Savings Going Down & Down but still NO Costs - and NO Questions!

So. The motion (see previous blog post) was passed at the February Council meeting but the Manager indicated that he will not implement it. (I have asked the legal basis upon which this refusal is being made, as the elected Council has a Statutory right to undertake studies into our administrative area but have as yet not received this information.)

Personally I find it extraordinary that, at this stage of the game, we are still waiting for any costs for the proposed merger of Waterford City & County Councils. The (City) Manager has admitted that no costings have been prepared and yet we have Minister Hogan constantly referencing the savings that this amalgamation will deliver. How can this be? Why is no-one challenging him on this? The Minister does not have the facts - as the costs have not been detailed!

SAVINGS GOING DOWN & DOWN!

In Putting People First, the Minister claimed that there would be up to €9m in savings from the merger. The amalgamation committee estimated savings of between €5m and €8.95m but targeted the lower number of €5m. (The two Managers in their exercise submitted that there would be about €3.8m in savings - with just €1.8m of that attributable to amalgamation over shared services.)

Now in the latest (2nd edition) workforce planning document from the Implementation Committee I see the savings are down to €3.95m! Remarkably close to what the Managers originally put it at. Of that €3.95m, about €3m - according to the City Manager - is due to loss of staff with another €1m due to 'other' unmentioned savings. Although what they are we haven't been told either. Assuming the Managers figures are right - bear in mind they only attribute €1.8m as being DIRECTLY attributable to Amalgamation! €1.8m - and this, with NO COSTS factored in at all!

AND WHAT OF COSTS?

And so what about the costs? Seeing as how nobody seems to be willing to make a stab at this: I will. I say at the beginning however that I am no accountant and this is my best guess having observed the process so far and with my knowledge of what might need to be factored in. But sure, in the absence of anything else we can at least have a go! So! Here goes:

I reckon costs break into two parts: Front-loaded start up costs AND on-going long term costs.
I have tried to keep it as simple as possible but some figures need a bit more explaining than others.

I have tended to be conservative in my estimates however realistically this can only be a guide. There may be costs that I have not foreseen. However, if my 'guess' is way off the wall, no doubt that will be pointed out post haste :)

Up front costs:

IT/Phone systems completely integrated      1.5m

Offices changes/Council Chambers             0.3m

Staff costs to date (of working on merger)

10 X Management Team @ 20 days each = 200 working days                                      0.1m

Other Senior Staff – 5 X 20 days = 100 working                                                        0.045m

Future Staff Costs (working on merger - pre-merger)

Staff costs to June ’14                                                                                                  0.28m

Economic Director                                                                                                       0.12m

Development of Economic Strategy                                                                              0.05m

Total      (before amalgamation)                                                                             2.395m

Other costs which I have not detailed but which will accrue are: rebranding for new Council; new crest; new Mayoral Chains, new stationary and new branding for vehicles and uniformed staff etc.

Costs before a single Euro is saved could safely be estimated at a minimum of         €2.5million

On then to ongoing costs.....

Ongoing costs associated with Merger:

Man and Van on road daily travelling between City/Dungarvan (staff and van costs)             70K

Travel costs (Manager and Directors)

7 on team X 3 trips per week each = 21 trips X 1.25 hrs travel time =

26 hours per week X 52 weeks = 1,300 hours is an average of

33 weeks work for 1 Director, the cost of which would approximate to                                  

Cost of travel time for Mgr/Directors                                                                           100K

Cost of Travel Expenses (Mgr/Directors)

20 trips X 52 weeks = 1,020 trips X €40 expenses                                                 40,800K

Travel costs for Senior Team (grade 8’s)

13 Seniors X 2 trips weekly  X 1.25 hours = 32.5 hrs per week

X 52 weeks = 1,690 hours / 35 hours = 48 weeks or salary of 1 senior =                       90K

Cost of Travel Expenses

13 staff X 2 trips X 52 weeks X €40                                                                        54,080K

Cost of paying for Shared Services provided by other Councils                                     100K

(counter balanced if we win a bid to provide services)

Additional staff attendance @ events and meetings - evenings and outside bodies          50K

Additional expenses for Councillors travelling to meetings in City/DG                             50K

Additional Annual Running costs                                                                          €0.55m

TOTALS:

ADDITIONAL UP FRONT COSTS (one off)                                                             2.4m

Lump sums – assuming 50 – 60 people through natural wastage (one off)                       6.4m

ADDITIONAL RUNNING COSTS (ongoing)                                                           0.5mpa

Additional annual pension costs (ongoing)                                                                   0.55mpa

Cost of servicing County deficit (if not taken by govt) (ongoing)                                    0.6mpa                                

Upfront COSTS                                                                                                          8.8m

Additional ongoing annual costs                                                                                1.1m

·        No allowance made for costs of servicing new additional Municipal/Metropolitan areas

·         Half of staff savings would be made anyway under Workforce Planning

·         Other savings probably achievable through closer working relations

·         Estimated very little savings to be achieved on outdoor staff

·         Any staff savings not realisable short term

Bear in the mind that costs are being accrued already while it could take 10 years (or longer) to achieve the savings required!

There will, eventually be personnel savings - but these would have mostly been delivered anyway because of the new National Workforce Guidelines...so they can't be claimed as amalgamation savings in my opinion.

Remember - the Managers accredited an additional €1.8m in savings for amalgamation over shared services.
My (conservative) calculations show that there will be on-going additional costs of at least €1.1m per year.

And this does NOT take into account the upfront costs which are already being accrued.

Now. Show me your costs please Minister. Or show me where mine are wrong.

I believe the savings will not be made in Waterford.
I believe the savings will not be made in Tipperary.
I believe the savings will not be made in Limerick.
I believe the Minister is breaking the system of Local Government in Waterford, Limerick and Tipperary for some mythical savings, not balanced against the relevant costs. This is, at best an uninformed strategy and and worst, reckless and irresponsible.

(Also bear in mind the hilarious but glaring elephant in the room that none of this addresses the issue of the spill-over of the city environs into South Kilkenny. It would be funny if it wasn't so ridiculous.)

When are we going to say stop - you cannot destroy our city?
Waterford is the oldest and noblest City in Ireland.
Why are we not up in arms to defend her?
Or, failing that, at least when are we going to start asking questions?