VCA BUSINESS PLAN

Transcription

1 VCA BUSINESS PLAN

2 The Department for Transport has actively considered the needs of blind and partially sighted people in accessing this document. The text will be made available in full on the Department s website. The text may be freely downloaded and translated by individuals or organisations for conversion into other accessible formats. If you have other needs in this regard please contact the Department. Vehicle Certification Agency Eastgate Road Bristol BS5 6XX Telephone Website enquiries Crown copyright 2015 Copyright in the typographical arrangement rests with the Crown. You may re-use this information (not including logos or third-party material) free of charge in any format or medium, under the terms of the Open Government License. To view this license, visit write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or psi@nationalarchives.gsi.gov.uk Where we have identified any third-party copyright information you will need to obtain permission from the copyright holders concern 2

3 Chief Executive s Foreward... 4 Executive summary Who we are and what we do Plans for Supporting delivery of the plan Digital Annexes Annex A - Profit and Loss Account Annex B Volume Forecast Annex C Volume Forecast Annex D Workforce Forecasts Glossary of Terms

4 Welcome to the Vehicle Certification Agency (VCA) Business Plan for This sets out our goals and objectives for the year and builds on the success of the Agency over the recent past. VCA is part of the Department for Transport (DfT) Motoring Services Group of Agencies, including DVSA (Driver and Vehicle Standards Agency) and DVLA (Driver and Vehicle Licensing Agency). All DfT Agencies are undergoing substantial reform to deliver improved services to citizens and industry, and reduce costs through greater efficiency. In August 2013, the Department announced that it would try to find a commercial partner to form a joint venture that would grow the work of the VCA. The formal procurement process to find such a partner began in early 2014 but, despite interest from industry, the Department was unable to agree a suitable joint venture. VCA will remain, therefore, as an executive agency of DfT for the immediate future and DfT will consult with stakeholders on the best way to deliver the agency s services in future. This coming Financial Year, we will be reflecting on a number of issues including how to take the agency forward without a new partner, the impacts of the pace of change of automotive legislation and how to respond to emerging technologies. The demand for VCA s services is increasing, due in part, to the health of the UK automotive sector. We are attracting new customers to the world of Type Approval, as new sectors have been brought into the European Whole Vehicle regulations. VCA has to offset this growth with a reduction in its work for Government. Our business plan for next year expects a deficit, unlike the more recent years of growth and surplus. We have looked at our costs and working practices, and we have found further opportunities for improvement, but these will take 2 or 3 years to impact positively on the Agency finances. To meet these challenges, we will continue to invest in our staff, to build on the existing excellent reputation we have for engineering skills, efficient, high quality services and excellent customer engagement and work hard to develop and maintain new clients. In April this year, the VCA will celebrate 25 years as an Executive Agency and we can look back over our first 25 years with great pride and satisfaction, as a trusted service supplier to the UK automotive industry. The world of automotive approvals and regulation has changed dramatically from the National schemes of 25 years ago, to European-wide Whole Vehicle approvals. The VCA has developed and grown over the years and we plan to build on our past heritage, to retain our position as a leading Type Approval Authority and Technical Service. PVW Markwick, Chief Executive 4

5 The new Financial Year will be challenging for the VCA, with the loss of the Enforcement work currently delivered for other Government departments. This is being consolidated into the National Measurement Office, within the Department for Business, Innovation and Skills (BIS). The lost revenue will not be recovered within the year, so VCA is budgeting for a 700k deficit. We plan to return to surplus within the next 3 years driven by growth in our core product and management system certification activities and efficiency improvements and cost savings. We will also carry out a complete review of our fees strategy and present options to ministers in the new Parliament. We will consult fully as part of this process. Over the past 10 or so years, Product Certification revenues have grown nearly threefold, averaging between 6 and 7% growth per year over the past 3 years, and our MSC business has seen a steady 10% per year growth. We anticipate this growth to continue over the next few years. We expect that Southern Europe, South America, and the UK will lead the incremental growth, while sales in China are expected to return to growth next year, following a slowdown in sales over the past 2 years. South American sales will be significantly impacted with the anticipated approval by IBAMA, the Brazilian Environmental Agency, of VCA as an accredited technical service. The four global regions of VCA, Americas, Asia/Pacific, China/India and UK/Europe will all contribute to the growth plan, and contribute positively to the financial wellbeing of the VCA. Despite the current challenging financial position, VCA remains in net surplus, considering its 25 years as an Executive Agency, and we forecast a return to a small, but sustainable surplus over the next 2-3 years. The detailed plans and targets are laid out in this document. 5

6 Vehicle Certification Agency 1.1 The Vehicle Certification Agency (VCA) is an Executive Agency of the Department for Transport (DfT), part of the Motoring Services Directorate, which is part of the RTL (Roads, Traffic and Local Transport) Group of the DfT, through which VCA receives its corporate sponsorship. VCA performs a number of core activities: Vehicle Type Approval: 1.2 As the UK Type Approval Authority for new on and off-road vehicles, systems and components, VCA is responsible for approving that these have been designed and constructed to meet internationally agreed standards of safety, security and environmental protection. VCA takes its policy lead from DfT, through the International Vehicle Standards Division (IVS), part of the Environment, Technology and International Directorate. Some environmental policy lead comes from the Office for Low Emissions Vehicles (OLEV). VCA Chairs the DfT Vehicle Technology Forum, working with policy colleagues, other DfT agencies and the Chief Scientific Advisors Unit. This group shares knowledge, understanding and experience of emerging technologies with a view to developing a common understanding and approach. Management Systems Certification: 1.3 Having effective management systems is an important part of the vehicle, system and component production process. Because of this, VCA is a Management Systems Certification (MSC) body and this activity is complementary to our Type Approval function. Specialising in the automotive sector, we have been able to utilise our significant expertise in the engineering, manufacturing and production fields. VCA is unique in terms of being a combined Type Approval Authority, Technical Service, and Management Systems Certification body. 6

7 Certification of Dangerous Goods Packaging 1.4 VCA administers the operation of a scheme for the approval and packaging for the carriage of dangerous goods in the UK. Each mode of transport has its own set of International Regulations, but all use packaging as defined in the United Nations (UN) recommendations for the transport of dangerous goods. The requirements for approved packaging are put into effect by separate Statutory Instruments. Civil Traffic Enforcement 1.5 Building on core experience, VCA provides a certification service to local authorities who wish to operate bus lane and parking enforcement camera systems. This involves the evaluation of Technical Construction Files (TCFs) to assess compliance with the relevant requirements, with the ultimate aim of ensuring the integrity of evidence gathered using such systems. This service has recently been extended to cover authorities in Wales and the Highway Agency s Thames Link Crossing at Dartford. Data Provision 1.6 VCA collects and publishes CO2 emissions data for new cars, underpinning the Vehicle Excise Duty and Company Car Tax schemes. Accessed through GOV.UK, the data tools continue to be popular with consumers, with around 2.4 million users over the last year alone. This supports Government s strategic drive towards reducing CO2 emissions by helping consumers to make low carbon choices. 7

8 The VCA has agreed an ambitious and stretching set of objectives with the Department for Transport for to meet the twin challenges of delivering high quality services to our customers while delivering value for money for the taxpayer and fee payers. The table at 2.6 highlights the main objectives VCA has agreed with the Department for Transport for The following sections explain in more detail the specific actions we will be taking to deliver our agreed objectives: Reform and Modernisation 2.1 Implement a strategy for returning VCA to a break even position The transfer of enforcement services work to the NMO has had a significant negative impact on VCA finances. We have therefore identified a series of actions that will see VCA return to a break even position in the shortest time practicable. These will include: Consulting on a new fees strategy by 31 January 2016 We provide services to industry for which we are governed by statute in terms of what we can charge. We have held the charges flat for 8 years, and in fact have held fee increases to 3.5% over the past 11 years. During this period largely through inflation, we have had a consistent increase in our costs of providing the services, much of which have been offset by significant efficiency improvements. Whilst we continue to investigate new ways of delivering the services we provide, they are fundamentally based around physical inspections by our staff. The time is now right to review our overall approach to fees. The review and any subsequent legislative process can take up to 12 to 18 months to conclude. We will be working closely with the DfT to bring the necessary changes to the statutory fees on a full cost recovery basis. 8

9 2.1.2 Identifying opportunities for new or existing services and products to be delivered in new or existing markets We are looking to develop new products and services to complement our existing portfolio. There are a number of opportunities to support existing and potential new customers at home and across the globe. We will be evaluating the options, many of which will require investment to bring to market. We aim to have completed our initial review by the end of September 2015 but it could take longer to bring them to market depending on the level and speed of investment required. Two areas that will feature in the review will be: Product Certification The automotive sector continues to grow fuelled by new entrants into the market in emerging economies, and a great diversity of product in the mature markets. This is driving the need for increased levels of approvals. We expect this will continue to be the case over the next few years and we will be looking to exploit opportunities wherever they present themselves. Product certification has increased steadily year on year (at a rate of 6.5% on average) for the past three years and as a planning assumption we have assumed that this growth rate will continue over the planning period as we continue to offer extended services to our customers and actively market our services to new customers in this product line. Management System Certification We have grown the MSC business over the past three years in a very competitive market place. There are a number of much larger organisations competing directly with VCA in the same customer sector and territories that we operate in but, as is the case for product certification, we have seen our MSC sales grow steadily year on year. We have confidence in our ability to continue to grow this part of the business. We have identified 10% growth in as a realistic target for planning purposes. An initial assessment of the wider opportunities for increasing sales is to be completed by the end of September 2015 but will be kept under continual review to ensure we are ready to exploit growth opportunities as they present themselves Explore the potential for VCA to deliver additional services for DfT and other Government departments VCA has historically delivered a unique package of services back to its parent Department and to other Government departments. The services we provide across Government have declined over the past three years by almost 1m since and there will be further reduction of c 1.4m in sales in with the transfer of the BIS/DEFRA activities to NMO. As part of our drive to identify new opportunities, we will complete a review by the end of September 2015 of how we use our existing skills base to provide more, value added services to DfT and other Government departments. 9

10 We have built no growth into our plans for this product line, and have forecast revenues of 752k for the planning period. VCA delivers a distinct group of services to Government which are not directly related to our core automotive activities, including Dangerous Goods Packaging certification. We see the underlying sales in the area remaining at current levels for the planning period. The other element includes sales of VISTA (regulatory library) and Point of Sale services, which have potential to grow, but we see the real opportunities to grow in new products which are covered in more detail below Efficiencies In addition to looking for new opportunities to grow the business, we will also be focusing on our costs to drive efficiencies wherever we can. Our plans will include reviewing how we currently allocate our engineers time and ensuring we improve their utilisation to deliver better returns. This work will cover how we charge for administration and travel time to clients over the life of the jobs we work on. We have also identified a number of overhead cost savings at a high level for VCA to deliver over the planning period. We will develop the plans that will ensure that VCA delivers the savings. This will be a challenge for VCA to deliver at the same time as we are looking to grow the business but if we are to deliver the surplus in line with the overall plan, we will need to ensure we implement further cost reductions as a number of the growth plans do come with a degree of risk if they are not realised. 2.2 Identify a suitable site for re-locating the VCA Bristol HQ by end of September 2015 VCA leases its headquarters building in Bristol, and land at the Motor Industry Research Association site for the Midlands Centre as well as an office for the Dangerous Goods activities in Leatherhead, adjacent to testing facilities. The overseas offices are all leased. The lease on the headquarters building in Bristol was renewed in 2014 but this will expire in July We will work with the DfT in the interim period to explore potential sites that are suitable for our long-term business requirements, and align with the Government Property Services Strategy to support Ministerial targets relating to vacating leased premises. Our plan is that, by the end of September 2015, we will have identified a new site for our HQ that will meet our plans for growing in an environmentally sustainable way. 2.3 Take forward the Government Digital Strategy Our plans for , which are set out in more detail on page 17, will include the migration of appropriate VCA website content to GOV.UK, considering the implications for and providing a solution to the overseas operations. We will also update and enhance our existing Point of 10

11 Sale Software (POS) to enhance the existing service that provides environmental labels for new cars at the POS. 2.4 Finance We have budgeted to deliver a deficit of ( 700k) in ; this is primarily due to the transfer of work to BIS/Defra for enforcement activities. We are confident that we can deliver additional sales to offset the loss of work; however the margin of these sales is at a lower level. We anticipate that by , along with a revision of the fees and more mature sales growth from emerging markets such as Brazil and the efficiencies we have identified, we can return the VCA to breakeven in line with prior historical performance levels. A summary of the financial performance can be found in Annex A. 2.5 Workforce We will retain FTE staff numbers at current levels of 204 for ; we will be transferring 11 staff to the NMO, which we anticipate will be back filled in our frontline operations to support additional demand in the market. We are facing challenges to retain our experienced engineers as they are highly skilled and in demand. We will continue to do our best to retain staff who are key to the success of the VCA. VCA anticipates no increases in staff in back office functions during the coming year. We will look at ways of improving our efficiency across the organisation and align ourselves with best practice across the Department of Transport. In recent years, the VCA has seen an increase in the average number of working days lost to sickness. We have managed to return to the agreed target levels of 7.5 days in We anticipate that this will stabilise further in to 6.5 days, we are confident that we can provide an excellent working environment for our staff, where they are fully supported to deliver first class services to our customers. 11

12 Key Performance Indicators Reform VCA measure Target date in 2015/16 1. Reform and Modernisation 1.1 Implement a strategy for returning VCA to a break even position. 1.2 Identify a new site for the Bristol HQ 30/09/ /09/ Take forward the Government Digital Strategy. 31/03/16 2.Operational 2.1 System and component approval certificates issued within 9 working days of the completion of technical clearance. 92% 2.2 Audited test reports deemed to have no critical defects. 99% 2.4 New Type Approval clients that do not hold ISO 9001 or ISO/TS management systems certification to be subject to Conformity of Production assessment, in accordance with the agreed risk-based approach, before approval issue and 100% of surveillance audits on non ISO/TS customers to be conducted using the risk based approach, before CoP renewal. 100% 3. Finance and efficiency 2.5 Maintain or improve the satisfaction of our customers. Agency finance: 3.1 Deliver financial performance in line with the 2015/16 budget. 90% ( 700k) 31/03/2016 Workforce: 3.2 FTE staff numbers as at 31 st March 2016 will not exceed FTE 3.3 Ensure average number of working days lost to sickness absence does not exceed 7 days per FTE. 7 days 4. Customer Service Prompt payment: Payment of invoices within 5 working days 80% Freedom of Information: 93% 12

13 Provide a response within 20 working days Parliamentary Questions: Provide a response within due date Other Parliamentary correspondence: Provide a response within 7 working days Official Correspondence: Provide a response within 20 working days 100% 100% 80% 13

14 Human resources: 3.1 VCA Human Resources (HR) will continue to provide people processes aligned to wider Government HR strategy and underpinned by the Civil Service core values. During we will: Continue our successful graduate development programme, recruiting high calibre engineering graduates, and training them through the Institution of Mechanical Engineers accredited Monitored Professional Development Scheme (MPDS), supporting a fast track route to becoming Chartered Engineers Develop an apprenticeship initiative involving both internal and external stakeholders as part of a wider DfT scheme Diversity 3.2 VCA values and utilises the potential and strengths of all staff in the Agency by treating people as individuals, embracing variety, rejecting prejudice and accommodating changes in working patterns. VCA believes that using a flexible people management approach motivates staff and creates an environment that enables all members of the Agency to be productive. 14

15 4.1 The Government s Digital Strategy sets out its vision for the digital landscape, providing services that meet the needs of customers. VCA continues to work towards providing a range of digital services that complement the existing multichannel options available to customers. The nature of VCA activity in the testing and certification arena necessitates a high degree of face to face interaction but where the process can be supported by digital services, this is being done. Digital service delivery: 4.2 VCA corporate website VCA will continue to work with the Department and the Government Digital Service (GDS) to migrate content to GOV.UK 4.3 Point of Sale Software (POS) Update and enhance the existing software to provide environmental labels for new cars at the point of sale. Information services: 4.4 VCA ICT services provide day to day ICT infrastructure support, Help Desk services, and IT Security. During we will: Continue to support the Government s Digital by Default agenda Ensure that we continue to comply with the requirements of HMG Security Policy Framework 5 (April 2014) Provide Information Assurance to VCA and DfT Senior Information Risk Officers Look for further opportunities to reduce the cost of ICT services through use of centrally let framework contracts Further enhance our disaster recovery capability for business continuity Improve remote access capability across the agency along with the deployment of smart devices 15

16 A. Profit & Loss Account 16

17 B. Volume forecast 17

18 C. Volume forecast Transaction Description Type Approval Forecast outturn Whole Vehicle Type Approval Certificates/Test reports issued ,601 Systems & Components Type Approval certificates/test Reports issued 9,780 12,151 11,243 Commission Notice Applications processed 3,685 3,185 3,330 Technical Support to the Automotive Industry On average VCA responds to 55 technical questions per month from internal and external customers Through its VISTA information system, the VCA supports industry in keeping up to date with legislative requirements Documents published in VISTA Pages authored in VISTA ,327 3,909 4,664 Enforcement Under WEEE and Batteries enforcement regulations, on behalf of BIS, VCA will have carried out 500"mystery shopper" inspections and 2700 enforcement visits in In this work will transfer from VCA to another Government Agency 18

19 D. Workforce Forecasts Workforce FTEs Total VCA FTE's Front Line FTE's Back Office FTE's March March

20 Glossary of Terms 20

21 21