1. PricewaterhouseCoopers LLP  South Tyneside Council Use of Resources - Value for Money 30 th July 2007

2. PricewaterhouseCoopers LLP Coverage What is Use of Resources? South Tyneside – score 2006 What is VfM? Methodologies and structures used to generate VfM Why is VfM important? CPA Use of Resources How does the VfM judgement work? Members’ focus South Tyneside key areas for improvement

3. PricewaterhouseCoopers LLP July 2007 Slide 3 What is Use of Resources? The use of resources assessment is an Audit Commission judgement about a council’s performance in relation to five themes: Financial reporting Financial management Financial standing Internal control Value for Money Judgement evaluates how well council’s manage and use their financial resources to support their strategic priorities, improve service and deliver value for money The assessment is carried out annual as part of each Council’s external audit Use of Resources will continue when the CPA is replaced by Comprehensive Area Assessments White paper requires use of resources to assess organisational effectiveness and how well bodies use resources to support priorities and service improvements

4. PricewaterhouseCoopers LLP July 2007 Slide 4 South Tyneside – score 2006 South Tyneside Use of Resources scores in 2006 (out of 4): Financial reporting3 Financial management3 Financial standing2 Internal control3 Value for money2

5. PricewaterhouseCoopers LLP What is VfM? The value chain:

6. PricewaterhouseCoopers LLP July 2007 Slide 6 Methodologies and structures used to generate VfM Methodologies: 4*plus programme – VfM programme led by Chief Executive Efficiency reviews Performance and budget management reports Budget setting process reflects VfM Structures: Scrutiny Internal Audit Performance management

7. PricewaterhouseCoopers LLP July 2007 Slide 7 Why is VfM important? Optimise use of limited resources – Comprehensive Spending Review 07 Impact on Comprehensive Performance Assessment score through Audit Commission Use of Resources judgement

8. PricewaterhouseCoopers LLP July 2007 Slide 8 How does the VfM judgement work? KLOE 5.1 - The organisation demonstrates good VfM in its use of resources KLOE 5.2 - The organisation manages and improves VfM CPA 2005 – 2 out of 4CPA 2006 – 2 out of 4 CPA 2005 – 2 out of 4CPA 2006 – 2 out of 4

9. PricewaterhouseCoopers LLP July 2007 Slide 9 Members’ focus There is clear information on costs and how these compare to others and to the quality of services achieved currently and over time. Members and managers routinely use this information to review and challenge value for money throughout services and corporately. Members, senior managers and service managers manage costs alongside quality of services and responding to local needs.

10. PricewaterhouseCoopers LLP July 2007 Slide 10 “Auditors will focus on reviewing whether the self-assessment is still appropriate and updating it for any changes and improvements.” Key steps in doing so: Review of existing audit knowledge – in particular last year’s audit work on VFM Review of VFM profile – what are the key changes which need to be reflected? Review the self assessment – does this agree with the profile and are significant changes put forward? Fieldwork – target work at areas where self assessment cannot be agreed “…Auditors need to identify examples of outcomes which demonstrate that arrangements are embedded in order to support their level 3 assessment.”

11. PricewaterhouseCoopers LLP July 2007 Slide 11 South Tyneside – key areas for improvement Performing strongly in relation to methodologies – e.g. VFM reviews, budget setting, etc. (score of 3). Remaining areas to address are: Demonstrating that the Council considers equity of provision Ensuring that VFM activity is routinely carried out beyond reviews, the budget round, etc. Need to show that this is having an impact on the relative cost/performance of services (score of 2): Demonstrate improvement in the VFM profiles year on year Demonstrate that the Council knows what the appropriate level of spend and performance for a given service are

12. PricewaterhouseCoopers LLP This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers LLP, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. © 2006 PricewaterhouseCoopers LLP. All rights reserved. 'PricewaterhouseCoopers' refers to PricewaterhouseCoopers LLP (a limited liability partnership in the United Kingdom) or, as the context requires, other member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity. 