1. How To Drive A Commercial Approach In The Public Sector
Richard Harrison

2. Its nothing new………
Victorian councils embarked on large investment programmes
Run as separate companies
In response to market failure, to improve local lives and create jobs
To deliver return on investment to fund municipal services such as parks and libraries
80% of Waterworks were municipal
30% of all Gasworks were Municipal.
Municipal Ports, Tramways, markets across country
Hull Corp – first telephone Exch.
Newcastle Airport –1935

3. Fast forward – State of play today
94% of authorities share some services with another council;
More than half of councils (58%) own a trading company, and A majority of councils (57%) operate a joint venture with the private sector;
The sector’s combined profits of externally traded services of £1.5bn between 2008 and 2013 exceeded that of companies like JD Wetherspoons (£353m), John Lewis (£885m) and Waitrose (£1.25bn)
91% use assets such as land in an entrepreneurial manner
62% operate joint ventures with a neighbouring council, as well as 57% with the private and 54% with the voluntary sector
38% invest money in private sector enterprise
Number of shared services doubled between 2012 and 2014
Without these entrepreneurial activities, eight out of ten councils say they would have to cut services and raise taxes
Localis – Commercial Councils

4. What are commercial approaches?
Internal Charging and Trading
Trading through a separate legal entity
Commercial Procurement and Contract Management
Investing;
Return in Investment?
Economic Growth?
Social Return?
Strategic Commissioning with Numbers

5. Which Services are developing more enterprising approaches?
School Traded Services
Adult Social Care
Cultural and Leisure Trusts
Environmental / Waste / Streetscene
Children's Trusts
Accountable Care Organisations (Health / Care)
Back Office / Transactional Services
Back Office Professional Services
Soft and hard FM
Property Development Co’s
Energy Companies

6. Why develop a more enterprising approach?
Generate income / Defend market share
Increase productivity / reduce costs
To develop new skills / more entrepreneurial culture
Improve the quality of services by becoming more responsive to needs
To keep skilled staff in the market
To promote approaches to better manage demand / incentivise co-production
As vehicles for public service reform / integration
To maintain a strategic link where they are being eroded (schools)
More Funding Opportunities

7. What Makes a Successful Commercial approach?
There is no magic ingredient to success
Take a corporate view
Never start with form – always start with function
Have a clear business case – evaluate all options
Have a detailed business plan
Be clear on governance

8. Evaluating Options / Developing a Business Case
What outcomes do we want to achieve ?
Does it give the customer what they need?
Who can and who is best placed to manage and run this service?
Budget position and existing plans
Performance and Quality Data
Opportunities for meeting outcomes through different approaches
Opportunities for Reducing Costs / Improving Productivity
It’s often said that the seeds of success or failure are sewn at the inception of a project.
When considering setting up an new organisation its critical that you take an evidence based approach
It’s self evidence but you’d be amazed at the amount of decisions which are leaps of faith.
When making
Commercial Opportunities
Market Appraisal
Impact on the economy
Implementation and Delivery Risk
Staff views
Residents views
Draft

9. Identify the best deliver model
What is the most appropriate delivery model?
Deliver Services Internally
Look to increase productivity and maximise commercial capabilities / opportunities
Purchase From the Market
Purchase services from the market / potential for contractual joint venture around growth risk/profit share
Integrate / Joint Venture / Shared Service
Establish Alternative Service Delivery Vehicle
(LATC, CIC, Trust, Mutual, etc)

10. Develop a Clear Business Plan / Financial Plan
Determine your ambition
Understand your market
How do cost bases compare
Can you increase productivity
How will you compete / win business?
What resources and capabilities do you need?
Understand and Manage Risk

11. Getting the Governance Right
Clarity on Roles:
Internal Trading and Risk
Client
Commissioner
Contract Manager
Board of Directors (Company Law)
Shareholder Role
Key Controls:
Contracts / Specification / Payment Mech
PMF
Reserved Matters / Business Plan
Reporting Mechanisms

12. Lets Talk

13. Richard Harrison Managing Director of C
Richard Harrison Managing Director of C.co CIPFA's New Advisory Service, CIPFA, The Quadrant, Sealand Road, Chester, CH1 4QR