990s. The council has not yet established a systematic corporate strategy to demonstrate competitiveness across its commercial/trading operations, although it has won external contracts and uses other methods to review efficiency, including revised service level agreements, EFQM, best value reviews, benchmarking through the Association for Public Sector Excellence (APSE) and other ‘family group’ councils, and tendering for external contracts.

•	The grounds maintenance service has won contracts to carry out work for the RAF bases in the area and for a number of housing associations.  
•	The refuse collection and street sweeping service has won contracts to provide services for an RAF base and local distilleries. 
•	The street lighting section has won contracts to provide design and installation services for a number of local developers. 

34. The roads maintenance service market tests 30 per cent of its work annually (though, for the first time, this target was not met in 2006/07). This market testing also provides benchmarking information. 
 
35. Most services use APSE as an important source of benchmarking information. Services also benchmark with neighbouring councils and against private sector comparators where this information is available. Some services have been subject to best value reviews, including roads maintenance, vehicle maintenance and building cleaning. 

36. A range of approaches are being used to challenge and test the competitiveness of services, but their application and the rigour with which they are used varies between service areas. The council recognises that it must consider a more strategic approach to ensuring the competitiveness of its commercial operations, but it has not yet articulated how and when it intends to do this.

Project and programme management

The council has yet to develop systematic programme management arrangements to help prioritise and manage its wide-ranging improvement agenda. It has made progress in delivering key strategic projects, but difficult decisions lie ahead for the newly elected council. 

37. The Accounts Commission found that the council had too many projects which were not effectively controlled. Although there is now a broad consensus on the priority project areas, the council has not yet developed a systematic way of prioritising and monitoring its many projects.

38. The council has made progress on a number of challenging priorities: 

•	Flood Alleviation Schemes – The council has four major flood alleviation schemes at different stages of development. The Lhanbryde scheme was opened in May 2006, and the Forres scheme was given Ministerial approval in May 2007, with work likely to begin towards the end of the year. The planning and consultation required for these schemes continues to be a significant commitment for the council. The council plans to meet a large part of its contribution towards the funding of these schemes through reserves. This poses financial challenges for the new council over the next few years given its other significant commitments. 
•	Schools Estate Strategy & Public Private Partnerships (PPP) –
The council has made good progress in consulting and agreeing a systematic corporate schools estate strategy. The council now faces the challenge of securing agreement on, and delivering this strategy. The PPP programme has been difficult and politically contentious. In July 2006, the council made the decision, as part of the PPP programme, to pursue the building of two secondary schools in Elgin to replace the current secondary schools. Officers have presented a number of reports to members detailing the potential impact of this decision and the financial constraints on the council. The council confirmed its decision in September 2006 and is currently awaiting a decision on funding from the Scottish Executive. The local auditor has identified the affordability of the scheme as a risk for the council and will review it as part of the 2007/08 annual audit. 
•	Single Status – In December 2006, the council concluded its single status agreement, reflecting significant investment and commitment. Although the initial funding for equal pay liabilities will be met from reserves, the council recognises that there are wider implications for longer-term service planning and budgeting. The completion of this phase of work will release some human resources capacity to address other strategic initiatives which are not so well progressed, such as workforce planning. 

39. Although progress has been made on these projects, and on the projects identified in the council’s improvement plan, the council still needs to improve its programme management arrangements. There is evidence that individual projects and areas of work are monitored on a regular basis, but the council still lacks an over-arching work programme and it does not use recognised project management approaches consistently across the organisation. The current arrangements are informal and rely too much on the chief executive providing a strategic overview of the linkages between areas of work. A more structured approach, supported by an investment in programme management, would put the council in a better position to prioritise and manage its significant commitments.

Achieving Best Value – service performance

SPIs show that performance is broadly the same as it was at the time of the first audit. Performance varies across the organisation, but, overall, the council’s services compare well with other Scottish local authorities, though the rate of improvement has been below the national average since 2003/04.

40. The follow-up audit reviewed service performance as measured by SPIs. These do not give a comprehensive picture of performance across all services, but they allow some comparisons to be made between councils and over time.

41. The information available for comparison with other councils is for the financial year 2005/06. This means that the impact of the council’s improvement plan does not yet show in the indicators.

42. The first Best Value audit report concluded that the SPIs suggested some good performance and no fundamental weaknesses; overall, The Moray Council’s SPIs compared well with other local authorities. The indicators for 2005/06 show a similar picture. The proportion of SPI indicators which fell within the upper quartile of all Scottish authorities remained the same and the number in the lowest quartile fell (Exhibit 2).

43. Between 2003/04 and 2005/06, the council’s performance worsened by five per cent or more on 14 SPI measures and improved by five per cent or more on 16 (Exhibit 3). This gives the council an improvement-to-decline ratio of 1.14, which is below the national average of 1.38.

44. Housing continues to perform very well, with six of the eight SPIs in the top quartile and the two SPIs on homelessness showing improvement. Performance in development services has continued to decline in some service areas; the council is putting changes in place to address this. More recent performance information shows progress in areas where there has been a focus on improvement, for example, sickness absence and food hygiene inspections.

Conclusions
The council is moving in the right direction and the pace of change has been steady. The council still has much to do but it has invested in developing a firmer base from which to make future improvements. It needs to build on this investment and sustain the pace of improvement to deliver better outcomes for local communities. In particular, elected members need to set a clearer strategic direction for the area and the organisation, promote a culture of continuous improvement, and ensure that there is sufficient capacity to sustain improvement.

45. Since the publication of the Best Value audit report in February 2006, there has been some improvement in the corporate leadership and strategic direction of the council. The council has:

•	published, with its partners, a Community Plan which sets the strategic direction for the area and which is based on a knowledge of community needs 
•	invested in strategic leadership through training programmes
for elected members and
senior officers
•	made significant improvements to its performance management arrangements
•	introduced new political management arrangements which aim to focus on strategic policies and performance
•	made progress on strategic priorities such as flood prevention projects and agreement on
single status.

46. In other areas progress has been more limited:

•	Elected members have not provided consistent strategic leadership for the council; leadership has tended to focus on specific issues and has come from a core group of members, many of whom are no longer members of the council.
•	Although the council uses a range of methods to test the effectiveness of its commercial operations, including some market testing, it has yet to develop a systematic approach to demonstrating competitiveness.
•	The council has not developed a systematic approach to prioritise and manage its wide-ranging strategic priorities.
•	The council has made limited use of external support to help deliver its improvement agenda.

47. The challenge for the new council is to sustain and build on the improvement made since the original Best Value audit. It now needs to ensure that its investment flows through to improved services for the people of Moray. In order to do this, the council needs to further develop and support elected membership leadership capacity and ensure that it has the capacity and commitment to sustain continuous improvement.

If you require this publication in an alternative format and/or language, please contact us to discuss your needs. It is also available on our website: www.audit-scotland.gov.uk

Audit Scotland 
110 George Street 
Edinburgh EH2 4LH 

Telephone 
0845 146 1010
Fax 
0845 146 1009
 
www.audit-scotland.gov.uk 

ISBN 978 1 905634 65 1