Trading with Schools

Informal Consultation on Phase 2 Cabinet Report

Informal Consultation Overview

• Today’s session is an informal consultation on Phase 2 of Trading with Schools:– Potential externalisation

• Please feel free to ask questions as we go through• Its an opportunity for us to discuss the potential

content of the next report to Cabinet, scheduled to be submitted to 3rd October 2013 meeting

• Formal consultation will commence, if authorised, after the October 2013 decision

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Context

• School Funding is increasingly going directly to schools and other educational settings

• Diversification of the educational landscape and service providers

• BCC’s strategic response was to create Trading with Schools (TwS), a business unit, internal to the Council

• TwS does not have a budget and covers its costs through revenues generated from:– BCC commissioning– Selling services to schools

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Progress to Date – Phase 1

• Established in December 2012 with:– a new catalogue (covering all CS and CYPS services), – the formation of the Client Management Function– the secondment of Service Manager to lead the Business

Unit on an interim basis

• Improving relationship with schools• Good level of business for first year of trading• Some re-modelling undertaken• Senior Leadership Team mostly in place

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Benefits to the Council of Phase 1

• Ensuring provision of high quality services to Bristol schools of all types

• Appropriately aligning with the Council’s strategic role within a diverse school system

• Supporting the effective exercise of the Council’s on-going role as the maintaining authority for maintained schools and settings

• Creating a sustainable basis for the provision of high quality services which can be purchased directly by schools and which can be commissioned by the Local Authority to ensure the delivery of improvement in outcomes for children and young people in the city.

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Current Challenges

• Not all re-modelling has been completed• Difficulty in recruiting to Head of Operations• Further cultural change required to instil business

disciplines across the services• Need to re-build school’s confidence in some of TwS

services• New web ordering system (TwS Online) not yet

rolled out to all schools

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The Future Organisation

• Demand led and not supply led• Continuous improvement in the mix of products and services• Ability to react quickly to changing market demands• Ability to draw on associates for meeting peaks in demand and

developing new services• A bias towards innovation• Strong customer focus• Working practices focussed on customer requirements• Strong performance management

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Decision Criteria for Phase 2

• Enhances the Council’s ability to improve the educational attainment of the children and young people of Bristol

• Maintains the Council’s strategic influence on the provision of services• Is likely to generate a surplus for investment in developing services and

introducing new ones• Enables quick decision making• Enables innovative thinking• Enables robust performance management• Secures existing Terms and Conditions for transferring staff

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Potential impact on Council of Phase 2

Assessment of future development would need to fully take account of likely impact on the Council of any externalisations of TwS:•Accommodation•HR•Finance•ICT•EqIA•Environmental impact•Viability of residual services

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Options Initially Considered

1. Carry on as Phase 1, an internal business unit within the Council

2. Establish a Joint Venture with a commercial partner

3. Establish a Joint Venture with a non-commercial partner

4. Establish an external vehicle which could be wholly owned by the Council

5. Outsource TwS to a commercial organisation

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Option 1:Remain as an Internal Business Unit

• 190 staff currently in an internal business unit• Whilst there are advantages to this level of stability, it is

not believed to be possible to build an innovative, agile organisation that can rapidly respond to the changing environment

• The wider cultural change needed for TwS to be a success will be difficult to achieve internally

Therefore, this option was not recommended for further investigation, however, will return into consideration if the neither of the chosen options is viable

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Option 2:Joint Venture with Commercial Partner

• Establish a Public Limited Company (PLC) or a Limited Liability Partnership (LLP) with a commercial organisation

• A commercial organisation would want to maximise profits

• The advantages of improved commercial acumen (greatly needed) are outweighed by the negative aspects of being driven solely by generating a profit

Therefore, this option was not recommended for further investigation

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Option 3:Joint Venture with Non-Commercial

Partner

• Utilise the expertise of an organisation operating in the private sector

• Includes the possibility of a joint venture with another Local Authority

• They would to contribute significantly to accelerating the progress of TwS to becoming an efficient, effective organisation, with realistic growth plans, without losing the public service ethos

Therefore, this option was recommended for further investigation. It will be analysed and included in the Cabinet Report 13

Option 4:External Vehicle owned by the

Council

• A new entity wholly-owned by the Council• Advantages potentially include; greater commercial

freedom, lower operating costs, whilst delivering the strategic objectives of the Council

• Consideration has to be given to not displacing TwS cost reductions back into the corporate centre

Therefore, this option was recommended for further investigation. It will be analysed and included in the Cabinet Report

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Option 5:Outsource TwS to a Commercial

Organisation

• All staff TUPE across to a commercial organisation• This option is not considered viable because:– There is little funding to pay an outsourcer (the schools

have the majority of it)– An outsourcer would be focussed on profit and not

improving attainment

Therefore, this option was not recommended for further investigation

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Two Options Recommended for Further Investigation

Option 3

Establish a Joint Venture with a non-commercial partner

Option 4

Establish an external vehicle which could be wholly owned by the Council

(Option 1, the status quo, will be revisited if neither of the above options are considered to be viable)

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Principles for Phase 2

• TUPE will apply to all staff in TwS at the date of transfer

• Terms and Conditions of employment will be maintained for staff that transfer

• Transfer will be compulsory for most of the existing staff, as driven by anticipated demand for services

• Discussions are underway to determine what accommodation will be used

• It is likely that there will be a migration away from the Council’s ICT systems over 2-3 years

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Potential Entity Types (1)

• Social Enterprise– Trading organisations driven by social and/or

environmental purpose which generate surpluses for reinvestment

• Co-operative– Businesses that are fully or majority-owned by their

members – who may be employees, consumers, others in the community or a mix of these

• Employee owned business– Companies where employees own a significant or

controlling stake in the business18

Potential Entity Types (2)

• Mutual– Businesses owned by their members. The term has more

recently been used to cover a range of organisation forms including co-operatives, employee-owned businesses and social enterprises.

The definitions above can be overlapping. They are not based in law and are founded on a set of principles and on common understanding that has emerged over several decades.

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Potential Legal Entities

Community Interest Company (CIC)A relatively new type of company introduced in 2005 designed specifically for social enterprises that want to use their profits and assets for the public good. Company Limited By Guarantee (CLG)A form of company used primarily for non-profit organisations. A guarantee company does not have a share capital or shareholders, but instead has members who act as guarantors. Company Limited By Shares (CLS)A form of company with shareholders with limited liability. The shares may not be offered to the general public, unlike those of a public limited company (plc). Industrial And Provident Society (IPS)A legal form commonly used by co-operatives

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