Comments on draft Finance Peer Review

These are consolidated comments from the Corporate Director (Finance), David ElisWilliams (DEW) and the Head of Service (Finance), Einir Wyn Thomas (EWT) on the draft report. Two versions of the draft had been received one received by DEW in December 2010 and once received by EWT in April 2011. There are marginal differences, and the later version has been referred to here.

General Comments
Process The whole process was driven by the Interim Managing Director (IMD) it was he who had agreed that the review should taken place at the beginning of October. The consultation about the timetable for the review was muddled and the review began without our being able to brief the staff affected properly. Having been told that the MDs Office would coordinate arrangements we found ourselves having to collate the documents required these were then presented far too late. What we were told was the Peer Review was about the whole authority approach to managing finance, but in fact it came to be seen almost entirely as a review of the finance service (mostly the accountancy function within that). Impressions that we have from other authorities who have had the WLGA Peer Review have been that they were much more positive about the experience and that it was indeed more about the whole authority approach; in contrast our approach had been skewed by the IMD in his influence on the brief to something that finance staff perceived as being done to us. Not only was this a negative experience for us but it also meant that we had missed the opportunity to get the benefits of the whole authority approach applied in other authorities. There was uncertainty over outputs after the review IMD had given assurances that initial feedback would only be to DB and DEW so Finance would have an opportunity to digest and challenge the feedback, then we discovered in the course of the review that there was also to be feedback to the SLG and Executive members the same day! Draft report did not arrive for two months (sent to DEW 7 Dec 2010) but the IMD pressed DEW to respond within days, without allowing DEW to share draft with colleagues. A copy was released to EWT because she had been tasked by the IMD with preparing an action plan but she was discouraged from commenting. IMD then sat on the draft for several months and stated later (March 2011) that he was not pressing for its completion. DEW provided comments to IMD (13 Dec 2010, comments consolidated into this response). In April 2011EWT was told the report was to released. She reminded IMD that there were errors in the report. He then sent EWT a copy of a different draft for correction of points of sensitivity and errors. Thisdraft report received then was not very different, adding to suspicions that DEWs comments had in fact been passed on the review team. We have asked for details of observations passed by the IMD to the review team, but not received these.

Meanwhile, the IMD referred to peer review findings (even before receiving draft report) as part of his justification for proposing to make DEW post redundant. There has been a suspicion all along that the peer review has been a device to engineer sackings. Overall Approach The peer review team claims to have relied on evidence and perceptions. There is concern from finance that they have been over-influenced by the IMDs views, not giving sufficient weight to opinion from the Finance Department or others within the Council. Sometimes the approach to evidence has been partial or selective. Where there has been criticism, those criticised have not been told of the evidence underlying this, so there has been no opportunity to challenge this evidence or present alternative evidence. Therefore we have been unable to respond properly to many of the issues raised. In fact this is the main objection to the report that we cant respond to some of the individual points because we dont recognise the generalisation made and havent been told enough to know what they are talking about. In most cases the statements are so vague that we havent been able to follow them up. In one case (see comments on paragraph 51 below), the allegations were specific enough for us to be able to follow through and we found insufficient evidence to support the assertions. We cannot help suspecting that this has been their approach for the vaguer assertions, too. Requests to the Peer review team for access to the evidence underlying their conclusion (during the review itself and by email on 13 October) have met with no response. Nowhere is this approach more evident than in relation to the implication that the Finance Department is blocking or risk averse when it ought to be supporting innovation. We have no doubt that people will have alleged that we are that goes with the territory but our complaint is that such allegations have been accepted at face value, and then form the basis of a conclusion without having been subjected to any challenge. If somebody has said Finance blocked Project X we would expect the team to have asked Finance was this indeed true. If it was, we would expect Finance to have been asked what their reasons were for acting as they did. We would then expect the review team to consider whether, overall, the actions of the Finance Department were supportive of the overall aims and objectives of the authority. None of that was done. Moreover, we would like to have been asked ourselves for evidence of when we had been innovative, and when we had been blocked by the controlling attitudes of others. This was not done. Along with the criticism of finance being negative is the mention in the key conclusion that refers to examples of the Finance Department acting as a restraint to the advancement of collaborative, shared services. This conclusion is made in isolation it does not draw on any material in the body of the report, and we cannot

challenhge these examples when we are not told what they are. This approach falls far short of the standards we have come to expect from auditors and regulators, and are accustomed to working with. The peer review team sought to reassure when they said they were not like external audit but in fact the difference is that they were less fair. Finance staff say that their impression was that the team had come with its own agenda and were not open to issues of resources. The disagreements between members of the team also became clear. Our understanding of the Peer Review process is that the team should test its findings. There was very little testing of findings with Finance Management, even on aspects where they were best placed to comment.

Inadequate attention paid to resources Throughout the review, insufficient allowance given for the low resource base of the finance service and the fact that we have been struggling to prioritise for years. First, there is the fact that historically the authority has given low priority to investing in systems. This has led to us operating outdated financial systems. Appendix 1, supplied to the IMD in January 2011 also in the context of the peer review, gives more detail of this. The authoritys concentration of resources on front-line services and the lean and mean approach to support services also meant our staffing resources, at the best of times, were lower than any other unitary authority. This weakness of the corporate centre was recognised in the 2009 Corporate Governance Review, with a specific recommendation to strengthen central support services. The finance service has responded to its lower resource base by ruthless prioritisation of only essential functions, meaning that many things which we would like to have done did not reach the top of the list. The Peer Review arrived in 2010 when the service had been weakened even further both by the loss of 3 key staff and additional requirements on staff that remained driven by the Recovery Plan and other initiatives from the IMD. We have to admit that in 2010 the finance service had been driven close to failing (and the time spent on the peer review and responding to it became part of the burden), and this has led to even more ruthless prioritisation, but we have not given up striving to recover. Better evidence of how our resource base compares with others has become available to us since the peer review was completed. As part of the collaboration on support services for North Wales authorities, information on Finance and other support services was collected and validated from six North Wales authorities (Appendix 2). This shows that the size of the Finance service is not just small because we are the smallest authority, but it is even smaller than that in terms of a per capita population comparison.

Therefore when the peer review team found failings, or things not done, we would have liked them to consider whether we had prioritised reasonably and whether, overall, the total outputs of the service were reasonable for the total resources available. We can readily agree that we would like the service to have done some things better, but the reality has been that we have needed to concentrate on the highest priorities and risks. We would have liked the peer review team to have commented on the level of resources devoted to the finance function, or at least to comment on relative priorities adopted within the fixed level of resource. We would also point out that one member of the Peer Review Team had extreme idealistic views of the role of the service and its capacity to respond. His view is that Finance should just do what the services ask for and should set targets for responses to reports and consultation at one day. We are not resourced to do that and this is not the model we use at Anglesey, where we have tried to balance corporate and service needs. The Anglesey Manager model is about reducing dependence of service managers on corporate and support services and the challenge for the future is further reduction of dependence and streamlining and standardisation of processes. Current regulators recommendations require prioritisation of statutory responsibilities which will further squeeze resources to support frontline services No consideration of what we have done well Leaving aside the criticism, what have we done well in finance? The financial health of the authority as a whole is good IoACC always low Council Tax, good performance Always had a good financial standing verdict from auditors reserves per head of population actually one of the highest in Wales (2008) Despite much-publicised corporate governance and member conduct issues, always achieved agreed budget on time and without unresolved issues Avoidance of financial crisis Until problems of 2009-10, high standard of financial accounts used as a model by others Early adopter of Audit Committee in local government

Examples of innovation and entrepreneurship in the Finance Department, or in encouraging and supporting others to be, are Supporting the HRA business plan, where by not going for stock transfer and undertaking unsupported borrowing, we are out on a limb - but where experience is showing this was sound judgement Undertaking the Penhesgyn electricity generation project on balance sheet financed by unsupported borrowing, when the safe option might have been to franchise the right.

Being open-minded and pragmatic on the purchase and internal financing of Gritters and Highway Depot Encouraging and supporting the internalisation of the building cleaning service, going against recent trends, but which did result in savings Supporting the use of the Private Leasing Scheme for otherwise homeless tenant again where Anglesey has taken a bold stance compared to other authorities, but which has had long term benefits for the tenant and fro the authority Encouraging and supporting innovative and collaborative procurement for transport, which brought significant savings Assisted Social Services in removing inefficiencies in home care working reducing costs without affecting service. Supporting social services in the approach to private residential care home providers. This has been a risky area for many authorities but our approach to the toolkit an disuse of top-ups enabled the service to agree a three-year deal from 2008-2011 which has since been rolled forwards. Innovation in the internal audit management contract, which has gone against traditional service delivery models and delivered a better service The purchase of Graigwen. This has since been a controversial issue, but in fact Finance enabled moving ahead with an innovative and opportunist proposal. The subsequent controversy and the blame culture surrounding it perhaps suggests that we would have had every reason to have avoided, but the financial case was good and it still was the right thing to have done. Accepting electronic submission of supply teachers time sheets. This is an example of innovation that we would have done, making some efficiency gains, but for the conservatism of the client service who decided not to move ahead.

Specific comments on text of report Text of report (second version) Comments (DEW/EWT)
excluding summaries, appendices, diagrams and footnotes

Our approach
1. The WLGA was commissioned by the Interim Managing Director of the Isle of Anglesey County Council (hereafter Anglesey) to undertake a financial peer review of the organisation; this We understand that the WLGA peer review initiative has been well received at many other authorities. We understand too that it can be tailored to the requirements of individual

commission was made with active support of Cllr. Tom Jones, Executive Member for Finance. It is a part of a national initiative aimed at supporting Welsh Authorities in their preparations for the expected financial challenges of the medium term. 2. There were a number of specific issues that the Interim Managing Director wished to see addressed within the review and a detailed terms of reference was agreed between the WLGA, The interim Managing Director and the Corporate Director (Finance) at Anglesey. These are attached at Annex A but in summary it was agreed that the peer team would comment upon, and make recommendations where appropriate, in the following areas. * The level of financial control within the organisation and the manner in which this is discharged * How the Finance Department plans for the future and supports departments in delivering change * The way in which Anglesey identifies, manages and mitigates its financial risks * The way that it delivers value for money through effective and efficient financial management; 3. In undertaking this review and in order to arrive at their conclusions the team will consider: * The structure and culture of the Finance Department * The systems and processes that are in place to manage and monitor budget allocations and spend * The systems that support the achievement of Value for Money and a devolved management structure. 4. The Peer visit was an intensive review of the authority during which time the team engaged with:

authorities, and that tailoring for Anglesey appears to have made it more of a review of the finance service than is the case elsewhere; it does not appear to have created the positive impression of other authorities reviews.

The Corporate Director (DEW) was consulted on the draft terms of reference and made comments, some of which were taken on board. At no stage was DEW asked to agree the terms of reference, and did not.

* Informal Executive / Interim Managing Director/Corporate Directors * 1-2-1 interviews (finance / corporate / social services / education / environment and technical services) 26 people * 4 workshops (frontline staff / middle managers / scrutiny members / finance staff) 54 people

Contextual position
5. Anglesey is an Authority that has had a turbulent recent past and is currently subject to ministerial intervention. Its Interim Managing Director was an appointment of the Minister for Social Justice and Local Government and alongside this intervention there is a Recovery Board supporting the Authority, also appointed by the Minister. 6. However, the Peer Team found that recent stabilising political changes augmented by positive and determined leadership from the Leader and the new alliance leadership group within the authority as a whole helped ensure that there had been a positive response to the Recovery Board and the initiatives and ideas that they had suggested. One of the most important was the positive response from the scrutiny members and the new approach to the scrutiny function. 7. Whilst there has been a great deal of attention on the political side of the County Council, it is acknowledged that the officer side and the corporate centre need strengthening. With regards to the financial context and the forthcoming challenges facing the Authority, the formal adoption of the Strategic Priorities is an important step in the A key context to the review is the recognition in the Corporate Governance inspection that central services at Anglesey were weak and needed to be strengthened. See general comments on Resources above. This has not been adequately acknowledged or recognised by the Peer review.

Authority being able to make the difficult political decisions in the future. Notwithstanding such positive steps, many of these are in their infancy and to be effective the Council needs to accelerate its change programme in its corporate working and in Finance in particular. 8. The adopted Medium Term Financial Strategy (MTFS) incorporates estimates of the financial challenge and is allied with the emergence of the Affordable Priorities Programme which embraces a range of cost reductions, service modernisation and difficult decisions. These provide suitable building blocks in place to support a coherent approach to the financial contraction that is expected in the next Comprehensive Spending Review Period. 9. Within the operational management arrangements within the Council, the Peer Team were heartened by the emergence of the Anglesey Manager. This establishes the fundamental managerial responsibilities expected within the organisation. It also goes further in making explicit the relationship between public service delivery and support functions within the Council. 10. Within the organisation, the Peer Team were struck by widespread positive officer and Member approach to change and critically for this review and report a positive recognition amongst finance staff of the need for change.

Financial planning to deliver priorities

11. The Peer Review Team considered

the way that the Finance Department was planning to deliver the Authoritys priorities through sound financial planning and playing a full part in the organisation through proactive financial strategic leadership. 12. The Authority is in a position whereby it is facing the future from a stable (if not strong) financial base. This will allow it to take structured and informed decisions. The adoption of Strategic Priorities and the Medium Term Financial Strategy puts in place a framework through which the authority can work, identifying options and assessing different consequences. However, the Medium Term Financial Strategy was not a sophisticated document and whilst there were two broad brush scenarios (bad and really bad) included within there was no evidence that a range of different scenarios within the different elements had been considered. It is assumed that reference to the Medium Term Financial Strategy are to the Medium Term Revenue Budget Strategy which is what the strategy eventually adopted by the Council was more accurately called, although we had used the other term earlier. No, it is not sophisticated, but we hope that is not meant to be a criticism. The aim always was to produce a simple high-level document. DEW had reviewed a number of other authorities examples and concluded that complexity was something to be avoided, especially in relation to getting members ownership. The linkages with other financial documentation at the end were meant as a signpost to other parts of the strategy for the interested reader. The same strategy (i.e that adopted in March 2010) had also been reviewed by PWC and a copy of their assessment was supplied to the review team. The PWC assessment was generally very positive and the Peer review have given no reasons for arriving at a different conclusion. This issue had not been discussed with us during the review.

13. The two broad-brush scenarios that have been discussed with Members were based on the Finance Departments understanding of the potential consequences of the Westminster Governments Comprehensive Spending Review.

We disagree fundamentally with this paragraph which appears to be based on the review teams view that Angleseys forward projections of the funding situation were not pessimistic enough. The projections extant in October 2010, the time of the peer review visit, were not quite as pessimistic as WAG and WLGA

These scenarios would always be predicated on the outcomes for the Welsh funding block rather than local governments place within it.

projections at that time. Anglesey did not set out to disagree with any national projections, but our projections can be traced back to May 2009 in response to the UK Budget that spring, at which point a clear deterioration in public spending was evident and the projections used internally at Anglesey then were more pessimistic than other authorities were using. It was only later in 2009 that WAG began using their 3% cash reduction scenario and WLGA/SOLACE started issuing draft projections. We would claim that Anglesey was ahead of the national position in preparing for the deterioration to come. Agreed. We had made projections about the WAG block, based on UK government figures for their allocation to WAG and respected independent commentators analysis of these. When we found that WAG themselves later made more pessimistic assumptions, and these themselves deteriorated following the election of a new UK government with different spending projections, we reviewed and rechecked our assumptions. We discussed these different assumptions with the WLGA and modified our projections. Nevertheless these still confirmed that WAG itself was making worse assumptions than were supportable from published UK figures, and Anglesey projections remained not quite as pessimistic as WAGs. At the time of the Peer review the announcement was expected but this comment (draft received in December 2010) is written with the benefit of knowing the actual settlement. We can now confirm that Anglesey projections were in fact closer to the actual

Whilst early analysis and the actual announcement confirmed that the Welsh revenue settlement was not as severe as the three year / 3% cash reduction that was the Assemblys planning assumption

outcome for 2011-12, as they had also been for 2010-11. no local authority can have additional We had not claimed additional insight in insight as to the funding allocations with to funding allocations within the the Assembly budget. Assembly budget. Where we had made assumptions about how local government would fare within the WAG total, we did so only on the basis of what WAG had said publicly about their priorities as indeed had the WLGA. The risk for Anglesey is that the Finance Departments analysis understates the potential exposure to revenue contraction, Indeed. In presentations to members and officers on the budget outlook, we had always taken care to make it clear that these were central projections and there were far worse projections around including the WLGA/SOLACE figures which we had quoted. does not take sufficient account of The medium term plans included existing and additional budget pressures projections on revenue growth in adult (especially on adult social care and social care based on projections from special education needs) the department which the Finance department had encouraged them to develop and sought to ensure members allowed for these pressures (when previously they had been unsympathetic). On special education needs, Anglesey is already the highest spender in Wales and there was a degree of consensus with education that the aim should be to contain the budget within the current level, not to build in more increase. Internal presentations on the deteriorating budget position from 2009 onwards emphasis that the downturn was unprecedentedly bad. In the worst cuts scenario in current staffs careers, complacency didnt come into it. As noted above, we also emphasised the downside risks. But we also wanted to avoid crying wolf and to create trust in our members and officers that we were giving them our best projection, not an exaggerated version. In consequence of the foregoing

and creates a false sense of complacency within the organisation.

comment, we maintain that paragraph 13 is based on a thorough misunderstanding of how the financial projections used at Anglesey had been developed and used. The review team had not actually asked us about these projections, except very superficially, and we do not see that can have any evidence to support their contentions.

14. The Medium Term Financial Strategy is weakened as a corporate document by a lack of clear ownership and responsibility for the delivery of specific savings. This procedural weakness is exacerbated by the fact that planning assumptions appear to be reliant upon 100% of savings being achieved within their attributed timescales. There is clearly a high risk that this may not happen and the team believed that this should be more clearly identified as a risk. Within the more positive of the two scenarios developed within the Medium Term Financial Strategy (10m funding gap l over 3 years) there are 4m of unidentified savings. This allied to the potential risks associated with achieving the identified 6m creates a critical risk. The Peer Review Team understand that the Finance Department engaged with service and corporate colleagues in establishing the savings figures identified within the savings plan but this was not done in an open or transparent way.

This is fair comment and supports the direction in which the IMD and the Finance Department were moving the authority.

What eventually became the Affordable Priorities Programme began from discussions at officer level in autumn 2009 about the potential for more severe budget cuts than hitherto. The outcome of these discussions was run past Executive members in informal session in late 2009, which resulted in further adjustment as to what was deemed politically tenable. These initial discussions were not in the public domain because there were sensitivities over proposals which might entail, for example, job losses, when these had not yet been fully worked up. The public consultation run in February 2010

The Peer Team would expect to see the Medium Term Financial Plan as a deliberate document with assumptions / scenarios / sensitivities explicitly stated within the document.

(referred to approvingly by the PWC review of medium term financial planning) did go public on the extent of the programme, and in some detail. There have been further iterations of the programme since in response to both consultation and further work on the detail. We fail to see how the review team found this process not to have been open and transparent when they have not asked for evidence of what was done, nor discussed these issues in any detail with us. Assumptions, scenarios and sensitivities had been outlined both in informal presentations to members as budgets were developed, and spelt out more formally and openly in reports to the Executive and full Council. The Medium Term Revenue Budget Strategy adopted by the Council in March 2010 (and again in 2011, since the review) summarises the main assumptions. We maintain that this does fulfill the Teams expectations we cannot be sure they have seen this evidence. The general point is accepted. This was work in progress at the time of the peer review visit and the point will help us move this forward within the authority. The issue about the APP Board not having met by the first week of October the time of the peer review visit is rather trivial. The idea of setting up such a Board had only recently been conceived and it had only been created by resolution of the Executive the previous month, part of the project management initiatives driven by the IMDs office. I dont think the authority can be criticised for not having a meeting of the body before it had been conceived.

15. The Corporate Director (Finance) has taken on the Senior Responsible Officer role on the Affordable Priorities which will be a key part of the Councils response to the financial pressures and it is positive to see Finance taking a key role in this area. However, there was not a strong sense that this was owned corporately; with responsible officers not clearly held to account to deliver a clear programme of delivery of the individual work streams. It is now important that the programme is driven as a coherent set of projects to deliver an owned strategic outcome. There was evidence that despite the Lead role taken by the Corporate Director (Finance) this had not led to sufficiently increased momentum, awareness, ownership or accountability to the

Strategic Leadership Group or Executive. At the time of the visit to Anglesey there had not yet been a Members Programme Board of Affordable Priorities. The Corporate Director (Finance) should develop the programme infrastructure by taking the offers of support from the Managing Directors office and drive the programme with pace and certainty. 16. Notwithstanding a number of staff briefings across the Council, there was evidence in the staff workshops that the programme was not well understood or even recognised, that communication and feedback was erratic and that decisions were made without explanation. This is an example of the poor communications that existed between the senior managers of the Finance Department and the staff. A poor level of communication within the Finance Department was also an issue identified in the employee survey completed in January 2010.

As to offers of support we can only ask the review team what evidence they have of such offers. We did not find the IMDs office as being always supportive in this direction. In fact we have evidence of the IMDs office blocking access by Finance staff.

The perceived lack of awareness of Affordable Priorities is puzzling, given how much authority-wide communication and finance department cascading there had been on the point. However there was a different agenda being driven by the MDs Office and there was some frustration on the mixed messages around that. For the Peer Review, we had been asked to arrange for the staff workshops a cross-section of Finance service staff, which therefore included a majority of staff engaged in transactional processing i.e. not just the accountants who would have been more involved in the budget savings programme. This initiative had been begun by the Finance Department in 2009 before the IMDs arrival and only later rebadged as Affordable Priorities Programme. It is possible that if staff claimed not to have heard this terminology, they may not yet have internalised the new jargon. We can provide evidence that the accountants had been involved in the challenge of individual projects. They were concerned that the basis of the work in the MDs Office was not robust and not detailed enough and that information was slow to be shared with

them. There were poor scores on communication for the authority as a whole in the staff survey as a whole. The Finance Service scored no worse (although note that the Finance Department has a whole reflected low scores in ICT) 17. In creating a Medium Term Financial Strategy, the Council has taken an important first step in developing a key corporate document. However, in order that the Strategy is more than a document written for a specific moment in time in must become far more integrated with the range of other supporting strategies that should exist within the organisation. 18. The Medium Term Financial Strategy should have clearly articulated links to the organisations workforce plan, its IT strategy and the Asset Management Plan. The Peer Team felt that whilst all of these strategies were embryonic it is important that the links are made early in their development. This will further strengthen corporate centre working to best support service delivery to the citizens of Anglesey. [Figure 1 was here] 19. The final area that the team considered was the way in which the Finance Department themselves planned for the future and critically how they participated in the annual cycle of business planning. The Peer Team were pleased to find that the Finance Department had completed its annual plan by the end of March 2010 deadline. Whilst recognising business planning had only recently been introduced as a The whole business planning process was a shambles in 2010. It is not true to say that business planning had only recently been introduced this was already in place at the authority in previous years. The finance service already what had been termed a Service Development Plan in earlier years, used as a basis for quarterly performance monitoring Agreed. The PWC review of medium term financial planning was positive about how the 2010 plan and stratgic priorities had been worked up together, including in public consultation. Work is in hand (since the review) to improve integration.

corporate initiative, the completion of the plan was not as thorough as it needs to be with significant gaps in the assignment of responsibilities and timescales. It looked as though the plan had been completed in isolation and this view was reinforced when only 3/16 finance staff who took part in the workshop said they had seen it or were aware of its development.

amongst other things, and this was underlain by plans for teams within the service. The 2010 initiative was a revamp of the process. Services were asked to prepare drafts by end March on the understanding that there would be some feedback on these, plus an attempt to identify and resolve issues between different services plans, before these drafts would be revised or accepted. The initial draft was accepted by the IMDs office as fulfilling expectations at that time, and further feedback was promised. However this feedback was delayed and in the end the exercise was abandoned corporately. The fact that the plan was in draft awaiting feedback had held up its completion and dissemination. The IMDs initiative had in fact set back the process of planning within the finance service. However the completion of the plan for the finance service as whole should not have meant that individuals within it were unaware of the expectations of them because of the other arrangements in place.

20. This low level of awareness could be linked to the lack of an appraisal process within the Finance Department. Given that the corporate business planning process has been a recent development, the very low staff awareness suggests that there was potentially no business planning prior to October 2009. It was not clear how the staff had been involved in the preparation of the business plan, or how other departments had been involved in setting out their requirements on Finance. The Finance business plan provides an opportunity

As noted above, corporate business planning was not a recent development. October 2009 should not be considered a watershed. In 2009-10 and earlier years the Finance Service had a Service Development Plan which was substantially the same in overall content as the business plan, and from which the business plan was developed. The SDP also included a Risk Register which was dropped from the 2010 corporate version.

to help assess priorities and get things done within agreed timescales; but it must be used to help define, communicate and drive the business or else it will be just another document to collect dust left on the shelf.

Understanding costs and delivering value for money

21. In order to effectively plan for the future and to deliver a sustainable and fair series of decisions within a constrained financial envelope, it is important that any organisation understands its cost base. The Peer Team sought evidence that this was happening in Anglesey. 22. The emergence of the Affordable Priorities programme demonstrates a strong link between the service reform agenda and the financial challenge. This is a positive development. The Peer Team also identified positive evidence that the Council had contributed to the development of regional service solutions to reduce costs and enhance service provision. The Peer Team were also pleased to note that the Finance Director had been heavily involved in the development of the business cases for collaborative Waste Management in North Wales. 23. However, there is no driving, coherent view of value for money to underpin the financial strategy. During their visit the Peer Team were not able to find evidence of a comprehensive approach to benchmarking costs. The Authority has submitted a data set to the Local Government Data Unit as a part of the Measuring Up project and comments on their performance can be found in Annex B. This is the first year DEW had been involved in the Waste Management project but didnt claim it was heavily.

The general point is accepted; the authority as a whole does not have a culture of comparison and benchmarking. The finance service would like to be able to support this activity but with its general low level of resources (see general observations above) has so far been unable to do so. One of the bids for resources submitted in 2010 would have enabled the service to provide more support in this

that the Measuring Up data has been collected in Wales and inevitably there are some gaps in the data both locally and nationally.

direction; resources have not to date been released. There are of course limitations to the extent that simple number-crunching is truly informative. The same could be said of the Measuring Up exercise. We were led to expect from the terms of reference that the Peer review would include something informative from Measuring Up and this paragraph refers to comments on their performance but Annex B is simply a list of figures and does not include any comments. Measuring Up is a new initiative and results only became available in the week of the peer review visit. We are aware from subsequent work done by accountants across North Wales that there are reservations about the comparability of some data, and there must be some doubt about reliability until these can be resolved. The Annex adds nothing and should be omitted.

24. The understanding of costs was See above comment tested with the service managers that were met as a part of the review and the Peer Team consistently found that managers were unaware as to how their service costs compared to others. 25. The Peer Team were unable to find evidence that suggested that Value for Money is at the heart of all of the Councils activities. This represented a key weakness for the Peer Team. Throughout the organisation there was a sense that responsibility for financial savings and efficiency was the responsibility of another department or individual. There was a strong view amongst the Peer Team that the explicit commitment to achieving Value of Money especially in the current climate should be writ large in all key See above comment but we suspect also that the Peer teams expectations have been conditioned by expectations which apply in English local authorities but not so far in Wales. Even the IMD recognised this was not particularly relevant and did not want it included in any action plan.

strategies. 26. The Peer Team also found evidence that where investments or improvements had been suggested, the business case building processes within the organisation were not as robust as expected. This reinforced a culture where there was a reluctance to take decisions and make changes. What was this evidence? Where do the expectations as to robustness come from? What leads to the conclusion about culture? Without these details it is difficult to respond to the assertions.

Financial reporting: Revenue and Capital

27. The Peer Team interviewed 11 Directors and service managers and was struck by the common message that emerged from the group. Across the range of service areas there was a real sense of dissatisfaction with the standards of financial management information that service departments were receiving. 28. Monthly financial reporting has been required from the beginning of the year as a corporate priority, yet there were multiple examples of Service Managers still receiving information on an irregular and untimely basis. This was in two senses; the information was provided quarterly which the Peer Team (and several Service Managers) felt was not sufficient given the need to manage budgets more effectively, and the information took several weeks (at least three weeks) to prepare post period end. We were told that to the end of period 5 (the end of August), only two monthly reports had been produced and that they are produced if there is time. This is factually incorrect. The corporate priority set by the IMD was to have monthly reports to the Executive (which were to be brief, high-level and riskbased), NOT to have monthly reports to service managers. This was explicitly agreed by the IMD in 2010 and confirmed again in 2011.

This attitude is of great concern both in its disregard of a corporate requirement and that in this period of financial contraction monthly budgeting monitoring is an important tool to manage costs and understand spending profiles. This is especially pertinent given the historical problems of overspending in adult social care and current pressures in Education.

See comment above. The peer review team have misunderstood the corporate requirement and may have substituted their own expectations.

But when the historical problems arose in social care, we stepped up the level of financial monitoring, both to the department and to the Executive. Current pressures in Education were also being responded to in a similar way. We have worked with service managers to develop workable mitigations for the failings of financial systems to enable such monitoring to be done.

29. Alongside the issues regarding the timeliness of data there were significant concerns regarding its usefulness. In key spending services, such as Childrens Social Services, there was a lack of commitment accounting. This significantly compromises the ability of service professionals to manage their volatile and high risk budgets but also allows for significant fluctuations to be monitored within and between periods. Another service department had to employ two extra staff to provide the budgetary information they needed in addition to that provided by finance. 30. The Peer Team also reviewed recent revenue monitoring reports to the Executive. It is acknowledged that these were quarter 1 reports and early in the year but there was an absence of corrective action identified and forward projection. The Peer Review Team would recommend that reports that cover over & under spends should also include actions to be taken to redress the current position and a named individual responsible for that action. 31. The mitigating factor against some of the flaws in the way financial management information was managed

We do not believe is the case. Which department is this meant to be and who are the staff? Without this information we cannot challenge the assertion. A look at quarterly reports for other quarters would, we believe, readily confirm that we are reporting projections where relevant, identifying actions and accountability, usually as agreed with relevant budget holders. The MD has been of the view the reporting of reasons should be primarily the job of the budget holders, although in practice the finance reportsinclude a collation of what budget holders report.

was the existing good relationships that exist between service departments and service accountants in many, but not all, areas. There were examples of good practice where new accountants had made particular efforts to ensure that the information they provided was timely and useful. 32. Strong financial management reporting is vital to sound and effective financial control this becomes even more important in a period of reduced budgets. The position of the service departments summed up by a Director who said I want the responsibility, capacity and expertise to manage our budget. This quote demonstrates three key factors that the Council should focus on correcting. * There is not a clear understanding of what devolved means in relation to financial budgets within the Council. This is required to tackle to the question of responsibility. (It could also be suggested that this lack of clarity also undermines the corporate approach to Value for Money as indicated in para 23) * Where there is an ongoing lack of clarity regarding the division between central finance and services, there is a need to create additional capacity We fully accept the Directors quote, which sums up what we are all striving for.

* There needs to be greater levels of financial expertise amongst the management cadre 33. Many of these challenges are tackled by the introduction of the Anglesey Manager which this report considers in para 53. The Peer Team also noted, encouragingly, that there was recognition amongst finance staff

The Anglesey Manager approach is fundamental to improving this clarity, where we believe many budget holders are too dependent on the centre. Improving the clarity will help but will not remove the need to create additional capacity. See above

that the reporting requirements needed to change. Notwithstanding the detailed comments above, we fully accept that financial reporting falls short of the ideal, and that the authority and the finance service should invest in their improvement. At the root of the weakness is a lack of resources, first because members in the past had been unsympathetic to our need to invest in modern financial systems, and secondly because in 2010 we have been hit very hard by loss of experienced staff. The Finance Team deserves some credit for the way in which we had prioritised these scare resources and achieved reasonable outcomes for financial management of the authority. For example, although we have a predominantly quarterly pattern of financial reporting (which itself is not unusual among comparable authorities), we are not aware of evidence that this has led to over/under spending problems but where a higher risk has been identified, we have given priority to more intensive monitoring.

Managing risk and Financial Control

34. The new Overview and Scrutiny arrangements have help provide a much needed impetus to the challenge and accountability for the Council to progress. However, it has felt impeded by a lack of information flows, e.g. the publication of the Councils Budget Book for 2010/11 only made available in September 2010. We agree that the investment in support to scrutiny has improved the depth and quality of challenge. To date, there has not been the same investment in our capacity to respond to such challenge, and that has created a problem for us (and other services). At least up to the date of the Peer Review, we did not feel that the scrutiny function had asked for any such information: we would have endeavoured to respond. All Services receive their budgets at a more detailed level and in spreadsheet

format and the traditional Budget Book is less in demand: we now produce them in fewer numbers and with lower priority than in the past and with little discernible complaint. Finances expectation would have been to work with Scrutiny members to support them in their deliberations not to have them work in isolation and dependent on dry documents.

35. There is a fundamentally underdeveloped approach to the management of risk and this impedes the authoritys ability to face future challenges. The importance of completing a corporate risk register and for risk management to become an essential part of the Councils decision making process has been highlighted for many years and in many audit and other external reports.

Agreed the Finance Department has for several years been agitating for the need to develop wider aspects of risk management, for which an additional resource would be essential. Until 2010, we had failed to persuade successive Managing Directors of the need to do this. Up until 2010 the lead responsibility for doing so was in the MDs department but it was agreed in 2010 that Finance would take on this lead role and bid for resources. That bid was supported by the Executive (July 2010) but the IMD did not release the funding, and indications later in 2010 were that he saw this as a lower priority than other recovery initiatives. The insurance/risk manager post within finance is fully occupied in operational risk management and the job description does not encompass these roles. A review commissioned from the Councils insurers indicated with Anglesey was under-resourced to carry out that operational function alone within the current level of resource. It was clear that the risk register would be prepared when the resource already confirmed by the Executive was released.

Even with a dedicated risk officer within Finance, there is still no clarity on when the corporate risk register will be produced and what improvement programmes have been established so that the external auditors requirements are satisfied.

This may help explain why a third of recommended improvements are still

outstanding and are to be implemented.

The Structure and culture of the Finance Department

36. As noted throughout this report, the Peer Team found several instances where the contribution of the Finance Department and the leadership of the department did not meet expectations either of the corporate centre or of the service departments within the Council. This section of the report is concerned with identifying the structural and cultural issues that the Peer Team found are contributory factors to the performance of the Department. Expectations are difficult to define. The reference to expectations of the corporate centre really refers to the expectations of the IMD after all, the Finance Department is itself part of the corporate centre. It became evident to us that the expectations of the newlyarrived IMD were different to the expectations we had been working to hitherto and we sought to adapt to these, but they were not always communicated well or consistently. There is some evidence that expectation of senior managers differ widely. In DEWs 360 degree appraisal conducted in June 2010, the anonymised feedback from senior manager peers shows one of them giving low scores when others give high scores on the same criterion. It is always difficult to meet all expectations when these may be different from one customer to another we believe the peer review team has given undue weight to the different expectations of one. 37. It should be stated at the outset that the Peer Team were encouraged, when undertaking the review, with the positive attitude of many of the finance staff interviewed and/or involved in workshops. As described above in para 31 there were examples in several service areas of positive relationships between the service managers and their accountants. There was also a very clear understanding in the group of finance staff that the Peer Team met

that there was a real need for change in the way that they provided their services. 38. The workshop held with finance staff was a very useful addition to the normal Peer Review timetable. The Peer Team undertook a workshop exercise with the group, asking them to imagine where the Finance Department was in relation to being an excellent department they were asked to provide one positive reason and one negative reason. They then placed these post-its on the Finance Mountain. Figure 2 below is a picture of the output of the Finance Staff workshop. It shows an acknowledgement that the Finance Department is not currently performing at the level it needs to but that there are many positive things to build on. There were three very clear themes emerging from the workshop. i) The finance staff are a very close team with a strong sense of professional responsibility and commitment ii) Managerial communications was identified as a key issue in need of improvement by nearly half of those attending the workshop iii) Shortcomings in managerial practice was cited by a high number of participants as an issue; (with individuals citing including issues such as)a lack of guidance / authority & empowerment and providing a reactive service [Figure 2 was here] 39. The Peer Team found in all of the areas reviewed (Financial Planning, Financial Reporting, Understanding Costs, Risks and Financial Control) the We do not understand how the evidence of Figure 2 leads to the conclusion reported. Given that this was something added on to the normal review, can the peer review team be confident of drawing such conclusions from this picture?

structure and culture of the Finance Department did not meet their expectations of a modern, effective support function. 40. There was evidence that the leadership culture within the Department placed an undue emphasis on accuracy and complexity rather than timeliness and accessibility. This message was identified in the middle managers workshop, the finance staff workshop and the interviews with service managers themselves. This was also observed by the Peer Team in how the organisation undertook its financial monitoring as set out in paras 33-37. The trade-off between accuracy and timeliness is always with us and it can be difficult to meet all conflicting demands. If we have placed too much emphasis on accuracy it may be a result of the authoritys blame culture and the scars we bear from brutal criticisms of the past. The IMD, who would refer to the 80/20 rule, did influence us more in other direction, including at the time of the Peer review. We are always aware of the balance to be struck, and seek to be clear, when reporting, whether we are being timely but inaccurate, or precise if tardy. We would question complexity, and cite in reponse the positive feedback we have had on our financial reports as being simple and clear. There has been frequent praise from elected members, generally good feedback from external audit and indeed in discussion with members of the peer review team itself. Ian Bottrill, a former leader of Warwickshire County Council and a consultant engaged by the authority, referred at a March 2011 budget workshop to an Anglesey budget report being the best he had seen. 41. During the visit there were suggestions from key stakeholders that the Finance Department was too risk averse and cautious in its approach to decision making creating a block to new ideas and innovation. This cultural point is linked to the Peer Teams views about how the Finance Department (and the organisation as a whole) supports and delivers value for money and understands its cost base. We would like to know more about these suggestions so that we can respond to them. There may indeed be cases where the input of the finance department has resulted in initiatives being reconsidered or not going ahead but if our input was correct and appropriate, that could have been the right outcome for the authority. We were not asked for any response to such instances.

Neither were we asked about instances where we have been innovative or risktaking, either ourselves or in support of others, nor about the instances where our innovation has been stifled by others. This is a key conclusion of the report which is based on no more than selective hearsay. Bear in mind too what has been said at paragraph 35 about an underdeveloped approach to the management of risk. If Finance are on occasion more challenging, that is perhaps an attempt to compensate for the weakness of the risk management framework generally in the areas where our professional background gives us insight into some risks. There were specific concerns raised about the Councils lack of use of Prudential (unsupported) Borrowing and how that potential could be used to a greater extent. The Peer Team are not able to comment specifically about the use of Prudential Borrowing but would stress that any decision would have to be fully costed and developed and represent value for money. Who raised these concerns about use of unsupported borrowing and what were the concerns? We were not asked about the use of unsupported borrowing, and would have welcomed a chance to discuss this. There is in fact extensive use of unsupported borrowing in the Housing Revenue Account, and, for example, the 1m spent on the power generation project. At around the time of the peer review, the Corporate Director was encouraging members to assume more use of unsupported borrowing in support of the capital programme, but finding some members over-cautious in their attitude.

42. This issue links strongly to the broader concerns of the Peer Team that the Finance Department is not acting as

The middle sentence looks like a criticism but we dont understand what it means or could refer to.

an enabling support function for the organisation. There was some evidence to suggest that the Finance Department adopted an observer status in developing solutions. In the current, and worsening funding climate, service professional working closely with finance professionals will have to be more proactive and entrepreneurial to meet future challenges. 43. The structure and form of the Finance Department was also found to be having an impact upon the way that it interacted with the service departments. There were suggestions that there was a high rate of turnover in the Department but when this was tested with the HR department it was clear that the turnover within the department was lower than the organisational average. The issue was that following some departures from key posts the Finance Departments management had not moved quickly enough to fill the vacancies. As a consequence there were unplanned gaps in relationships with key departments and important corporate responsibilities had been spread amongst the remaining staff. These gaps in the structure are having a significant impact on the morale of the finance staff e.g. the lack of clarity on interim arrangements and the plan to fill vacancies such as the position of the Chief Accountant. In some instances; this is being exacerbated by the use of agency staff and the loss of continuity and experienced expertise. 44. The Peer Team believe that, with a growing dependency on agency staff to fill key roles is an unnecessary cost to the organisation, the business case for full time replacements should be made immediately with the filling of the key

We would contend that the corporate centre and the role of Finance within that has been deliberately weakened by the IMD.

We agree that vacancies should have been filled more quickly. The failure to do so cannot be laid entirely at the door of Finance Department management. At times in the past (and some of the feedback from staff will relate to this) we had been blocked by members from filling posts, or felt intimidated from doing so. One of the IMDs reforms was to remove the members role in this respect, and that has helped more recently. There have been times when we have recruited but failed to attract any suitable candidates. This was not discussed with Finance Management and we could have provided evidence.

Following on from the foregoing comment, we have in fact found that agency staff are the most effective way of recruitment to cover gaps in technical skills.

finance posts filled without further delay. The cost is not only financial but the core staff have to spend time briefing the agency staff and the ensuing lack of continuity potentially places further strain on the delivery of a financial service to the service departments and the wider organisation. There was a suspicion and mistrust amongst the finance staff that vacancy drift was being allowed by management to cover the costs of agency staff. 45. The evident challenges to delivering an effective service whilst operating with a reduced complement of staff were further exacerbated by the management culture within the Finance Department. The Peer Team was unable to find evidence that staff felt empowered to take decisions or resolve problems without reference to the Department s hierarchy. Finance staff described the apparent bottlenecks at the Head of Finance and the Corporate Director (Finance) levels for issues to be cleared and addressed.

We dont really understand what is meant by the last sentence.

Certainly it has been the case during 2010 that DEW/EWT have needed to get involved in issues that we would rather were delegated downwards, but this has been largely because of the level of staff vacancies which the report acknowledges, and in some cases because we had relatively new staff in some roles. We are rapidly developing them to take on more of these delegated roles. It is very often our customers in other services who want our personal involvement rather than delegation.

46. This Peer Review does not seek to blame or otherwise, but the overdependency to the top two Finance professionals reinforces the concern raised that the Finance Department acts in a traditional hierarchical way not empowering its staff and being too risk averse in the way new ideas are considered. This dependency is reinforced by the gaps in senior finance posts 47. During the course of the interviews and workshops, the Peer Team sought to understand the causes of the poor

See comment above This is not consistent with the with findings of the staff survey which showed the Finance service staff scores empowerment and trust being better than the average for the authority..

The issues about pay levels are not just recent. Over a decade we have lost experienced accountants to other public

recruitment and retention within the Finance Department. There had recently been issues around the levels of pay within the Council, particularly when compared to that which was obtainable in other organisations, such as Cartrefi Cymunedol Gwynedd. However, there were also clearly underlying concerns that the management culture and style within the Department and the burden on individuals following staffing departures was also a cause.

sector employers in the local area paying considerably more. Cartrefi Cymunedol Gwynedd was only the latest example. Benchmarking against our neighbouring local authority shows a significant gap in pay for comparable posts at senior levels. Increasing the rates of pay to competitive levels would present dilemmas. DEWs dilemma is that it would have entailed breaking with the principles of the Salary and Grading Review where he has a corporate lead role. EWTs position is that there is no headroom to enable payment of market rates. This is not evidence but hearsay. We cant respond to such issues unless we are told what they allegations are. If they did not proceed to formal complaint they will not have been formally investigated, so we couldnt say what grounds there were. The objective is not disputed. The Peer review took place at a time of rapid change when some new corporate initiatives were still going on and had not always been well communicated or understood. We need more detail of the underlying allegations to be able to respond to these.

Further evidence of this was provided by a number of allegations of poor staff management practices although the Peer Team understands that none of these has progressed to a formal complaint.

48. The Finance Department should be a vital part of an effective corporate centre in any organisation that enables the rest of the organisation to deliver effective, efficient and economic services to citizens and communities. The Peer Team found evidence during their visit to Anglesey that the Finance Department was not meeting these expectations. The leadership of the Finance Department in Anglesey was unable to convey to members of the Peer Team that there was a full commitment (or understanding) to the corporate role. This was evidenced through the attitude towards the several corporate initiatives such as the Anglesey Manager, business planning, financial reporting and performance

appraisal alongside more operational aspects such as not completing responses in a timely fashion, not following up gaps, or not participating at all. 49. The Peer Team noted that the approach that the Finance Department took to the business planning process was typical of its broader corporate malaise. It was apparent that there was a degree of frustration regarding communication flows between the Finance Department and the Policy Unit but it was also evident that the centre offered support to complete the business plan. We do not accept that the malaise was ours see comments on sections below There was indeed a breakdown of trust and confidence between the Finance Department and the Programme Office of the Managing Directors Department, which was not confined to business planning issues. We do not believe it was it confined to the Finance Service either. However, as has been accepted at paragraph 19, the Finance Service did complete the draft business plan for 2009-10 on time. As pointed out in response to that paragraph, that draft was accepted by the IMDs office as fulfilling expectations at that time, and further feedback from them was promised, but never arrived. The Finance Department was also expecting feedback on how other services draft plans ought to affect ours; this too did not happen. We are not sure that we needed support to complete the business plan, but what is the evidence that we were offered it? This was a decision by the MDs office applied to all plans, because the process they had begun had become too complex and could not be completed within their abilities. This was nothing to do with the Finance service. As noted above against paragraph 19,

However, the lack of completion of a Business Plan for 2010/11 is primarily due to a decision to focus efforts on the 2011/12 planning cycle, taking into account learning from the previous cycle which was the first time a corporate approach had been implemented. These issues aside the Peer Team was

still unable to ascertain how, with so many gaps in the plan, priorities were set or work programme responsibilities given. This example demonstrates that lack of corporate cohesion within the central functions. The fault should not be laid solely at the door of the Finance Department but the Peer Team felt that somebody in Finance should have taken the initiative and discussed the matter allowing an important planning process within Finance and across the Council to be brought to a proper conclusion.

the finance service plan was a development of previous years plans which themselves summarised work programmes already in progress. Somebody in Finance did try to take the initiative but these were generally ignored or rebuffed. For example, we sought to move the corporate business plans process along by identifying across all services plans made available to us those matters which potentially interacted with finance, ICT or audit, or issues that we were aware of which interacted with other services plans. This was a significant piece of work for us but which was not taken up by the Programme Office.

50. One of the most critical areas of weakness identified by the Peer Team was the failure of the Finance Department to comply with certain key corporate initiatives. The most significant was a failure to complete staff performance appraisals across the whole department. At the finance staff workshop only 2 of the sixteen attendees had completed an appraisal in the last 3 years. There are significant risks of not completing regular and effective appraisals and these include; poor staff morale, failure to align corporate priorities, failure to identify staff training and development needs and failure to communicate effectively with staff. Finance, as a major player in the corporate centre, has failed to comply with corporate requirements and this undermines the position of the corporate centre. 51. The Peer Team also identified other areas where the Finance Department was not seen to be meeting its corporate obligations. Most We made it clear to the Peer Review Team that there was no reluctance to engage with the Anglesey Manager initiative.

significantly, whilst the detailed allocation of roles and responsibilities had been completed and revised by the professional leads in HR, ICT and Property/Assets, work on the Finance work stream was left undeveloped a part of this was because the Finance Department and the Corporate Centre were waiting for the outcome of this Financial Peer Review.

There were potential clashes with the forthcoming review of the constitution including Financial Procedure Rules. And there were concerns at reinventing the wheel in an area where detailed Procedure Rules already exist. However there had been no clear communication of the IMDs expectations in this regard and no response from him to draft documentation. Promised face to face meetings and facilitation did not happen. It is not clear which particular meetings this refers to, but there have been occasions when we were not notified of meetings in time, or at all. If details are supplied we may be able to explain further. These two allegations are more specific and we attempted to follow them up. We asked the peer review team for more detail (email to Will McLean, 13 October 2010) but no specifics were supplied. So we met with HR to try to find out what these alleged failings were. In relation to sickness absence our discussion with HR failed to identify what this might refer to, except for an incident four years previously, when DEW had concern over the possible misuse of sensitive personal information. The issue had not been raised between the services since that earlier incident, but in consequence of having had this discussion, changes in reporting practice were agreed. In relation to training courses the view of HR was that Finance was generally better than other services in this respect.

However it should also be noted that the key individuals from the Finance Department were not at the corporate presentation meetings. There was a suggestion that the Department had been reluctant to share sickness absence data with corporate HR colleagues, corporate rules on categorising training courses were broken.

We have to conclude that the suggestion has no evidential base. The Council has recently invested heavily in Ffynon as its corporate performance monitoring system and it is hoped that this will address some of these challenges. 52. There was a recurrent theme that the Finance Department were often the cause of late reports and this links strongly to the issue raised in para 45 regarding the bottle neck of activity at the level of the Head of Finance and Corporate Director (Finance).The comments regarding reporting were two fold. Often the Finance Department were asked to comment upon reports but because they received them (in their perception) too late in the process they would not add any comments. However, there was also evidence that direct reports from Finance were also consistently late. One interviewee cited the example of the Annual Accounts being tabled at a meeting rather than in advance. We are glad this issue has been recognised because it is very real pressure on the service. We are often placed in an impossible position when several departments consult at the last minute before a committee deadline on different matters and we have to ration resources severely while trying to complete our own reports to the same deadline. The response within finance is not dependent on any one person our internal arrangements for receiving and sharing emails (via cyllid151) allow a delegation such that one of a number of staff can deal with these. We do try to turn around comments, including no comment, as soon as we can and to indicate to authors if more time is required. This lack of clarity on appropriate timescales for consultation had already been raised with the IMD as one of the fundamental barriers to the conduct of the s151 role. He did not respond. The Finance Service reports are often late. This is very often because finance reports are about the whole authority and cannot be completed until we have input of all services. The report is as late as the last contribution, when often we are dependent on others. As for the draft Statement of Accounts, our auditors tell us that such late tabling is not unusual at other

authorities, but that (at least up to 2009) our drafts were actually more complete than many others.

53. Along with the specific examples cited above the Peer Review Team identified reluctance on the part of the Finance Department to engage fully with the development and delivery of the Anglesey Manager as a critical example of a detached relationship with the corporate centre. The Peer Review Team see the Anglesey Manager as a key building block in creating an effective corporate centre supporting service delivery for this reason alone Finance have to be on board. The Payroll Section in Finance has started to show performance against best practice standards on the intranet. This useful initiative shows how such a more open approach can help ensure better compliance with necessary deadlines and create better relationships with service departments. Whilst this may be seen as an exception, it demonstrates what can be achieved and how the Finance input to the Anglesey Manager can be quite powerful. 54. The approach in which the Medium Term Financial Strategy was drawn together also reinforces the apparent corporate isolation of the Finance Department. The comments made above in para. 13 illustrates the introspective analytical basis for the savings projection and the need for more transparent budgetary discussions.

As 51

This was, of course, at the instigation of management and in response to concerns about bullying of Finance Staff by managers in other services.

We refute absolutely the notion that the MTFS was isolated or introspective. The projections were used in a number of internal presentations to members and officers at key milestones in the budget process when assumptions and sensitivities were explained. As explained in the response to paragraph 13, the projections were iterated a number of times taking account of internal feedback and national developments. The palpable failure is hurtful and wrong. We are well aware that support services are there to support their

55. The Peer Team found that both the structure and the culture of the Department to be insufficient to meet

the demands of the organisation, be they service or corporately led. There was a palpable failure on the part of the Finance Department to understand that in essence the service departments are customers and that the service should be focused on meeting their needs.

users, although we would also comment that we have multiple customers including the general public and the corporate customer, e.g if the needs of one service conflict with the needs of another service or harm the financial standing of the organisation as a whole. Work done recently to support the authoritys recovery plan suggests that the Accountancy Team are too focused on the service and need to become more focused on the corporate and statutory role.

Wider Corporate Issues

56. With much of the work with Members at an advanced stage, attention must now be placed on strengthening the corporate centre. This includes the role and function of the Strategic Leadership Group and its Corporate Directors, the wider Management Team and its Heads of Service and the four key central support functions namely ICT, Asset Management, HR and, the focus of this review, Finance. 57. It is important that the Strategic Leadership Group in collaboration with the wider Management Team consider the significant number of corporate initiatives that are being embarked upon as part of the Recovery Plan and to bring them together into a comprehensive action plan, prioritised, resourced and with clear deliverables and timescales (SMART). 58. Whilst many of the cultural behaviour of the organisation affects the behaviour of all, this Peer Review has necessarily focused upon the Finance Department and the key role it needs to play especially with the

financial challenges ahead with the anticipated reductions in public funding in both revenue and capital.

Conclusion
In view of the above comments, we would wish the Peer review to reconsider the evidential base of those paragraphs where we have commented, and then to reconsider whether the findings and recommendations follow. Although many are accepted, we have not commented directly on conclusions and recommendations because many of these will need to be reconsidered in the light of the detailed comments.

David Elis-Williams Einir Wyn Thomas 10 June 2011

Corporate Director (Finance) Head of Service (Finance)