Support Services for Education (SSE) – Paper C-Item No. 7
(QUESTIONS,ANSWER AND MORE QUESTIONS)
Q1 Paragraph 3.2 “….Following a non-key decision by the Cabinet Lead Member for Children on 23 April 2014, the Business Case will focus on two options; one that involves a partner or one that is an independent option incorporating the significant involvement of schools. Both will be compared to the in-house SSE model established on 1 April 2014.”
a) How will Best Value be established when comparing the two options and an In House model?
b) Will the In-House model be supported by an improvement and innovation plan to create a competitive baseline?
The Business Case uses a range of tools to assess the proposed changes including consideration of the strategic and business context, the risks and benefits and the financial and economic impacts from the perspective of the different stakeholders. The assumptions are being tested with in-house colleagues and with the external expert who has assisted on this project previously. The Project Board have already been discussing the initial findings and Scrutiny Committee will have the opportunity to review the Business Case before it progresses to Cabinet.
A Business Improvement Plan has already been developed for the in-house SSE unit. This is based on recommendations made by the external consultant. The need for a more commercial/competitive approach has been recognised and with this in mind it has been agreed that a Commercial Managing Director should be appointed to lead SSE forward irrespective of the decision about its future operational model. It is anticipated that this post will be advertised in September 2014.
Q2 Paragraph “3.3 A financial model has been developed which provides the basis on which SSE could move towards a full cost recovery position and trading surplus within five years as an arms’ length organisation. This assumes an on-going level of support (via a loan) for the first three years. The model incorporates a range of assumptions related to application of inflation, growth in income, efficiency savings and a phased approach towards the recovery of full costs to mitigate the impacts for the Local Authority, Central Direct Schools Grant and Individual Schools Budgets. Development of a cash flow forecast and various stress testing is also in hand.”
a) Will Scrutiny see the operating parameters for an Arm’s Length organisation (ALMO)?
b) Will the model (and assumptions) be subject to a stress test like the banks?
c) Will an ALMO have assets transferred to it? If not how will a loan be secured within the prudential code?
d) What are the “growth in income” assumptions?
e) If the business is running at a loss in 3 years’ time who will be liable for repaying the loan (and possible staff redundancies)?
(a) Scrutiny Committee have asked to see the Business Case before it progresses to Cabinet. It is expected this will go to Scrutiny on 22 October 2014.
(b) The stress testing relates to potential changes in scope, changes in levels of buyback from schools, impacts of the MTFP
(c) Unclear as yet whether any external option would decide to use SCC property assets or lease its own – advice on the potential options has been requested from Property Services and ICT in terms of other assets but the detail of the actual position would form part of the implementation plan once the preferred option is known. Equally the detail of how the loan would be secured would need to be negotiated as part of implementation.
(d) Growth assumptions are 1.5% per annum for internally and externally traded services, no growth for services funded by grants, Local Authority or Central Direct Schools Grant.
(e) Part of the detailed negotiations to secure the contract between SCC and the ALMO. Usually such contracts include a range of ‘exit clauses’ which set out the liabilities of the relevant parties in circumstances where the ALMO cannot continue. That would be the expectation in this case.
Q3 How will the Business Case meet the requirements of Best Value and the Social Value Act?
I assume this question relates to the Public Services (Social Value) Act 2012.
In terms of the Business Case the section on the strategic and business context will make the connection to the targets in the existing corporate plan and the public statement made by the Leader in October 2012 which confirmed SCC’s wish to find the best way to provide sustainable support services to schools by firstly consolidating these within the Council and secondly by exploring the options to improve that sustainability through the potential use of other service models.
It will refer to the feedback from the stakeholder engagement to date which sought views on the value of the services and on the potential options for the future and it will make reference to findings arising from the soft market testing exercise.
It will also incorporate advice from the Commercial and Procurement Function.
When the preferred option is decided the implementation plan and contract negotiation process will include the development of success measures as part of the performance framework. The intention is to build on the measures that will be developed by the in-house unit in conjunction with the Lead Commissioner.
Q4 Paragraph 3.4 indicates the changes to SEN(D) is introducing “…..significant changes to the Local Authority statutory duties….”
How will the Business Case transfer the risks if statutory duties are to be met?
The Business Case will set out the scope of SSE in terms of the staff to be transferred and the services to be provided to the range of customers it supports ie schools, Compact and the Local Authority. Usually the fine detail is captured in the contracts that follow – these define the names of staff, arrangements relating to pensions, the performance levels required and the actions that can be taken if these are not met. As part of the Business Improvement Plan for the in-house service the need for a number of Service Level Agreements has been identified – these would form the basis of any future contract with an ALMO. In addition work is underway to identify the type of client/contract management arrangements the LA would need to ensure it can enforce the contractual requirements/intervene if necessary.
Q5 Are the Risk and Issues log and Risk register up to date and available for inspection?
The SSE Project has a risk and issues log which is reviewed on a regular basis with updates/new risks and issues also reported to the SSE Project Board. The current log is held by the Change Team. Please contact Project Officer for information.
Q6 Paragraph 5.4 “As part of developing the Business Case work is also underway to assess a range of economic factors that will enable better ranking/assessment of the alternative partner and independent models as well as the impact of any change in the scope of services.”
a) Will social, ethical issues and the views of service users and the local community and local economy be taken into account in the developing Business Case?
b) Will a draft Business Case be available for Public Inspection and Consultation?
(a) The Business Case will incorporate the use of an economic model which assesses the impact of the proposed options on the key stakeholder groups – in this case SSE as an in-house/externalised service, schools and early years and SCC. The development of this model has taken into account the feedback from the stakeholder engagement sessions held to date. These include headteachers, governors, business managers in schools, community learning partnerships, early years cluster leads. As the services are provided to schools/the Local Authority rather than directly to parents/children and young people there has not been engagement with the public.
(b) The Business Case will be shared with the Project Board and is then expected to become a public document as it progresses through Scrutiny Committee and Cabinet. Depending on the eventual findings and recommendations it may be necessary for some elements of the Business Case to remain confidential as they would form part of a commercial consideration eg if it were decided to recommend procurement of a partner.
Q7 If a Joint Venture with the private sector is chosen:
a) Will the progress be reported to Scrutiny at key project milestones?
b) How will an Arm’s Length organisation maintain transparency and accountability?
The Business Case is expected to go to Scrutiny Committee in October 2014. Once Cabinet has decided on the preferred option an implementation plan will be developed and the appropriate governance determined.
SCC is able to set out its requirements in relation to transparency and accountability of the ALMO especially where this relates to statutory services – this would be part of the contract negotiation and the development of an appropriate retained client/contract management role within SCC.
Q8 Will there be a reduction in the Southwest One unitary charge to reflect a decrease in service provision?”
This depends on the scope and change of services provided by Southwest One and will be subject to negotiation with Southwest One through the Client Team.
Thank you for your replies – were these sent on behalf of the Portfolio holder, Cabinet or Scrutiny?
1 Can we be reminded about who is the “external expert” and the composition of the Project Board?
2 How were/are the staff/trade unions involved in the Service Improvement Plan (SIP) – (who have considerable knowledge of how the services work)? A high level analysis from a consultant may not result in serious staff “buy-in”?
3 Can we see the SIP (Services improvement plan)?
4 Thank You for the Risk Log suggestion, I have contacted the Project Officer. Will the asset status be part of the Business Case prior to deciding what the best fit option is? Is it a risk log entry?
5. Will the cost of a properly resourced and skilled contract management team be built into the relevant costs of each option within the business case?
6. Can we (trade unions) get a copy of the draft business case before publication?
7 Is the Scrutiny meeting on 24th October as indicated on the website?