Culture, Media and Sport CommitteeWritten evidence submitted by Councillor Timothy Godfrey, Labour & Co-operative Party Councillor for Selhurst Ward, London Borough of Croydon

This Paper Shows

The high costs that councils load onto their library service.

The actual running costs of large individual libraries.

That by decentralisation of libraries, savings of up to 40% of budget can be made, thereby protecting front line services.

Utilising Community Co-operatives and Community trusts to engage users and communities and reduce costs.

In 2011–12 financial year, Croydon Council spent 44.78% of the Library budget on the back office.

Figures relate to 2011–12 Financial Year.

Problem in proper financial comparisons as councils only publish headline budgets. Figures in this paper are drawn from internal accounting charts.

1. Introduction

1.1 On working through the full budgets for Croydon Libraries, it becomes clear that the Current Council consultation was only looking at the very front line costs and how to reduce them. The savings achieved or achievable from the proposals are small in comparison with the overall budget. The question therefore is why? The answer is that 44.78% of this budget has been allocated to the back office. Much of it has been allocated to the large corporate contracts for IT and Facilities Management.

1.2 I have not been able to look at the whole Council, as I do not have the internal budget sheets that are necessary to see the full breakdown of how the Council spends its “top line” budgets. However IF that back office figure of 44.78% was repeated in other council departments, it becomes quite frightening.

1.3 The inefficiency is staggering. The Merton Council Briefing paper that is attached to this document sets out just how bad Croydon Council is in a simple comparator based on population, user numbers, costs per visit etc. Since Croydon is to be working with Wandsworth, another high cost borough, it might have been better to look at the lower cost model operated by neighbouring Merton Council.

2. Privatisation/Market Testing

2.1 The Conservative Council has announced an exercise to market test the delivery of the Library Service by other providers. The Council has allocated £250,000 to do this exercise in 2011–12 financial year. These providers could be charities, companies or other councils.

2.2 This completely misses the point. It misses the fact that it is our Councils duty to be efficient and spend our Council Tax in an efficient manner. Logically the Council should be doing this first before any market testing of the service, otherwise it is an open invitation for false comparisons to be drawn between an inefficient council model and an alternative provider who instantly strips out all the obvious wasteful contracts.

2.3 It is not good enough to say that the Libraries will be available to any willing provider including residents associations or other community groups because the level of capacity to produce meaningful, long term solutions is not there. The Council needs to lead on this, to provide the capacity which in term will strengthen the local community as well as the reputation of the Council.

2.4 If the Council can not manage to bring forward a scheme that builds positively on the public anger at the plans and the clear public commitment to our libraries, then it is not worthy of running any public service in Croydon. It has in effect already declared that it has failed and is on the path of privatising all Council services.

2.5 The for profit sector creams off a minimum of 5% of contract value and a usual 10–15% of contract value to cover operational profit as well as bid costs and ongoing contractual negotiations. That is profit that should be used to improve public services and maximise front line delivery.

3. The Alternative

3.1 This is a perfect time to harness the commitment, energy and the community spirit brought about by these closure plans by devolving the running of the Libraries to the professional staff and their community.

3.2 I set out below how to do this. I set out the efficient model of operation that is Upper Norwood Joint Library and why an amended version of this model could work so well across Croydon. I set out how to involve local people, staff and library members and use Libraries as a way to strengthen local communities. A model that is empowering, inspiring and has the opportunity to develop further in working with the local community that it serves.

4. The Dead Weight of Contracts and Other Back Office Expenditure on the Library Budget

4.1 Below is the table for back office charges. Read them carefully because they are illuminating. These are the sums of money that the Council thinks necessary to spend in order to run 12 branch libraries, a home library service and a central library. Under normal accounting rules, you account for the actual costs of the services provided. This is necessary because if you decide to outsource this service (or another) to a private company, or stop running a service altogether, you need to know what that service is actually costing you. Not just the front line staffing figures.

4.2 Total for all of these back office functions £3,327,822.

4.3 The Total budget for Libraries is £8,563,022 including a depreciation charge of £1,132,616.

4.4 In other words the library service has actual funds available of £7,430,406.

4.5 Of available funds, the council spends 44.78% of its budget on back office functions and contracts.

4.6 Let us look in detail at some of those areas of spending.

Support Services

BVACOP charges:

Corporate Finance

33,282

Financial Governance

51,574

Financial Services

9,163

Customer Focus

1,385,526

Human resources

111,577

Payroll

21,401

Accommodation

239,300

AFM

821,570

Legal

1,467

Strategy and Communication

21,437

Customer Services

224,537

Intra Community Services

406,988

Customer Focus

This is the provision of integrated computer systems, including the call centre at Taberner Houser, the web site and all the individual computers and printers in the Libraries. That charge is £1.385million.

Customer Services

That is the call centre—presumably for answering highly complex questions like where my local library is, or renewing a library book over the phone. £224,537.

Payroll

This is the day to day arrangements needed to service the 115.2 Full Time Equivalent posts in the service—so that is a charge of £185.77 per person. A little high compared to what a small business would pay, but not too extravagant.

Human Resources

Includes recruitment, training etc £111,577 is £968.55 for each employee.

Accommodation

This charge relates to provision of office accommodation for non library based staff. £239,300.

AFM

Asset & Facility Management—this is mostly bundled into a huge contract with Interserve PLC. The cost to look after 12 branch libraries and one main library is £821,570 that is a separate charge to the £23,500 for repairs and maintenance of buildings.

Strategy and Communication

£21,437—presumably this is the cost of putting together the consultation to close our libraries down.

Intra Community Services

£406,988—the charge for running the department. However this is also supplemented in the Council accounts by a charge for “Cultural Central” £377,000 which includes the senior management of the department (3.4 FTE posts).

Finance Charges

Corporate Finance

£33,282

Financial Governance

£51,574

Financial Services

£9,163

Total recharge for Finance

£94,019

Supplies and Services

Including the book fund of £277,376 Croydon spends £541,515 on everything from security to postage.

Transport

Croydon Libraries spend £12,169 on transport services for the library service each year.

5. How Reasonable are All of these Charges onto the Library Service?

5.1 The sums involved are significant. The amount paid over to large multi national contractors is huge. 44.78% of this budget.

5.2 These figures are from internal charts of account. It is increasingly difficult to make full comparisons, other than using CIPFA headline data, when comparing a service provided by one council to another. Yet, full transparency is the only way to actually see what is being spent on individual libraries and individual library services.

5.3 The real question is, could this service be delivered in a different way that removed the need for the expensive senior management, large contracts for IT and so on and managed to put the majority of the budget onto providing the front line service?

5.4 This is not an abstract comparison, because in Croydon we have an alternative model that operates within a fully contained budget and with all the necessary charges applied to it in order that it can operate. It even publishes its own audited accounts.

5.5 Upper Norwood Joint Library—a joint library authority between the London Borough of Croydon and the London Borough of Lambeth.

5.6 That library receives a budget allocation from Lambeth and a budget allocation from Croydon. Croydon Council acts as the “agent” for this joint authority and makes a recharge to the budget for corporate services including clerking the formal committee and running its finances. The Joint Library is also fully responsible for building maintenance, computer technology, book purchasing etc.

5.7 The Upper Norwood Joint Library does this for a total sum of £397,483 (according to its accounts on Croydon.gov.uk web site). Croydon Council will contribute £189,297 in 2011–12 Financial Year. Less than half the running costs because Croydon Council claims the difference in funding between Croydon and Lambeth is because Croydon provides support functions (such as accountancy and clerking the committee) with a value of £20,000–£30,000 according to the Upper Norwood Library Campaign.

5.8 So, let us break the costs of Upper Norwood Library Down.

£30,000 for accountancy and clerking claimed to be spent by Croydon Council.

£315,616 for employees—75.15% of budget to the front line of staff.

£26,701 for buying books—6.35% of budget to book buying.

£77,655 for general running expenses.

5.9 The Library manages to bring in approx £40,000 in earned income each year. A note of interest is that this is at least double any Croydon branch library. Selsdon brings in £18,778 and Norbury brings in £14,182. The Central Croydon Library brings in £212,252.

6. What are the Unique Characteristics of Upper Norwood Library?

All staff are front facing.

No highly paid senior management.

More staff than a Croydon branch library, but many more users and no senior management.

High use of the Library, including Children’s Library, Archive, Reference etc.

Costs transparently contained within an annual budget.

A bigger annual spend on book buying than any other Library in Croydon.

Book buying to building maintenance responsibility of the staff in the library.

Community committed to their library including a dedicated campaign group “Upper Norwood Library Campaign”.

7. Why the Negative Pressure on Upper Norwood Library?

7.1 If you set out to deliberately mislead, you first of all strip out all of the expensive back office costs that Croydon spends from the Library budget, then you make the cost comparison with Upper Norwood Library. In those terms, Upper Norwood Library costs about twice what a Croydon Branch Library costs each year. Yet if you include all the back office costs, this shows clearly that Upper Norwood Library spends less than 20% of its budget on back office, building, IT and other costs.

7.2 It therefore makes an easy, perhaps cheap, political point that Croydon Council is pumping far more money into an “inefficient” library that it does not directly run. Having this easy comparator on its doorstep is an inconvenient fact that in the long term, officers and Cabinet members would rather do without.

7.3 The Council officers and cabinet members have vested interests in keeping their internal empires and protecting headline budgets.

7.4 Senior Council staff and Council Cabinet members don’t like the idea of not having the day to day control of a Library (despite the rhetoric of “community involvement” or “the big society”).

7.5 The Costs of contracts for IT/Building management etc has all been outsourced and is out of the control of the staff within the library department.

7.6 Corporately the Council has lost control of its own expenditure from outsourcing too much of its everyday operation into long term contracts.

7.7 The Library is not a branch library; it offers many different services and is very heavily used, but Croydon continue to make that (inaccurate) comparison.

7.8 Croydon Council are in the process of privatising its libraries. It is spending £250,000 this year on the process to do so. It is understood that the documentation did not include the provision of a Library in Upper Norwood.

8. The Way Forward: Co-operative Community Library Trusts

8.1 The need to exploit Libraries as the centre of local communities and ensure that they reach out and develop is very important. We don’t want to go through this painful closure process in 10 years time. We need to enable libraries to be different in each locality. In some areas, “just” being libraries, in other areas running the local community hall as well. In other areas being part of a school or running a community café. One size does not fit every community and it is important we enable communities to be distinctive, with high quality libraries as an essential and popular ingredient.

8.2 In the longer term, the ideal solution would be to transfer land and buildings to new local “Community Library Trusts” that would be multi stakeholder co-operatives:

Local Councillors representing the interests of the borough, the tax payer and their own locality;

staff representing the professionalism of Librarianship; and

user members being the active voice of the ordinary Library user. Trust members to be elected from open user meetings, for instance held twice a year in the Library.

8.3 This approach is not new. 20 years ago, every school was run out of the local council. Today each school runs its own affairs. Buys its own books. Has its own governing body. Most employ their own staff. This has, in the main, been good for those schools and has had the knock on effect of being good for the local economy. Schools employ small firms to undertake building works, they employ local people to clean their schools, they order stationary from local companies. They arrange their own IT (often through partnerships or network organisations to ensure they have the necessary skills and professional advice).

8.4 Risks and Rewards: there is obviously a risk that by devolving and empowering front line staff that you risk a range of different standards to exist. You risk a library being closed because staff are sick. You risk users not being familiar with the IT provision in different libraries. These are all risks that are worthwhile, if you can manage to cut costs and boost the front line of service delivery within existing budgets or within smaller budgets.

8.5 You can further mitigate those risks by ensuring staff remain employed by the Council, but directed by and a key part of each Community Library Trust. Employing Chief Librarians at each Trust. At Upper Norwood Library, the Chief Librarian is not on a “big” salary, but manages the whole service they are responsible for. The reward is that they are the public face of that Library and a point of contact for the local community. They act as ambassador as well as manager. They command respect and loyalty from the local community.

8.6 You could also insist that each Library Trust had a duty to Co-operate with other Library Trusts. An example could be when staff were sick at one, lending staff to cover.

8.7 The biggest reward would be a better, lower cost service with more users and more community involvement.

9. Indicative Budgets?

9.1 Upper Norwood library costs the taxpayer approximately £400,000 per year to run within a fully contained budget. It is a large library. Many Croydon libraries are far smaller. Economies of scale might be needed by running a community trust for the whole of a geographic area. For example, Coulsdon, covering both Bradmore Green Library and Coulsdon Library. Similarly pairing other libraries together might make management sense.

9.2 The Central Library would make sense to be run in association with the remaining budgets from the cut Arts & Heritage programme. It makes sense to run one building, including the closed David Lean Cinema, the closed Clocktower Arts, the closed Museum, the cut local studies library. One Community Trust for the whole of the Clocktower Complex makes sense. Similar back office costs are spent on this area by the council in addition to the costs set out in this paper.

If you allocated an average of £300,000 per library across Croydon you would end up with a spend of £3.6million on the 12 libraries.

£150,000 for the home library service.

£1.5 million for the Croydon Central Library (actual spend this year, excluding central overheads £897,297).

£200,000 for Upper Norwood Library.

Grand Total: £5,450,000
Current spend: £7,430,406
Minimum Saving: £1,980,406

9.3 These figures are just an outline of what could be achieved. Cutting at least £2million from the annual Library budget should leave plenty of scope for increased front line staffing, a bigger book buying budget and greater community ownership of their local library.

9.4 Alternatively greater savings could be achieved by not increasing staffing in libraries and by having a leaner senior management team(s) serving groups of libraries.

January 2012

Prepared 5th November 2012