Somerset Council 'betting the house' on transformation programme
Around £34m was saved in the first phase of its transformation programme, which concluded in April with the loss of around 300 staff
Somerset Council is “betting the house” on the next stage of its transformation programme in a bid to avoid effective bankruptcy.
Since its inception in April 2023, Somerset Council has been exploring various ways to reduce costs by avoiding duplication and other inefficiencies, as demand for local services continues to rise.
Around £34m was saved in the first phase of its transformation programme, which concluded in April with the loss of around 300 staff.
The council is now looking to hire a professional partner to oversee the next, more ambitious phase of transformation as it seeks to plug a projected budget gap of £101m next year.
But councillors and local residents have warned that the council is proceeding “without a credible plan” and risked repeating the mistakes made by previous local authorities.
Here’s everything you need to know:
What is transformation?
When Somerset Council was created, it inherited all the previous systems from Somerset County Council and the four district council – along with all of its staff.
Many of these ‘legacy’ systems are still in place – for instance, the planning department uses different IT systems depending on where a given applicant wishes to build.
As demand for services grows – particularly for vulnerable children and elderly adults – the council has been looking at ways to trim its back-room staff and modernise the way it delivers services, allowing it to save money while still meeting the needs of local residents.
‘Transformation’ is not merely a cost-cutting exercise – it is designed to change the way services are delivered to make the council more responsive to changes in people’s circumstances, more specific in meeting people’s needs, and ensuring that unnecessary costs are minimised or eliminated.
Why is it needed?
In short, if nothing changes, the council is staring down the barrel of effective bankruptcy.
Councils in England can’t technically go bankrupt, but they have to balance their budgets every year.
If the council failed to do this, it would have to issue a Section 114 notice, banning any non-essential spending – which would bring an immediate halt to the numerous regeneration projects being delivered through central government grants (such as the Celebration Mile in Bridgwater town centre or the upcoming upgrades to the Octagon Theatre in Yeovil).
Issuing a Section 114 notice would also result in the government sending in commissioners, who would have the power to sell off assets, cut services and drastically raise council tax with little or no democratic oversight – charging Somerset taxpayers more than £1,000 a day for their time.
While the council has already saved £34m through the first phase of transformation, that is not sufficient to balance its books as demand for services continue to rise.
The council was only able to set a balanced budget in February with central government help – with council tax rising by higher than the usually accepted level and Whitehall allowing the council to use the sale of assets to fund front-line services (which is not normally permitted).
Despite this support, the council currently faces a budget gap of just over £45m for the current financial year – with next year’s budget gap rising to just over £101m, and the gap projected to exceed £190m by 2029/30.
Councillor Theo Butt Philip, portfolio holder for transformation, human resources and localities, addressed the issue in detail when the second phase of transformation was discussed by the council’s corporate and resources scrutiny committee in Taunton on Wednesday (July 30).
Mr Butt Philip (who represents the Wells division) said: “This council exists to serve the residents and communities of Somerset, and that is the guiding principle behind this transformation.
“During the past few years, we have lost many valued colleagues, but we have not lost sight of our purpose.
“It is essential that we create a council which is both financially sustainable and capable of delivering.”
How much will all this cost?
The council’s executive committee voted on July 7 to move forward with the second phase of transformation – including the procurement of a contractor to oversee the changes at an estimated cost of around £20m.
However, additional funding has been set aside to cover the cost of any further redundancies (up to £18m), IT reforms or other changes which will be deemed necessary.
The council has set aside £72,118,000 for the programme – of which £45m comes from the sale of existing assets (including the commercial investments it inherited from the district councils in April 2023).
The remaining £32,118,000 comes from the ‘capitalisation directive’ agreed with the government, by which the council can use capital receipts (e.g. from the future sale or land and property) to fund day-to-day spending.
Clive Heaphy, the council’s acting chief financial officer, said that this money would be “spent over a number of year”, with the council looking to secure a return of investment of between £2.50 and £3 for every £1 spent on transformation.
He said: “This will stop central government looking over our shoulder. We want to control our own lives and our own agenda.”
Carl Haggerty, the council’s head of transformation and digital, said that each element of the transformation programme would have its own business case, which would be subject to scrutiny through the executive committee.
He added: “There is massive urgency and the scale of the challenge is not to be ignored.
“We are in need of external capacity, capability, experience and expertise.”
Why is this controversial?
Taunton resident David Orr – who has been a frequent critic of Somerset’s various councils – said the council was “without a credible plan” and was rushing into this new phase in a desperate bid to avoid having to call in the commissioners.
He said: “This chaotic council is rushing into a long-term seven-year contract, with a single supplier for £20m or more. Where is the time for proper scrutiny and oversight?
“The Titanic, having hit the iceberg and sinking, is now planning its cruise schedule for the next seven years.”
Mr Orr said that the council risked repeating the same mistakes of previous transformation efforts, including the South West One programme (a joint venture between Somerset County Council, Taunton Deane Borough Council and IBM) and Ignite’s changes to South Somerset District Council.
He said: “Do councillors really believe that there is a single consultancy that can, top-down, ‘transform’ diverse services from social care to education,
roads, planning, environmental health, waste and libraries? That was tried in South West One and failed.”
“The council must avoid ‘betting the house’ by gambling on a single supplier, appointed in haste.”
Unison branch secretary Nigel Behan said he was “deeply troubled by the similarities in approach” between the South West One venture and the current transformation programme.
He said: “I commissioned a report from Professor Dexter Whitfield from the European Services Strategy Unit in July 2007. His report highlighted the future outcomes for South West One with uncanny accuracy.
“Staff want to do a good job for Somerset and people, in general, like working for effective organisations.
“The staff have been on the transformation operating table for over two years and that is inevitably affecting morale and motivation.”
Mr Butt Philip responded: “The scale of the cost-cutting nature of the work needed and the pace required mean that a single overarching contract was deemed to be the best way forward.
“However, we have remained open to consortium bids and have been clear throughout the procurement process that we will retain the right to use other providers for individual pieces of work as appropriate.
“The South West One project was such a fundamentally different thing to what we’re doing now, that I feel it’s like comparing apples with data centres.
“What we are doing here in bringing in additional expertise to support and work with our existing staff team on the delivery and further development of council transformation.
“Our brilliant staff have been faced with enormous uncertainty – but with the completion of the workforce programme, we have been able to give more certainty to our staff than has been the case for many years.
“Additional work is now being done, including the pay and reward programme, to ensure their contributions are properly recognised.”
How have councillors reacted?
Numerous councillors expressed concerns about the pace, scale and transparency of the transformation plans.
Councillor Sue Osborne (Conservative, Ilminster) said: “There was never a ‘lessons learned’ report from South West One.
“We’re looking at saving £45m this year, plus £101m next year – how are we actually going to do that?
“We’re looking for a transformation partner but it looks like we’re looking for a miracle worker as well. We’re not going to do this in 18 months.”
Councillor Henry Hobhouse (Liberal Democrat, Castle Cary) described the process as “back to front” and said the proposals “lack detail”.
He added: “Every single departmental saving should come back to this committee to be reviewed with a baseline and what the improvement is.
“Ignite totally destroyed South Somerset District Council’s planning team. After we have appointed the partners, the saving blocks must be brought back here in detail so we can scrutinise them before they are actioned.”
Councillor Dave Mansell (Green, Upper Tone) concurred: “This looks a bit of a mess – I don’t get the sense that we’ve understood this.
“We’ve already squeezed an awful lot out of the system, and I’m worried about how much more we can squeeze out.
“I’ve been through local government reorganization three times – four if you count the Somerset Waste Partnership, and that was the only one that I felt went well.
“I don’t see the substance – and yet it’s got to deliver £101m of savings by March.”
Councillor Claire Sully (Lib Dem, Mendip South) was more optimistic, stating: “I think this is a good plan. I think it’s got a good framework, with vision and direction.
“It’s looking to inspire us to do things differently – it has the ambition to do things better and to unlock innovation.
“In Somerset, we have a track record of innovation and doing things better. We see it all around us, why can’t we do it here?”
What happens next?
The tendering process for the transformation contractor concluded at 2pm on July 30 – mere minutes after the committee finished its discussion.
The chosen provider will be subject to further scrutiny committee discussions on August 27 , with the executive expected to ratify the final appointment on September 3.
The chosen contractor will begin mobilising in mid-September and officially start work in October.
In line with the scrutiny committee’s recommendation, the individual business cases for each of the transformation elements will have to come before councillors for further analysis.