Scrutiny Review Panel Commercial and Traded Services 13 Roderick - - PowerPoint PPT Presentation

Scrutiny Review Panel “Commercial and Traded Services” Roderick O’Connor Assistant Director

Agenda Item 5

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• 1. Where are we now?
• 2. Where do we need to go next?
• 3. Alternative Delivery Models

Agenda

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The Context

• As we are all aware, we will continue to face decisions about

which public services to restructure, scale back or close altogether.

• The MTFS continues to demand increasing savings.
• The creation of Academies and their evolution continues to

provide challenges and opportunities.

• It remains a changing landscape, with fluctuating markets

and we continue to review how we develop our approach and whether we should embrace alternative delivery models.

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Lets Take Stock

In 2012 a programme was created to address Cabinet’s response to an update on the MTFS which identified financial risks associated with the academy conversion agenda: The programme objectives were:

• To develop a Commercial Services Strategy
• To develop a sustainable business stream from services

provided within the councils remit and legislature.

• To retain 90% of our current business over the next two

years.

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Our Strategy

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Our Approach – to a changing market place

• In September 2013 we created a commercial service strategy

defining our approach.

• Our approach was ambitious but measured.
• Faced with the number of possible options we decided, that we

would trade but without major infrastructure changes.

• Our aim was to generate funds to support wider council objectives
• f securing a positive outcome for Leicestershire.
• Use the funds generated to either increase the range of activities

by financially supporting non-funded work, or reduce the burden

• n council tax payers to fully meet the cost of existing activities.
• Run services with a commercial and business approach that

ensures we can continue to offer quality services, that customers will choose, as high quality, value for money services, at a price they can afford.

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Strategy Proposed to Board

• Deliver value to customers by working together to

deliver a tailored quality offering to meet their changing needs

• Grow quality services in new regions and into new

markets

• Develop staff to deliver our values, using a consistent

approach to reach objectives and achieve our targets

• Develop relationships and marketing channels

effectively

• Consider how our structure and approach needed to

evolve to achieve this and the possible benefits of developing a wholly owned trading company

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Commercial Services Strategy

Our intention was:

• To separate traded services from core services.
• To maintain and develop a business stream and generate a

contribution to cover County Council costs.

• To achieve this without, distracting officer focus on the delivery of

the County Council’s core priorities.

• To develop quality services which would provide a stepping stone

to any future direction that emerges within a volatile marketplace and a changing local authority environment.

• To review our strategy at some point between September 2014

and September 2015

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What have we achieved?

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What We Have Achieved?

• Moved trading services from CYPS to within Corporate Resources
• This has enabled us to focus on developing and training staff within

these teams

• Created marketing literature to promote all services to schools and

academies

• Begun to cross trade and market services beyond the boundaries of

teams

• The Corporate Resources Business plan and MTFS savings have

incorporated improved income targets and these are being delivered

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What We Have Achieved?

• Business levels mostly sustained in a changing and

challenging market.

• Services continually evolving and responding to

maintain and improve quality and meet customer need.

• We have ensured that the standards and principles of

trading that we have adopted does not conflict or compromise other Council activities

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Turnover

Total = £25.4m Total = £24.5m

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Turnover by Customer

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Largest Services

Turnover Contribution Service 2013/14 2012/13 2013/14 Future Expectations £m £m £m School Food 9.6 0.4 0.6 A significant increase in turnover is expected when free infant meals are launch in September. This should present contribution opportunities whilst reducing the cost of the service to schools Sites Development 1.3 0.0 0.1 On the back of improving economic conditions service is targeting greater sales with existing customers and expansion outside of Leicestershire. Insurance 1.2 0.3 0.3 Absence scheme now outsourced, due to the change in legal status of schools converting to academies. Property and liability insurance schemes likely to stop due to the new scheme proposed by the EFA. Farms & Industrial 2.7 0.6 0.5 Increase contribution being targeted, which should be supported by the capital investment fund. Economic development grants may also aid expansion of this service. LEAMIS 1.3 0.2 0.2 Expected to expand on the growth already delivered outside of Leicestershire Beaumanor 1.5

• 0.3
• 0.2 A combination of increased income and reduced costs are being targeted to ensure that Beaumanor
• perates on a financially sustainable basis.

Total of largest 17.6 1.3 1.6 General Expectations Across all trading services an additional contribution of £1m has been included in the MTFS. Further increases are being targeted, but these have a lower level of certainty and some will be required to offset reductions elsewhere. Competition to date has been lower than expected, although may increase when new academy conversions stop. This could be compounded by potential insourcing by academies.

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New Services

Services not traded to schools before conversion Budget 2014/15 £ 000s Internal Audit Service 65 Health & Safety 228 Performance Information 120 Property Valuations 60 Total 473

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Expanded our customer base

Academies

District Councils

Schools

Leicestershire Fire and Rescue Service Leicestershire Constabulary

Parish Councils

Leicester City Council

Charitable trusts

Private industry

ESPO Leicestershire Fire and Rescue Service Probation Services

NHS

Other Educational Establishments

Kings Lynn & West Norfolk Borough Council

Stoke-on-Trent Royal Borough of Windsor & Maidenhead Rutland Nottinghamshire Lincolnshire

Derby City Wiltshire Day Nurseries Dorset

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Services in perspective

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ICT Operations – Traded Services

ICT Operations trades two full services, LEAMIS and Central Print

ICT Operations also has the potential to sell additional ad-hoc and non-labour intensive services e.g. Disaster Recovery space (sold to Leicester City annually) & ICT Service Desk (previously sold to MBC)

LEAMIS Central Print The Service A professionally accredited support service to schools and academies A quality, environmentally accredited, value for money printing service to a range

• f organisations.

Customers Customers are in Leicestershire, Rutland, Stoke, Derbyshire, Nottinghamshire and Lincolnshire External customers include Leicester City, Maidenhead, Kings Lynn, MBC, CBC, Police, Fire, Health and Private

• rganisations

Product Service Desk, Training, Consultancy and Technical ICT Services Brochures, books, leaflets, flyers, committee papers, bulk copying, canvases, calendars, no-carbon book sets, forms and marketing materials

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History of Trading in ICT Operations

• ICT Services are a highly tradable commodity
• In 2010/11 Central Print Services were re-organised with business oriented

principles – catalyst for increasing trading surplus for the next three years

• This is against a whole scale re-organisation of the printing function, a

general decline in the print industry and a reduction in internal print expenditure

• In 2012, the same took place with LEAMIS and again trading surplus

increased

• This is against a whole scale re-organisation in a tumultuous education

environment which saw high staff turnover and operational and financial pressures from academy conversion

• In both examples, staff culture has been re-focused on financial awareness

and customer needs

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Central Print surplus

70 126 166 128 20 40 60 80 100 120 140 160 180 2010/11 2011/12 2012/13 2013/14 £ thousands

Contribution to LCC overheads Central Print Services

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LEAMIS surplus

50 201 182

• 60
• 40
• 20

20 40 60 80 100 120 140 160 180 200 220 240 2011/12 2012/13 2013/14 £ thousands

Contribution to LCC overheads LEAMIS

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Property Traded Services

Soft Facilities Management Hard Facilities Management Industrial and Farms Property Portfolio

The Service

Provision of out-sourced Building Cleaning, Grounds Maintenance, Security, Waste Management, and Pest Control. Delivery of in-house Site Development service Premises Officers, Postal services and Transport and Logistics. Provision of maintenance support services, Minor and Major capital works full turn key packages, Regulatory compliance, Building condition and energy surveys. Property Services helpdesk and inspection and clerk of works functions. To provide quality industrial premises for new start-up and small business enterprises. To provide farm tenancies and farming opportunities to the rural community.

Customers

LCC Corporate Customers, Schools, Academies, District and Borough Councils, Police & Fire, City Council etc. LCC Corporate Customers, Schools, Academies, District and Borough Council, Police & Fire, City Council etc. Private Business and new start- up enterprises requiring

• premises. Private individuals

seeking an agricultural

• pportunity.

Product

Total Soft Facilities Management Package provided either as a whole or individual elements. Total Hard Facilities Management Package provided either as a whole or individual elements. Provider of industrial premises and farm estates within Leicestershire

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Recent traded growth by service

1,600 1,700 1,800 1,900 2,000 2,100 2,200 2010/11 2011/12 2012/13 2013/14 £ thousands

Soft FM contracts traded income

50 100 150 200 250 300 350

2010-11 2011-12 2012-13 2013-14

£ thousands

County Farms contribution

100 200 300 400 500 600 700 800 900

2010-11 2011-12 2012-13 2013-14

£ thousands

Industrial Properties contribution

Contribution (excl. maintenance & refurbishment) Contribtion

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School Food School Financial Support The Service A quality accredited catering service to schools and academies A professional financial support service to primary/special schools and academies Customers Customers are in Leicestershire, Nottingham City and the YMCA in Southampton. Customers are in Leicestershire and Leicester City. Product Full operational catering service, Food/health and safety risk assessments, catering audits, compilation of menus to meet government standards, special diets free school meals administration, equipment repairs and equipment renewal. Setting and monitoring budgets, preparing reports, submitting financial returns and processing financial data.

School Food and Financial Support Services

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School Food and Financial Support Services

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A look at some existing trading arrangements

• Public sector partnership; EMSS- HR and Payroll
• Private sector partnership; Contracts for Grounds Maintenance

and Facilities Management

• Off-site Hosting – Oracle E-Business suite
• On-site Hosting – Leicester City Council Disaster Recovery
• Central Print – selling services to public and private sector
• Production operations; School Food & Central Print
• Professional Services; HR, Finance, Valuations
• Asset Utilisation; Industrial properties, County Hall

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East Midlands Shared Services

EMSS Income Budget 2014/15 £ 000s

Leicestershire County Council

1,927

Nottingham City Council

2,453

Schools, academies & colleges

1,146

Nottingham City Homes

248

CRB checks

54

ESPO

42

Fire Service

48

Other Public Sector

63 Total 5,980

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• Insurance
• Payroll & HR Admin

Our Trading Services

Stable Uncertain Volatile

• School Financial

Services

• Central Print
• Audit
• Museums &

Libraries

• School Meals
• Health & Safety
• Property & Facilities

Management

• Governor

Development Service

• LEAMIS
• Country Parks
• Industrial Properties

& Farms 40

Next steps Hard questions

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The horizon?

There are increasing challenges:

• Remaining competitive
• Sustain existing business, where suitable
• Acquire new customers to replace those that will leave –

not just schools

• Be of value – provide what customers need, at a price

they’ll recognise as affordable and giving value.

• Be self financing as a minimum, as funding pressures

increase

• Moving forward within a transforming structure

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Hard Questions

• Is it viable and worthwhile to continue

to develop our traded services?

• Are there any services we should

stop?

• Should we embrace alternative

delivery models?

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Fully Traded

Cover all costs Income targets to meet

Partially Traded

Deliver a ‘core service to the organisation’ Trade services to limited extent. Have income targets?

Not Traded

Not currently traded could add value to the current portfolio of services and be profitable

Evaluate trading performance

Non-profitable

• Cease trading
• Alternative supplier

Profitable

• Continue to trade
• Develop business to

maximise income

Profitable

• Continue to trade
• Develop business to

maximise income

Non-profitable

• Cease trading
• Restructure service to deliver

core/statutory services only

Service adds value

Develop Business Plan

Route map - direction of travel

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Alternative delivery models

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Alternative Delivery Models

ALTERNATIVE DELIVERY MODELS Government

• wned
• rganisation

Stand-alone

• rganisation

Social Enterprises Partnership Joint Ventures Co-operatives Outsourcing Mutuals In-house Service

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Any questions?

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