Rob Fountain and Paul Jansen
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1 Rob Fountain and Paul Jansen
2 By way of introduction About Stepping Out About the challenges Councils are facing and the role alternative delivery models can play About the time we have together today 2
3 Stepping-Out: Experts in turning good public services into great businesses Setting Out Stepping Out Staying Out High-level feasibility and options appraisal ADM Readiness Assessment Socialising the ADM idea with staff and other stakeholders Strengthening management s confidence Business Planning & financial modelling Project management Support during contract negotiations Powerful networks Partner selection Finding social investments Executive mentoring Planning for growth Investment readiness Leadership development Social Value analysis Interim management 3
4 Over the last few years working with Councils on alternative delivery models we ve literally written the book on the challenges, learning and potential of setting up a new vehicle. 4
5 Case Studies of some businesses we have helped to build and grow 5
6 Pop Up Events are about quickly getting useful resources to where they are needed 6
7 These are opportunities for you to grow your knowledge and test your thinking... 7
8 A Network of Expertise Janet Rowse setting up a staff-led mutual Mette Le Jakobsen delivering as a LA-owned trading company Gayle Monk legal considerations in alternative delivery models Scarlett Archer Cabinet Office Mutuals Support Team Paul Jansen business and transition planning support to establish new vehicles It s your task now to bring the questions and your ideas 8
9 Lots of scope to ask questions And a chance to pitch your thinking... 9
10 Why are you are here today? 10
11 Why you said you are here today? To gain more knowledge and insight into ADMs A thorough understanding of how/why/when Mutual, JV s, Social Enterprises are implemented with timelines, what other factors such as legal need to be considered Gain knowledge on different forms of delivery. Learning more about the barriers, challenges of spinning out and how these have been overcome. 11
12 The Context: Austerity II: The Next Wave
13 Options for Vulnerable Services from 2015: 13
14 Make-do-and-mend 14
15 Withdraw the service 15
16 Or build a Wave-Proof Business! 16
17 What are the Ingredients of Success? 17
18 Finding and Developing Leaders 18
19 Great External Support to become an independent venture 19
20 Building support with staff, members and the public (your customers) 20
21 Council Can Choose An Attitude 21
22 Councils can take a different view of risk 22
23 Councils use their legal powers to create a new enterprise 23
24 Don t miss the opportunity to ask us for our insight before we pack up and move on 24
25 Sirona s Story Janet Rowse Chief Executive
26 The snakes: National policy constraint & dissonance Staff & union anxiety Market anxiety Legal framework Distraction factor Spinning Out The ladders: Shared clarity of purpose between partners snow plough individuals Clear vision for the organisation Positive finances Governance addressed up front
27 Characteristics of a Social Enterprise Social Enterprises should: (Social Enterprise UK) Have a clear social and or environmental mission set out in their governing documents Generate the majority of their income through trade Reinvest the majority of their profits Be autonomous of the State Be majority controlled in the interests of the social mission Be accountable and transparent
28 Social Enterprise an umbrella term: Social Enterprise Profit Distributing Non Profit Distributing Co-operative Society Community Interest Co. Ltd by Shares Non Charity Charity Company Ltd by guarantee Charitable Co Ltd by guarantee Community Interest Co Ltd by guarantee Community Benefit Company
29 What is a Community Interest Company? An independent business with a social mission: committed to generating social benefit rather than financial profit. Community Interest Statement Asset lock Board & Members Limited by guarantee Regulation
30 What happened next? Stabilisation Cultural Infrastructure Service Model Business Model Growth Win some & lose some Business Strategy Ambiguity & uncertainty Leveraging the benefit of the governance model
31 Commercial Models Mutuals Programme Stepping Out Trade Up Events
32 Commercial Models Mutuals Policy The Coalition Programme for Government made a clear commitment to new forms of organisations delivering public services We will support the creation and expansion of mutuals, co-operatives, charities and social enterprises, and enable these groups to have much greater involvement in the running of public services 32 Commercial Models - Mutuals Programme
33 Commercial Models Mutuals Definition Although the sector has varying definitions, a public service mutual has three key characteristics An organisation that has spun out of the public sector and continues to deliver public services and involves a high degree of employee control 33 Commercial Models - Mutuals Programme
34 Commercial Models Mutuals Numbers The number of public service mutuals is growing rapidly, with many more in development Q Q Projected Commercial Models - Mutuals Programme
35 Fire & Rescue Social Work Housing School Support Adult Learning Libraries Commercial Models Mutuals Sectors Mutuals are operating in a range of sectors, delivering services from the front line to the back office Leisure Community Safety Education Health Environment Social Care Community Learning Children & Youth 35 Commercial Models - Mutuals Programme
36 Commercial Models Mutuals Benefits Mutuals deliver a number of benefits which improve outcomes for staff, for commissioners, and for citizens Service improvements Savings and efficiencies High growth and additional contracts Lower absenteeism Reduced staff turnover 36 Commercial Models - Mutuals Programme
37 Commercial Models Growth Study Projected Growth 12/13 to 13/14 Revenue 12/13 to 13/14 Savings Jan 2010 to Present 10% 645m 710m 21m Churn Jan 2010 to Present Contracts Jan 2010 to Present Absenteeism Jan 2010 to Present 16% % UNCLASSIFIED Commercial Models - Mutuals Programme
38 Mette Le Jakobsen Partnerships Director
39 Today s presentation What Optalis is and what we do Our achievements and what we have learnt LATC Partnership
40 About Optalis Local Authority Trading Company a company limited by shares and a social enterprise Established June 2011 successfully achieving contract extension in 2014 Wholly owned by Wokingham Borough Council Response to personalisation, sustainability and council transformation Provider of Choice and Provider of Last Resort
41 Agency Services Provider Services Comprehensive Service Portfolio Care at Home Specialist Dementia homecare Reablement Private pay homecare Employment, Learning, Leisure Outreach Short breaks Life long learning Day services Supported employment Supported Living LD, elderly residential LD supported living Elderly extra care Care Brokerage & Professional Support Support planning Independent brokerage Training & consultancy Social Work & Occupational Therapy Sensory needs specialism Assistive technology
42 Some facts Turnover: 11m Headcount: 350 FTE: % of staff on TUPE contracts 7% non WBC business Formal Trade Union recognition Regulated services all compliant with CQC Accredited with Support with Confidence National Care Awards winner 2014
43 Optalis Achievements to date Vision, purpose, values Develop & Invest Business basics Strategy Delivery Establish customer focus culture Strength of management team Financial controls & reporting Service innovation & social value Address sickness absence Staff engagement IT systems fit for purpose Policies & procedures Service turnaround Reduce agency spend Achieve efficiencies Dedicated HR, L&D Quality assurance Integration partnership Maximise productivity Strategic partnership Value for money Operational governance Planned and organic growth Modernise T s & C s Personalisation Core Values Company governance Ethical Care Charter Open Book approach
44 Learning. That spinning out is tough and that innovation is exciting! The vision and strategy has to be clearly articulated and regularly refreshed and the model needs to reflect the vision You can achieve a commercial approach whilst looking after your staff and adding real social value Quality and Customer Focus first principle Build the right leadership team and focus on front line recruitment and retention Building constructive partnerships both at commissioning level and at shareholder level is crucial open book approach Teckal is our foundation stone: Opportunities, solutions, and flexibility Governance is key for an LATC negotiate and observe
45 Why partner? 1. Improved timescales 2. Reduced cost 3. Reduced risk
46 Speed of Delivering Objectives SLOWER FASTER Two Partnership Options Do-it- Yourself 100% control 100% risk Limited expertise A Advisory Partnership 100% control 100% risk Leverage expertise B Joint Venture Partnership shared control shared risk Own the expertise HIGHER Total Investment Required LOWER
47 A. Advisory Partnership model Your Council Service Contract Optalis ltd Partnership fee Your Council LATC Council Services Self Pay = Contracting Authority
48 B. Joint Venture Partnership model Optalis Holdco Shareholder agreement Your Council Management fee / dividend JV Partnership LATC Service Contract Council Services Self Pay = Contracting Authority
49 Thank you /
50 One part questions only please! Give your name and role 50
51 What do you want to make happen? A chance for you to pitch your idea to us What service are you looking to set up as an ADM? Why? What is your proposal for generating income? What will be in it for your Council? What is in it for staff in the service? The local community? What challenges will you solve as an ADM? How will you operate differently than you do now? What will the impact of that be? 51
52 Making it Happen: Your next steps Legal Considerations Gayle Monk Central government support Scarlett Archer (Cabinet Office Mutuals Support Programme) Stepping Out s service offer Paul Jansen 52
53 Mutuals, spin outs and contracts Stepping Out November
54 What are the legal issues? Public sector powers Corporate design Procurement Staffing issues Transfer of assets State aid Contract / relationship management 54
55 Public sector powers Central govt depts the Crown limited only by prohibitions Local authorities general power of competence (though largely untested) Other public sector need to review powers to set up companies 55
56 What kind of model: Corporate design Mutuality and staff engagement What kind of service? Charitable? Commercial? Neither? What kind of organisation? Governance Relationship with parent body 56
57 Procurement Is getting business from the public sector (including the body spun out of ) crucial? If so new entity may have to compete with other suppliers unless Teckal exemption applies NB change on the way new directive Duty on public sector body to consider social value 57
58 Staffing issues TUPE regulations may apply If an in-house service is being outsourced then staff dedicated to that service will transfer under TUPE Will staff automatically become members of the new mutual? Beware of pensions Manage the risk in advance 58
59 Transfer of assets Where will the new body be based? On what basis will it occupy those premises? Community asset transfer What about equipment? What about IT or software licences, or intellectual property? 59
60 State aid Branch of European competition law Aims to create a level playing field for business Concerns the extent to which public sector bodies can support specific organisations (because of potential to distort competition) 60
61 State aid Key elements: Aid from public sector Which favours certain undertakings And distorts competition Which affects trade between EU members states De minimis level of 200,000 over three years (around 170,000) Other exemptions 61
62 Contract / relationship management How will public body manage relationship Framework agreement? And how will it manage contract? Performance and accountability Will relationship change: Procurement issues 62
63 If you have any queries or comments in regards to this document please contact David Alcock of Anthony Collins Solicitors LLP on or Mutuals, spin outs and contracting thanks for listening! November
64 Commercial Models Mutuals Support Programme The Mutuals Support Programme provides a comprehensive package to help at every stage in the journey Exploration Development Planning Growth Website & Call-back Mutuals Success Training Spin Out Support Going-for- Growth Training Pro Bono Guidance & Commissioning Academy Module 64 Commercial Models - Mutuals Programme
65 Commercial Models Find Out More Click through to the Mutuals Information Service, request a call back, and follow us on Twitter Online mutuals.cabinetoffice.gov.uk 65 Commercial Models - Mutuals Programme
66 Stepping Out s service offer Individual Service Level: Options Appraisal / Feasibility Study Outline Business Case Business Planning Development Programmes for staff Transition Partner Investment Partner Council-wide level: Propagator: Whole Council review of potential spin outs and a structured process to incubate and grow the best options 66
67 Thank you for your time Please complete an evaluation form to tell us how we can make events like this even better. Please get in touch to discuss any aspect of your thinking about alternative delivery models: Paul Jansen Director
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