1. Delivering Services Differently Wednesday 10 th July 2013

2. Conference Chair Cllr Anthony McKeown, Deputy Leader, High Peak Borough Council

3. Transforming Public Services Presentation to East Midlands Councils Wednesday 10 th July William Burgon Policy and Commercial Advisor, Cabinet Office

4. Transforming Public Services4 Transformation What We Mean Transforming Public Services Transformation = Structural Change

5. Transforming Public Services5 Transformation Case for Change Transforming Public Services Transformation Significant financial constraints Restrictive bureaucracy Untapped commercial potential High quality services fit for the 21 st Century Motivated and empowered staff Revenue generation for HMG and the taxpayer

6. Transforming Public Services6 Transformation Strands of Work Transforming Public Services Digital Services Alternative Models Commercialisation Workplace

7. Transforming Public Services7 Transformation Cross Government Transforming Public Services Transformation is taking place across government

8. Transforming Public Services8 Commercial Models Mission We help identify, develop, and deliver the best business models to achieve better public services Transforming Public Services Higher quality services Improved value for money Better deal for citizens

9. Transforming Public Services9 Commercial Models Principles Our work is driven by a number of core principles, which guide how we deliver projects Transforming Public Services De-layer service delivery Move decisions closer to users Realise commercial opportunities Recognise each service is unique Partner with the right organisations Promote and protect public service ethos

10. Transforming Public Services10 Commercial Models Approach Transforming Public Services Each opportunity, whether in central government or in the wider public sector, is approached on its own merits Engage DepartmentsArms Length BodiesWider Public Sector Identify Direct contactControlsEvents Support AdvisoryDeliveryFunding

11. Transforming Public Services11 Commercial Models Types of Model All models have their own advantages and disadvantages; in each instance, we explore which is most appropriate and how it should be applied Transforming Public Services Outsourced Service contract Mutual Mutual JV Privatise HMG In House HMG / Private HMG / Mutual HMG / Mutual / Private HMG Joint Venture De-layer service delivery Move decisions closer to users Realise commercial opportunities Recognise each service is unique Partner with the right organisations Promote and protect public service ethos

12. Transforming Public Services12 Commercial Models Successes Live Projects in 12 Departments Best Management Practice Energy for Growth MyCSP 120 Emerging or Established Mutuals £10m Mutuals Support Programme Transforming Public Services We have recorded some impressive results already, with a lot more to come within the lifetime of this Parliament

13. Transforming Public Services13 Commercial Models Contact Us Transforming Public Services Read more on GOV.UK and the Mutuals Information Service, or get in touch with the team Online Search ERG on GOV.UK mutuals.cabinetoffice.gov.uk Twitter @mutualsgovuk Email commercialmodels@cabinet-office.gsi.gov.uk

14. Transforming Public Services14 Transformation Q&A Transforming Public Services Q&A

15. Making the Right Choice Anja Beriro, Browne Jacobson LLP 10 July 2013

16. Content Strategic Context Strategic commissioning Different delivery models Undertaking an options appraisal Your role and who to involve

17. Spending

18. Austerity

19. Politics

20. Public sector reform

21. Risk v capacity

22. Strategic commissioning

23. Main delivery models In House provider Shared services Private Sector Operator – not today Joint Venture Social Enterprise Trading company

24. Options appraisal Provides a framework for: Identifying the different ways outcomes might be achieved Systematic process Evidence informed case for change Transparency : sharing the decision making process and outcomes with others

25. Key issues to consider Establishing the strategic need. Establish the range of resources available. Establishing the key outcomes and objectives you want to achieve in terms of meeting the strategic need. Establish your ‘do minimum’ or “baseline” position. Establish your organisation’s position on risk transfer. Develop your evaluation criteria for the long-and short-listing process. Identify the full range of options, which may be available to deliver your desired outcomes and objectives. Create a short-list from a high level option appraisal. Evaluate fully the short-listed options against the evaluation criteria. Progressing the preferred option

26. High level appraisal criteria Improved quality of service Improved efficiency Quality of employment Corporate impact on the authority Sustainability and growth Added value Speed of implementation Flexibility/scope for collaboration Governance (LA ‘control’)

27. Who should be involved? Politicians Overview and Scrutiny Senior Managers Commissioning staff Service staff Other staff within the organisation Service users Members of the public

28. Joint committee S101(5) and s 102 Local Government Act 1972 - full Council functions s9EB Local Government Act 2000 and subsequent regulations – executive functions Discharge of functions or advice on discharge of functions Members of JC are elected members of the delegating authorities – tasks carried out by officers Purely administrative arrangements – no contract, therefore outside public procurement regime No corporate status so need “lead authority” for any contracts with third parties – these may need to be procured Documented in a governance agreement Examples include regional procurement bodies such as ESPO and YPO Much simpler than a corporate structure but without protection of limited liability

29. Delegation S101(1) Local Government Act 1972 – full council functions s9EA Local Government Act 2000 – executive functions From one authority to another which has same functions Again an administrative arrangement keeping it outside public procurement regime BUT – recent ECJ case Piepenbrock C-386/11 setting out clear reminder of what a true delegation means –It is not the same as control over a Teckal company –It is not the same as Hamburg Waste judgement (next slide) –Cannot have a supervisory role True delegations must give over all responsibility for delivering service to the delegatee Delegator can withdraw delegation at any time Difficult balance politically

30. Hamburg Waste judgement Different type of public-public co-operative working Very little case law but being set out in new Procurement Directive Between two or more public bodies: –To facilitate genuine cooperation to perform a public task –Not to advantage any particular private entity –To reimburse the costs of carrying out the tasks –With a distribution of tasks (not necessarily equally) between the authorities –With no private sector involvement in the agreement

31. Issues to consider - corporate Governance arrangements: staff ownership; user representation; local authority involvement; Income/funding: trading; grants; contracts; Distribution of profit / surplus; Asset Lock; Market maturity: sufficient choice of suppliers; Risks; Procurement strategy; Regulation requirements; Power to trade?

32. Choice of structure Incorporation required? (see later) Companies –Limited by shares –Limited by guarantee –Community interest companies Industrial and provident societies Limited liability partnerships

33. Other issues The role of members (“owners” not elected) The role of Directors Conflicts of interest Governance and decision making Dispute resolution and deadlock Appointment of new members Resignation and termination Funding Role of executives Confidentiality and FOIA Impact of procurement law on the above

34. Public procurement Local Authorities are as a matter or principle subject to EU procurement regime. The EU procurement regime applies to the award of certain types of services contract when their value exceeds £173,000 Accordingly, when considering the establishment of a shared service the implications of the procurement regime must be considered. There is no automatic exemption purely because the contract is between public bodies and a procurement exercise may still be required.

35. Teckal exemption Where services are provided by an organisation which, although legally separate, is "economically dependent" on the buying authority to such an extent that it would be inappropriate to make their dealings subject to the EU procurement rules. This is known as the "in-house" or “Teckal" exception, established by the case Srl v Comune de Viano and Azienda Gas-Acqua Consorziale (AGAC) di Reggio Emilia (C- 107/98) [1999] ECR I-8121. The case establishes the principle that, to benefit from the in-house exception, the buying authority must be satisfied that the authority selling the services is a captive entity, that is, the selling entity: –Carries out the principal part of its activities with the relevant authority. –Is controlled in a similar way to that which the relevant authority exercises control over its own internal departments. –Is funded wholly or mainly by the controlling authority. –Has no private sector participation or financing (although private sector directors are permitted if their role is to provide expertise to fulfil public interest objectives).

36. Multiple controlling authorities Possible for more than one local authority to be a member of a Teckal company Although no individual authority needs to have sole control of the company, the participating authorities must have ‘decisive influence’ over strategic objectives and significant decisions Decisive influence can be present even where it can only be exercised jointly alongside other public authorities

37. We are a national firm with a track record of delivering solutions to our national and international client base. We have experience across a wide variety of sectors and a client portfolio to be proud of - including blue chip corporates, major insurers and public sector organisations including over 150 local authorities We have a national reach from our offices in Birmingham, Exeter, London, Manchester and Nottingham. This Seminar and supporting materials are prepared solely for training purposes and are not a substitute for legal advice. Anja Beriro, Associate T: 0115 976 6589 / 07796 343136 E: anja.beriro@brownejacobson.comanja.beriro@brownejacobson.com

38. Rushcliffe – great place, great lifestyle, great sport Rushcliffe Borough Council – Growing a social franchise 10 July 2013 Neil Clarke, Leader

39. Rushcliffe – great place, great lifestyle, great sport Introduction Background – drivers for change Our approach – planned and considered Growing Streetwise into a social franchise Lessons learnt from our journey so far Group discussion and feedback

40. Rushcliffe – great place, great lifestyle, great sport Drivers for change The challenge faced by many councils and elected Members Reducing costs (2.8 million) Maintaining the quality of service Providing a sustainable future for current employees Contributing to the local economy

41. Rushcliffe – great place, great lifestyle, great sport Our Approach – the 4 year plan Proactive approach – service reviews to consider ‘doing it differently’ and alternative delivery models Production of a ‘Four Year Plan’ to manage the funding gap over the four years by: Cost reduction Income maximisation Service Redesign Established a Transformation team to help drive the change agenda

42. Rushcliffe – great place, great lifestyle, great sport Investigate / Procurement Investment / Profit Share Transition Support / Profit Share Contracted Service Direct Provision Social Enterprise / Cooperative Efficiencies and Service Standards Support / Merger and Growth The future of service delivery

43. Rushcliffe – great place, great lifestyle, great sport Looking at private sector business models

44. Rushcliffe – great place, great lifestyle, great sport Looking at private sector business models All of the brands are franchises Offering consistent quality, service, pricing and environment

45. Rushcliffe – great place, great lifestyle, great sport Emerging service delivery models DISSEMINATIONPARTNERSHIPLICENSING SOCIAL FRANCHISING JOINT VENTURE WHOLLY- OWNED Social franchising is the use of a commercial franchising approach to replicate and share proven organisational models for greater social impact

46. Rushcliffe – great place, great lifestyle, great sport 30 years experience of caring for the Borough Highly skilled workforce with a can do attitude Taking care of grounds maintenance and street cleansing in the Borough

47. Rushcliffe – great place, great lifestyle, great sport Why transform Streetwise?  Existing quality service, with strong local brand and potential to grow  Opportunity to do it differently  Empower staff to have a greater say in their destiny  Retain social values, but with a more commercial approach  Greater freedoms to make decisions, trade, market and innovate  Develop the brand and services

48. Rushcliffe – great place, great lifestyle, great sport How? – My perspective  Established cross party member group – overseeing the review:  Appointed Cabinet Member to lead  Workshop to identify Members’ individual strengths and commercial experience  Member development programme e.g. social franchising & business case assessment  Addressing Member concerns – becoming more commercial  Portfolio holder briefings

49. Rushcliffe – great place, great lifestyle, great sport How?  Review explored options of reducing costs, generating income or ‘doing things differently’  High level of staff engagement in process  Phased approach with review gate at each key stage

50. Rushcliffe – great place, great lifestyle, great sport The journey so far  Identifying the skills and knowledge gaps  Getting the right advice  Establishing the governance structure  Stakeholder engagement and support  Changing the culture  Developing the offer  Testing the concept - dipping our toe in the market

51. Rushcliffe – great place, great lifestyle, great sport Streetwise Evolution Step 2 Social Enterprise Other clients Rushcliffe BC Step 1 Council Enterprise

52. Rushcliffe – great place, great lifestyle, great sport Proposed Business Model Step 3 Social Franchise Franchisee Other clients Franchisee RBC Franchisor Business Unit

53. Rushcliffe – great place, great lifestyle, great sport Conclusions  At present our key focus is on…  Workforce challenge – culture and Ts&Cs  Procurement challenges  Local economy – opportunity to grow  Element of risk and reward for the Council  Council – secure financial return? We’re excited about the potential to do something different and show other councils opportunities to develop.

54. Rushcliffe – great place, great lifestyle, great sport Questions Any questions?

55. Rushcliffe – great place, great lifestyle, great sport Discussion Discussion topic: What are the key issues for councillors when considering alternative service delivery models? 10 minute discussion in your groups, followed by feedback

56. Rushcliffe – great place, great lifestyle, great sport Discussion Discussion topics: How are you driving innovation and development within your authority? 5 minute group discussion followed by feedback

57. Commercial Models Mutuals Programme Presentation to East Midlands Councils Wednesday 10 th July William Burgon Policy and Commercial Advisor, Cabinet Office

58. Commercial Models - Mutuals Programme58 Commercial Models Mutuals Policy The Coalition Programme for Government made a clear commitment to new forms of organisations delivering public services Commercial Models - Mutuals Programme “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”

59. Commercial Models - Mutuals Programme59 Commercial Models Mutuals Definition Although the sector has varying definitions, a public service mutual has three key characteristics Commercial Models - Mutuals Programme …and involves a high degree of employee control …and continues to deliver public services An organisation that has spun out of the public sector

60. Commercial Models - Mutuals Programme60 Commercial Models Mutuals Numbers The number of public service mutuals is growing rapidly, with many more in development Commercial Models - Mutuals Programme Probation 9 70 120 Q4 2010Q2 2013Projected

61. Commercial Models - Mutuals Programme61 Commercial Models Mutuals Sectors Mutuals are operating in a range of sectors, delivering services from the front line to the back office Commercial Models - Mutuals Programme Probation Adult Learning Community Learning Libraries Health Social Care Social Work Fire & Rescue Education Children & Youth Leisure Housing Community Safety Environment School Support

62. Commercial Models - Mutuals Programme62 Commercial Models Mutual Sectors Commercial Models - Mutuals Programme The growth in scope has been explosive, and developing projects will further broaden the services offered by mutuals

63. Commercial Models - Mutuals Programme63 Commercial Models Mutuals Benefits Mutuals deliver a number of benefits which improve outcomes for staff, for commissioners, and for citizens Commercial Models - Mutuals Programme Service improvements Savings and efficiencies High growth and additional contracts Lower absenteeism Reduced staff turnover

64. Commercial Models - Mutuals Programme64 Commercial Models What We Do Commercial Models - Mutuals Programme Our work is designed to inform, guide, and support public sector staff and parent bodies along their journey to mutualise services Campaigns Commissioner Support Stakeholder Engagement Mutuals Support Programme Mutuals Information Service

65. Commercial Models - Mutuals Programme65 Commercial Models Mutuals Support Programme Commercial Models - Mutuals Programme The Mutuals Support Programme provides a comprehensive package to help at every stage in the journey ExplorationPlanningDevelopment Website & Hotline ‘One to Many’ Training ‘One to One’ Funding Ambassadors & Mentors

66. Commercial Models - Mutuals Programme66 Commercial Models Mutuals in Action Commercial Models - Mutuals Programme A number of mutuals have already recorded impressive results, and the evidence base continues to grow CECSSEQOL Social adVentures 3BM 8% savings last year £3m new business in last 12 months Staff innovation resulted in iPad deployment First mutual joint-venture in wider public sector Combines public service ethos and private sector expertise 4% increase in nurse visits per month 12% savings in first year Building network with local VCSE providers 262% growth winning RBS SE100 award Expansion into new and diverse service areas 20% fall in absenteeism cost

67. Commercial Models - Mutuals Programme67 Commercial Models Mutuals in Action Commercial Models - Mutuals Programme These independent businesses are delivering significant improvements in productivity, driving down staff absenteeism City Health Care Partnership CIC has delivered 4% efficiency savings, worth £600,000 a year. Central Surrey Health made 41% productivity gains on the Stroke Ward at Epsom General Hospital, so patients get 76 more treatment slots per week. Anglian Community Enterprise achieved 4.5% efficiency savings in 2011/2012 worth £1.4 million. Productivity At Care Plus Group - average sickness pre spin-out was 22.3 days per year. It has now fallen to 10.6 days per year. At Social adVentures, the cost of staff on sick leave before spinning out was £25,000. It is now only £2,000. At Central Essex Community Services, days lost to sickness absence per FTE decreased by approximately two days per employee per year. Staff Absenteeism Staff from Central Essex Community Services (left) and Central Surrey Health (below) at work

68. Commercial Models - Mutuals Programme68 Commercial Models Mutuals in Action Commercial Models - Mutuals Programme They are also growing rapidly, both in terms of staff size and turnover, whilst delivering significant improvements in user outcomes Social adVentures won the RBS SE100 Index Growth Champion award as its annual turnover increased 262%. City Health Care Partnership CIC has expanded from 1,200 to 1,400 staff. Project Salus has increased its turnover and staff 30% since spinning out. Growth NAViGO’s 2011 staff survey saw 79% of staff recording patient care as their Trust’s top priority, against a national average of 66%. 75% of SEQOL’s re-enablement patients do not require long-term term care. After Circle’s mutualisation of Hinchingbrooke, cancer targets which were last met in summer 2010 have been met five months running. Outcomes City Health Care Partnership CIC staff at work

69. Commercial Models - Mutuals Programme69 Commercial Models Mutual JVs Commercial Models - Mutuals Programme Mutual joint-ventures present another take on the model, and are already successfully delivering core services in a number of sectors 3BM is the first mutual joint venture to spin out of local Government. They have entered into a partnership with Prospects, the education employment company, bringing benefits to both sides. By combining the public service experience and ethos of 3BM’s staff with Prospects’ capital and business expertise, 3BM is leveraging the best of the public and private sectors. This means both parties can access skills and resources they would otherwise lack, enabling 3BM to provide a suite of high quality services to schools, including financial management, IT, and building development In spinning out, the local councils will see £1million in savings over the next four years.

70. Commercial Models - Mutuals Programme70 Commercial Models Find Out More Commercial Models - Mutuals Programme Click through to the Mutuals Information Service, call the hotline, and follow us on Twitter Online mutuals.cabinetoffice.gov.uk Hotline 0845 5390 543 Twitter @mutualsgovuk

71. Commercial Models - Mutuals Programme71 Commercial Models Q&A Commercial Models - Mutuals Programme Q&A

72. Engaging the workforce Adam Barker Local Government Association 10.7.2013 www.local.gov.uk

73. View from employees – CIPD survey CIPD Spring 2011 Employee Outlook Survey – public sector results Public sector overall job satisfaction down from 42% to 38% For larger employers overall satisfaction was at 26% 30% of public sector workers think its likely they will lose their jobs and are the least likely of any sector to think they’ll get a new job 45% of public sector workers say they are under excessive pressure at work Trust in leaders and senior managers continues to decrease www.local.gov.uk

74. New models of service delivery and employee engagement “The most important point is that mutualisation of public services can work incredibly well – staff are enthused, there is more innovation, better ways of working and increased efficiency.” Professor Peter Marsh vice-chair of the Cabinet Office's mutual's task force

75. Some of the characteristics of successful social enterprises Staff empowerment in decision making and governance Commitment to social mission Reduced absenteeism Responsibility Lower staff turnover Enthusiasm

76. Why bother engaging staff who are leaving the organisation? Well managed change sends positive message to all staff Will improve, performance, reduce costs and ultimately improve quality service delivery Valued employees will be retained in new organisation Council will need to work collaboratively with new organisation so engaged high performing employees are critical to an effective ongoing partnership.

77. Barriers to effective engagement in change process Clear Vision developed and shared by Councillors and officers-Strong clear leadership-70% of major change programmes fail (CIPD) this is a critical feature of success Managers get too far ahead of staff in the ‘marathon’ of change Clarity Communication Link short term action to long term vision

78. Resistance to change is a natural human response Beckhard’s law: Dissatisfaction x Vision x Steps forward > Resistance

79. So what can help? An inclusive approach Successful Change ExplainAskListenRespond Help people feel involved in and responsible for aspects of the change

80. What works? An individual approach Don’t take criticism personally! Be patient and pay attention Discuss implications Adapt your leadership to what individuals need from you at each point of their change journey Clear explanatio nfor change and a vision of the future Allow others to take responsibility and control Encourage and coach Exchange feedback Encourage risk-taking Prepare to move on DENIAL ACCEPTANC E ANGER & BARGAINING MOVING ON

81. Key messages for successful engagement Ensure spin out proposal is viable and well thought through-internal mechanism for evaluation-What are you selling + who will buy? Consult early with staff and TU’s Listen + adapt Identify concerns and respond Be Honest Promote opportunities

82. Why do it ? Margaret Elliot OBE Founder Sunderland Home Care “Workers are valued and feel part of the organisation; people participate and are listened to. They have an actual stake in the organisation which in return ensures commitment, commitment, commitment!” leading to high quality service provision

83. Event Round Up and Evaluation