Scrutiny Review Panel “Commercial and Traded Services” 13 Roderick O’Connor Assistant Director Agenda Item 5
Agenda 1. Where are we now? 2. Where do we need to go next? 14 3. Alternative Delivery Models
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. 15 • 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.
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: 16 • 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.
Our Strategy 17
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 of securing a positive outcome for Leicestershire. 18 • Use the funds generated to either increase the range of activities by financially supporting non-funded work, or reduce the burden on 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.
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 19 • 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
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 20 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
What have we achieved? 21
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 22 • 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
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. 23 • We have ensured that the standards and principles of trading that we have adopted does not conflict or compromise other Council activities
Turnover 24 Total = £25.4m Total = £24.5m
Turnover by Customer 25
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. 26 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 operates 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.
New Services Services not traded to schools before conversion Budget 2014/15 £ 000s Internal Audit Service 65 27 Health & Safety 228 Performance Information 120 Property Valuations 60 Total 473
Expanded our customer base Royal Borough of Windsor & Maidenhead Nottinghamshire Stoke-on-Tren t Derby City Day Nurseries Leicestershire Fire and Rescue Service ESPO Academies District Councils Dorset Charitable trusts Lincolnshire Rutland Schools Leicestershire Fire and Rescue Service Wiltshire 28 NHS Leicestershire Constabulary Parish Councils Private industry Other Educational Establishments Leicester City Council Kings Lynn & West Norfolk Borough Council Probation Services
Services in perspective 29
ICT Operations – Traded Services ICT Operations trades two full services, LEAMIS and Central Print LEAMIS Central Print The Service A professionally accredited A quality, environmentally accredited, support service to schools and value for money printing service to a range academies of organisations. Customers Customers are in Leicestershire, External customers include Leicester City, Rutland, Stoke, Derbyshire, Maidenhead, Kings Lynn, MBC, CBC, Nottinghamshire and Lincolnshire Police, Fire, Health and Private 30 organisations Product Service Desk, Training, Brochures, books, leaflets, flyers, Consultancy and Technical ICT committee papers, bulk copying, Services canvases, calendars, no-carbon book sets, forms and marketing materials 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)
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 31 • 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
Central Print surplus Contribution to LCC overheads Central Print Services 180 166 160 140 128 126 120 thousands 100 32 £ 70 80 60 40 20 0 2010/11 2011/12 2012/13 2013/14
LEAMIS surplus Contribution to LCC overheads LEAMIS 240 220 201 200 182 180 160 140 33 120 thousands 100 £ 80 60 40 20 0 2011/12 2012/13 2013/14 -20 -40 50 -60
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