EAST AYRSHIRE COUNCIL CABINET 24 JUNE 2015

Transcription

1 EAST AYRSHIRE COUNCIL CABINET 24 JUNE 2015 BUSINESS GATEWAY PROGRAMME FUTURE DELIVERY Depute Chief Executive and Chief Financial Officer: Economy and Skills PURPOSE 1. The purpose of this report is to seek Cabinet approval for the future delivery of the Gateway Programme in East Ayrshire to be brought in-house from October 2015 and for the existing delivery contract to be terminated on 30 September 2015, following the requisite 3 month notice period. This proposal is aligned to the same approach being pursued in North and South Ayrshire Councils. BACKGROUND 2. At its meeting on 22 April 2015, Cabinet approved the appointment of an external consultant by North Ayrshire Council to examine in more detail the option to bring the future delivery of the Gateway Programme in house in each of the three Ayrshire authorities. 3. Subsequent to that appointment, EKOSGEN Ltd has now analysed the inhouse delivery model and work has been completed in terms of funding required and resources available; as well as the benefits and risks associated with this approach. 4. It is important to note that the output levels for both start-up and growth companies, delivered by the current contractor have resulted in a current underspend of the annual Gateway block grant. This underperformance is thought to be a combination of adviser under resourcing, a lack of outreach activity, and low levels of marketing activity and spend by the current contractor. 5. To rectify this underperformance by the contractor, it is proposed that the delivery of the Gateway service is brought in-house for the remaining 2 years of the current programme and any subsequent programme. This has a number of advantages including a more efficient use of the total funds available for delivering the Gateway Programme and potentially targeting and engaging with local growth businesses in a more effective way by making best use of all available funding. CURRENT POSITION

2 6. The existing Gateway team in Ayrshire comprises six full time business advisers as well as administrative support, supplemented by selfemployed advisers working in Ayrshire on a part time basis. The Gateway team is based in Ayr although two advisers allocated to support East Ayrshire companies operate from the Johnnie Walker Bond and additional support is provided to us on an ad hoc basis and according to demand. The total budget for the Ayrshire programme is 936,000 per annum and a third of that supports activity in East Ayrshire. This budget resource is set at the same level for the next two years of the Programme. 7. The current Scottish Government block grant for the delivery of the Gateway Programme is awarded to North Ayrshire Council as the Lead Authority for Gateway. This funding will be allocated equally across the three Ayrshire Councils if the future delivery of the service is brought inhouse. TRANSITION PERIOD FROM 1 JULY JANUARY Any proposal to bring the service in-house will require the Ayrshire Councils to serve notice to the current contractor on 30 June The following six months will be a transition period to allow all three Councils adequate time to put all the mechanisms in place to deliver a full service locally from 1 January To support these efforts, the Scottish Government funding of some 936,000 annually will be used in the first instance, to cover a number of one-off expenditure items to be incurred during that transition period and to cover a number of ongoing pan Ayrshire management and delivery elements of the Gateway service after the service is brought in-house. The balance of the remaining budget will then be divided equally across the three Councils. 10. The estimated costs, which will be incurred during the transition period, amount to 45,636. This covers rent and rates for the continued use of the Gateway offices (between October and December 2015) currently located at Heathfield Industrial Estate in Ayr; its running costs and the cost of the IT systems. 11. It is considered appropriate that the lease at Heathfield is continued until 31 December 2015 to enable each of the Ayrshire Councils adequate time to find and secure new Gateway premises in each of the three Council areas. This budgeted sum also includes the cost for an Interim Project Manager for six months (from 1 July 2015 to 31 December 2015). This role will it be to manage the transition of the Gateway service into each of the three Councils.

3 PROPOSED FUTURE PAN AYRSHIRE ACTIVITY 12. It is proposed that an element of delivery remains at a pan Ayrshire level. This will include a Gateway Project Manager (employed by the Lead Authority on a part time basis) who will be responsible for all monitoring, reporting and liaison requirements for the Gateway National Unit and the Scottish Government. 13. It is also considered good value for the three Local Authorities to employ an Events and Marketing Manager to work for all three Councils with the role of planning, organising and delivering the required suite of Gateway workshops and seminars at various locations across Ayrshire. He/she will also plan and manage the execution of Gateway local marketing activities (advertising, print, social media and sponsorship). 14. The rationale for this approach is that the Gateway National Unit leads on all marketing activity, working with lead authorities to ensure national and local requirements are addressed. As agreed with the Scottish Government, this team is responsible for setting the strategic marketing direction and developing the tactical marketing plans that support all Gateway activity. By managing specific activities, such as marketing, nationally, the Gateway National Unit is able to reassure the Government of a coherent network-wide approach, providing targeted customers with consistent messages. This approach requires close collaboration, trust and compliance with agreed procedures such as the Gateway Brand Guidelines. 15. Similarly, the delivery of the proposed pan Ayrshire event programme must comprise Gateway catalogue workshops (pre-start/start-up and growth businesses). Being organised by a single, experienced staff liaising with East Ayrshire Economic Development (and SAC and NAC) colleagues should result in a more streamlined, cost effective programme, based on business needs, delivered across Ayrshire at various accessible locations for local businesses. This approach will drive business lead generation for both Gateway and other business advisers through better company targeting, improved attendance numbers, the input of more local staff knowledge, and delivery at more locations across East Ayrshire. 16. The cost of these 2 elements of pan Ayrshire support amounts to some 50,000 per annum. BUSINESS GATEWAY PROGRAMME IN EAST AYRSHIRE 17. Allowing for the above costs, the remaining Gateway funding allocated to East Ayrshire for the three financial periods relating to this proposal is presented below. Table 1

4 Period 1 Oct Mar 16 1 April March 17 1 April Sep 17 Total budget (inc. small underspend to be carried forward in period 1) Transition costs Pan Ayrshire Costs Balance to be split equally across the 3 Councils East Ayrshire allocation 521,795 45,636 24, , , ,000 NIL 49, , , ,000 NIL 24, , , The transferring of the Gateway Programme in-house necessarily involves the TUPE transfer of some of the existing Gateway staff to the Council on their current terms and conditions. This will equate to approximately 102,000 per annum of salary and on-costs based on a straightforward three way split of existing costs. 19. The proposal is for East Ayrshire Council is to secure and rent a new walk-in premises located in the town centre in Kilmarnock. The cost associated with refurbishment of and equipping a new Gateway facility will be paid for out of Programme funds. The one-off costs relating to this are estimated by the Gateway National Unit to be around 22,000 and relate to furniture, branding and IT. This amount also assumes that any landlord will pay for the fit-out costs for any vacant unit and dialogue with local agents confirms this approach. 20. Other costs associated with running the service in-house amount to around 107,000 per annum for premises, utilities, IT, consumables, marketing and events. It is proposed that Gateway is sited in the town centre and this will impact on costs as the many available premises within that footprint have high rateable value. There are, however, wider benefits in terms of bringing empty premises back into use; potentially increasing footfall in the shopping area and being a hub for the Council s economic development and business support engagement activities with individuals and local businesses. Premises costs will be kept within the Gateway budget. 21. After accounting for operational costs and existing Gateway posts there will also be an element of budget remaining. For East Ayrshire this surplus equates to 171,487 over the two year period from 1 October 2015, available to fund additional start-up and business advice and support services to East Ayrshire individuals and businesses, as summarised below. Table 2

5 Period East Ayrshire Committed costs Balance budget (staff, additional accommodation and overheads) Gateway activities) 1 Oct , , ,587 Mar 16 1 April , ,755 86,600 March 17 1 April , ,377 43,300 Sept 17 (for 22. The following section proposes how these monies can be best utilised to deliver more business support to local businesses. Forecast targets for Gateway start-up and growth advisory services, over the next two years, are also presented. PROPOSED MODEL FOR BUSINESS SUPPORT DELIVERY RESOURCES AND 23. Table 3 presents East Ayrshire s forecast targets for Start-up and Growth Advisory Service activity via Gateway. These targets have been set using the following key assumptions: The volume start-up target for is set to meet the Scottish national average rate (based on the Scottish 2014 start-up rate of per 10,000 population). This is considered achievable based on 2014/15 outturn forecasts. A targeted 5% uplift has been set for Year 2, 2016/17. Growth Advisory Service, Growth Pipeline and Direct Relationship Management (DRM) have been forecast based on the projected 2014/15 achievements, with an average 10% uplift in Year 2. These targets reflect an increase on current activity levels as detailed in the independent evaluation considered by Cabinet on 22 April Table 3 East Ayrshire Targets Actual 2015/ /17 Total Oct 2013 Sept 2014 Volume start ups Potential high volume start ups Completed high value starts(already VAT registered) Growth Advisory Service Including 22,000 for one off set up costs

6 Growth Pipeline Direct Relationship Management By using all available resource to focus on programme delivery it is anticipated that outputs will improve as set out above and the availability of additional resource within the budget will allow us to consider additional recruitment in the medium to longer term if this is required and depending on performance. RISK IMPLICATIONS 25. The following table summarises the potential risks of bringing the Gateway service in-house and details the mitigating actions which may be required. Issue Reduction in quality of Gateway service delivery Difficulty securing premises in new Low business awareness of new premises Likelihood Impact Mitigating actions of risk of risk (low, medium or high) (low, medium or high) Low High The same Gateway staff will be delivering the service The same premises will be used during the interim period Council staff training will be given before the change-over date Medium High The Heathfield facility is available for the 3 month interim period Various potential high street locations have already been identified Low High Part of the Marketing and Events Manager s role will be to advertise the change of Recovery plan Further staff training will be given to ensure the high quality of Gateway delivery is achieved by all Gateway staff Use of the Heathfield facility can be extended until suitable premises are identified and secured Further marketing (press releases, branding etc) will be done to raise local awareness of the change in address

7 Loss of consistent pan- Ayrshire delivery approach Events programme for Jan-Mar 2016 not organised by Oct 2015 Failure to recruit Interim Project Manager Gateway staff choose not to Low- Medium Low High The Marketing and Events Manager will be appointed before Oct 2015 to organise the pan- Ayrshire events programme Medium Medium Several potential candidates have already been identified Low Medium It is anticipated that all staff will TUPE across location prior to the move Existing clients will be informed of the move well in advance A high street premises with Gateway branding will be highly visible to the EAC business base High All existing Gateway staff currently deliver pan-ayrshire The outwardfacing events programme will be pan-ayrshire Regular meets between Ayrshire Gateway team leaders and Gateway Project Manager will ensure a consistent approach to Gateway delivery pan- Ayrshire Existing council staff have experience in planning and organising events and can continue to do so until an events staff is in place The consultants will continue to manage the process A Working Group is in place to action various stages of the process Additional business advisers can be recruited to

8 TUPE into Council IT and data systems not ready for use beyond Dec 2015 Low- Medium Staff live locally and have good knowledge of local business base, will be transferred to the Council in which they ve had most exposure There is ongoing consultation between the contractor and staff to ensure complete transparency Medium The implementation of IT and data systems will be done early on in the process (July) to allow sufficient time for installation deliver service the The launch can be delayed Gateway delivery can stay in the Heathfield facility past the planned launch date FINANCIAL IMPLICATIONS 26. The actual costs of delivering the Gateway Programme are met by ring fenced grant from the Scottish Government and do not require additional budget from East Ayrshire Council although there may be implications from the perspective of the local authority pension fund, should additional staff join the Council. This are calculated to be minimal given the very small number of staff that are in scope for TUPE transfer to East Ayrshire Council. HR IMPLICATIONS 27. Approval to bring the Programme in house will have HR implications in that staff are likely to be the subject of TUPE transfer from the current Gateway contractor to the Council. This could apply to up to 3 staff and it may be that further posts are created in the future to ensure effective delivery of the programme. 28. Additionally, adding staff to the business support element of Economic Development will require further consideration by the Head of Planning and Economic Development as part of the review of 4 th and 5 th tier management structures to be developed as part of the Council s Best Value Service Review arrangements, as reported to Council by the Chief Executive on 30 October 2014.

9 TRADE UNION CONSULTATION 29. The project proposals contained within this paper have not been discussed with the Trade Unions. LEGAL IMPLICATIONS 30. There are no legal impediments to bringing the Gateway in-house and support has been secured to ensure that the process of doing so adheres to the legal obligations of each Council. EQUALITIES IMPACT ASSESSMENT 31. An Equality Impact Assessment is not required for the proposal set out in this paper. LINKS TO THE EAST AYRSHIRE COMMUNITY PLAN 32. The delivery of business support mechanisms are recognised actions within the Skills and Economy theme of the new Community Plan which seek to grow local companies; supporting enterprise and entrepreneurship to create a more diverse and innovative business base. RECOMMENDATIONS It is recommended that Cabinet (I) (II) (III) (IV) (V) (VI) (VII) Approves the proposal to bring the Gateway Programme in house; Supports the appointment by North Ayrshire Council, as lead authority, of a Project Manager to oversee the transition period from 1 July 2015 to 1 January 2016; Supports the proposals to deliver programme management and events and marketing on a pan Ayrshire basis; Approves the proposal to secure a high street location in Kilmarnock for the future delivery of the Programme in East Ayrshire; Approves the TUPE transfer of up to 3 Gateway staff; Remits to the Depute Chief Executive and Chief Financial Officer to implement these recommendations; Otherwise notes the content of this paper. Alex McPhee Depute Chief Executive and Chief Financial Officer Strategic Lead: Economy and Skills

10 BACKGROUND PAPERS: Ayrshire Gateway Options Appraisal, February For further information please contact Sharon Hodgson, Economic Development Manager on (55)4591. Implementation Officer: Michael Keane, Head of Planning and Economic Development