Questions for Cabinet on 05/02/2014
Q1: Option 1 could have included an In – House Service Improvement Plan rather than “As is” (or Status Quo)?
Answer: Sections 1.5.1 and 6.1.1 of the business case make it clear in that Option 1 would only be “As is” in terms of the management and ownership and that “Managers running these services would need to agree a plan as to how they would change services to meet the vision and key objectives identified in the Commissioning Intentions”.
Q.1A: If the In House service is not attracting young people then why can’t the service be reconfigured (redesigned) now to take account of this “limitation”?
Answer: The limitations of services remaining in-house are outlined in detail in section 6.1 of the Business Case. In summary:
- Services are already competing in a market place – and they are not being chosen
- The market place will get even more competitive and more demanding as personalisation develops
- If services are left as they are they will become increasingly costly and uncompetitive as more people choose alternative providers creating a vicious circle
- Unless services share all of the freedom of action of the independent sector they will be competing at a disadvantage, and there is a high risk that they will fail
Q.1B: Why will a Social Enterprise (SE) and partner be able to do it differently/better?
Answer: The benefits of a social enterprise partnership, if selected by the Clinical Commissioning Group on 19/02, are outlined in detail in section 6.2.2 of the Business Case. In summary:
- Staff and community ownership lends itself to greater responsiveness to the changing needs of customers, and shares the responsibility for good services with them.
- The ability to attract inward investment into services, raise funds and attract volunteers, in ways which wouldn’t be open to other options.
- The freedom to pursue opportunities for growth inside and beyond Somerset.
- A partner may bring with it investment resources and economies of scale, thus reducing and sharing the costs of setting up and running the business. Investment can also be drawn in from Government and other sources to develop the business.
- Generated surpluses are retained for public/community benefit.
- Improved prospects of sustainability of services can be gained through investment and diversification of income sources.
- This option offers the flexibility to innovate and to provide the services that customers want, thereby providing the right response to Personalised Budgets and Direct Payments.
Q.1C: Why are the “processes to raise money and make investment decisions within local government…too slow” to respond to service users needs? Can this be evidenced (with comparators)?
Answer: The processes to raise money and make investment decisions within local government are not agile and flexible enough to respond to customer and market needs. This is a problem that is not unique to Somerset and is because any decision to make a significant investment needs to be made as part of the medium term financial planning cycle and will be subject to the normal governance and decision making processes before any firm commitment can be given to prospective customers. For example, in recent years the Learning Disabilities has developed 2 services, one for which was for young people. Both of these took over 2 years to establish even though they were not “new build”, by which time many of those originally identified as customers had chosen alternative providers who were able to respond far faster to put arrangements in place to meet needs.
Q.1D: What are the “market needs” (Paper A, A4-Option 1)?
Answer: “market needs” refers to the wider market of potential customers who do not currently receive support from the Learning Disabilities Provider Service as well as other organisations that the service may wish to collaborate with to meet these needs in the best way possible.
Q.2A: Will TUPE Plus (Builds on TUPE rights whereby it is included in the contract with a guarantee that there will be no deterioration in terms and conditions during the life of the contract and the contract could also state there will not be a two tier system (workforce) i.e. new starters will be employed on the same terms and conditions of employment) be considered “given there are no savings targets associated with the decision”?
Answer: The Code of Practice on Workforce Matters was repealed by the Coalition Government in 2010. On that basis, there is no foundation to include its principles (often referred to as TUPE Plus) in any of the contractual requirements for the establishment of the social enterprise.
Q.2B: Will existing staff and new staff have access to the Local Government Pension Scheme (LGPS)?
Answer: As stated in section 126.96.36.199, if Option 2c is selected by the Clinical Commissioning Group on 19/02, at the point of transfer, staff terms and conditions would be protected by Transfer of Undertakings (Protection of Employment) (TUPE) regulations. This includes the requirement to provide a comparable pension scheme. However, this does not mean that it is a requirement for the provider to seek Admitted Body Status into the Local Government Pension scheme which would, in itself, require approval from the Pensions Committee.
Q.2C: Would the new organisation honour National Joint Council negotiated changes to terms and conditions of employment including pay increases and pension changes?
Answer: This would be a decision for the new Social Enterprise Partnership Board, taking legal advice on the impact of the Transfer of Undertakings (Protection of Employment) regulations. Any changes to pensions would be dependent on whether the social enterprise partnership had admitted body status to the Local Government Pension Scheme.
Q.3 Relates to Social Enterprises (SE)/ Mutualisation
a) Does the Mutual Principle incorporate business partners being chosen by the client?
Answer: If Option 2c is selected by the Clinical Commissioning Group on 19/02 SCC will be tendering for the partner, but at this stage we may not be able to limit the type of organisation that could choose to tender to be the selected partner. However, the successful partner would have to commit to being part of a not for private profit social enterprise partnership. Once the partnership is created the Social Enterprise will be responsible for managing the relationship and negotiating any further contracts that are required.
b) Where is the cost of setting up a Mutual coming from (£750,000)? Will it be imposed on a new organisation?
Answer: The relevant costs detailed in paragraphs 1.10 and 5.4 of the Business Case are expected to be borne by SCC as it works towards bringing a mutual (if this is selected by the Clinical Commissioning Group on 19/02) to fruition. As detailed in 5.5, were Option 2 (the mutual/social enterprise option) to be chosen, SCC may be eligible to apply to the Mutuals Support Programme for funding for some or all of the costs involved.
c) Is there any evidence of establishing Social Enterprises that have incurred legal challenge(s) as suggested in the draft business case (Option 2)?
Answer: As stated in section 6.2.1 the risk of challenge to any organisation set up under option 2a/b has been assessed as being high. If selected by the Clinical Commissioning Group on 19/02, Option 2c mitigates this and other risks through the undertaking of a tender for the partner.
d) What rate of return/surplus would the SE and the (as yet unknown) business partner expect or has been forecast in the draft business case?
Answer: As detailed in paragraph 5.3.8, although a mutual/social enterprise would be expected to make a trading surplus, this surplus would be reinvested in the business whatever its size, and therefore would have a net nil financial impact on the Business Case. As a result, the Business Case is not predicated on the mutual/social enterprise making a surplus of any size.
e) Will the risk registers and risk and issue logs be publicly available?
Answer: The risks and issues for each option have been outlined in sections 6.1, 6.2 and 6.3 of the Business Case which is a public document. While the LDPS remains part of the Council risks and issues will be reported to the Audit Committee in the normal way.
f) As all members of the board will be legally bound to act in the interests of the company, what will be the role of service users/carers be on the board if they cannot meaningfully represent the interests of users/carers?
Answer: A social enterprise has a fundamental remit of social benefit, which customers, carers and staff would be central to defining, and ensure its implementation through their governance role. Should option 2c be selected it is expected that the role of customers, cares and staff in the governance of the Social Enterprise would defined in it’s articles of association which we expect to involve customers, carers and staff in developing alongside other key documents.
g) How (what is the method?) can the predicted sickness rates (costs) be lower in a proposed new organisation?
Answer: There is no plan to alter sickness absence policy as part of any move to a social enterprise partnership, if this is the option selected by the Clinical Commissioning Group on 19/02. However, research demonstrates that there are several indicators of the intrinsic benefits to employees of working for a social enterprise, and for mutuals in particular: reduced sickness and absenteeism, less staff turnover and increased levels of staff commitment to and enthusiasm for their work.
h) What will be the mechanism(s)/protocols to handle statutory responsibilities?
Answer: As stated in section 2.2 of the Business Case, Residential Care is provided under Part III of the National Assistance Act 1948. No other services are delivered as a direct result of statutes applying to the Council. However, under the NHS and Community Care Act 1990, Somerset County Council is legally required to provide funding, less any customer contribution, to those customers whose assessed needs meet or exceed the Council’s eligibility threshold, formerly known as Fair Access to Care Services or FACS, following the completion of a community care assessment. It currently provides just under half of the capacity (by value) to meet these needs directly from an “in-house” service, the Learning Disabilities Provider Service. However, whist the Council is therefore required to continue to provide the necessary funding to meet these assessed eligible needs, it does not have to provide these services directly (and does not for just over half of its capacity by value).
As stated in section 7.11 of the Business Case under Option 2, as part of the contract, it would be expected that the provider would take responsibility for regulatory compliance, such as the requirements of the Care Quality Commission (CQC) and the terms of reference of the local adult safeguarding board. The provider would need to demonstrate compliance to the Council, so that the latter can discharge its on-going statutory duties.
i) Who/what body will manage the legal and contract responsibilities imposed by a “commissioner”?
Answer: As stated in section 6.2.3, SCC with have a contract with the social enterprise and the social enterprise will have a contract with the partner.
j) Can the financial details of all the options be supplied with all relevant baseline figures and projections?
Answer: The relevant baseline figures are detailed in paragraph 5.2.1. The projected financial impact of all options is fully detailed within section 5.3 and summarised in the table in section 8.1.
k) Why is Appendix 2F (“contains exempt information and is therefore marked confidential”) not available for public scrutiny?
Answer: Appendix 2F contains information that would be likely to prejudice the Council’s position in the tendering processes for the partner. All other relevant information has been incorporated into the Business Case which is a public document.
l) Your Choice Barnet (YCB) was recently (Social Enterprised?) created/outsourced (including LD services) and is now proposing a10% pay cut and leaving national bargaining (outsourcing “difficult decisions”?). How can the LD commissioning service and provider service ensure there will not be a similar outcome in Somerset?
Answer: SCC is unable to comment on Your Choice Barnet other than noting that it would appear to be a different type of organisation to that proposed under Option 2c, if selected by the Clinical Commissioning Group on 19/02.
Additional Questions received after the Cabinet meeting
Item 2 – Can the proposed (first draft –early version) Governance Structure be provided?
Answer: An outline of a possible organisational governance structure is shown in section 6.2.5 of the Business Case. No further work has taken place on the governance as a decision on the future of the service has not yet been taken by the Clinical Commissioning Group, but if the recommended option is selected by the Clinical Commissioning Group on 19/02 we would expect to involve, customers, carers and staff in developing the governance arrangements.
Item 2 An Elected Member asked in the Cabinet meeting about the £3.7m saving in the Business Case (Pink Papers figure?)-How does this figure square with the “no savings targets associated with the decision”? (Assertion?)
Answer: There is no savings target associated with this decision. However, whilst the Cabinet is not expecting the Business Case to deliver any savings to balance the Council’s budget, this does not mean that, if selected by the Clinical Commissioning Group on 19/02, a social enterprise partnership will not deliver savings, efficiencies and grow the business in the course of its operation. The savings £3.7 figure referred to appears in section 8.1 of the Business Case and, as stated in this section, relates to increases in productivity, efficiencies in overheads and support services and income and opportunities for growth by the end of Year 5 should Option 2c be selected.
Item 2 What are the current “back office”/ “support” service(s) costs? (Impact on Unitary Charge?) (What are the Net Present Value(s) and Replacement Value(s) of current assets?)
Answer: As stated in paragraph 5.2.3 of the Business Case, SCC’s corporate apportionment process (the method used to assign these support services and overhead costs to other SCC services) is in the process of being redesigned, and, as a result, a formal apportionment process has not yet been undertaken for the 2013/14 financial year. In 2012/13, support services and overhead costs incurred by LDPS that would be relevant to this business case were in the region of £2.1m – this figure should, however, only be considered indicative.