2. Summary
• The potential PSM comprises libraries, archives and records, learning
and arts services
• In redefining itself and understanding its core business, Notts County
Council is open to new forms of organisation to help sustain services
and reduce costs, including encouraging the spinning out of services
• The potential PSM has identified a number of benefits for itself, for
local communities and for the authority
• We adopted a collaborative and flexible approach, able to respond as
requirements evolved over the course of the project
• We provided technical and advisory support to test the suitability of
the preferred model, reviewed the initial business plan and advised
on its development to a five year commercial business plan and
robust financial model
• A particular focus was supporting the team leading the spin out to
develop a clearer understanding of the commercial and financial
requirements necessary for the potential PSM to grow and thrive
3. Summary cont.
• We ran a series of workshops focused on marketing skills,
commercialising the service offers and engaging staff and stakeholders
(within and beyond local communities)
• The final output was a detailed transition plan that will ensure that the
potential PSM is ready for its planned go live date in April 2016; this will
be an organic ever-changing tool to support the potential PSM on its
journey over the next twelve months
• A number of challenges have been addressed, including new public
procurement regulations and setting up new contract arrangements
with external funding bodies, but it is inevitable that the potential PSM
will face more as it moves towards that go live date
• However we believe the team leading the spin-out are equipped with
the necessary skills, drive and enthusiasm to build a new entity that will
secure the delivery of these services for the communities in
Nottinghamshire
5. About this case study
• We were appointed by the Cabinet Office to support a potential
Public Service Mutual in spinning out of Nottinghamshire County
Council. Support was required in four areas of activity:
Support requirement 1: Legal and governance
Support requirement 2: Business planning and financial planning
Support requirement 3: Stakeholder engagement
Support requirement 4: Transition planning
• The mutualisation support package had the following objectives:
To enable the potential PSM to develop an initial business plan into a
full five year business plan with a detailed and updateable financial
model;
To deliver a model of governance that services the needs of the
potential PSM; and
To develop a clear understanding of the commercial and financial
requirements necessary for the potential PSM to grow and thrive
• This case study outlines the context for the spin-out, the various
tasks undertaken, and the journey we and Nottinghamshire have
been on over the three months of our engagement.
6. Services currently delivered by the potential PSM
• Library services
Nottinghamshire Public Libraries
Education Library Service (ELS)
Prison Library –Whatton Prison
• Arts services
Arts Development service
Arts for Children and Young People (including Nottinghamshire
Music Hub)
• Learning services
Adult Community Learning Service (ACLS)
The Skills for Employment Service (SFE)
• Archives and Records services
Nottinghamshire Archives
Records Management Service
7. Parent body: the business case for change
• The Libraries and Archives business case, approved by Full Council
at its meeting on 27 February 2014, aimed to retain a sustainable
network of libraries and enable the County Council to fulfil its
statutory and legal duties in relation to public libraries and archives;
• It proposed to move the Service to an arm’s length operating model
in 2016/17 to generate immediate savings (£400,000 per annum)
from a reduction in business rates, and to realise other benefits in
establishing trust/social enterprise status;
• A report outlining the full business case for the development of an
arm’s length operating model was presented to Culture Committee
on 3 June 2014;
• On 15th January 2015 a meeting of the Culture Committee agreed
the legal form and governance arrangements for the new arm’s
length operating model for Libraries, Arts, Archives, Information and
Community Learning Services, to be provisionally known as Inspire
– Culture and Learning Nottinghamshire.
9. The key drivers for spinning out
• Nottinghamshire County Council (NCC) is reviewing itself in a
fundamental way, prompted by reductions in public finance and
increasing demands for social care;
• In redefining itself and understanding its core business, it is open to
new forms of organisation to help sustain services and reduce
overall costs;
• NCC, in common with other local government services, has seen a
sustained reduction in funding from central government, alongside a
need to invest in children’s and adult social care services;
• Funding allocated to the group of services covered by the PSM has
fallen by over 45% since 2009, with further reductions agreed to
2016 and inevitable beyond that date;
• A fundamental review, Redefining Your Council, is examining the
way the council operates going forwards, with one of its strands for
future development encouraging the spinning out of services
10. Proposed operating model
• The County Council had determined the following factors that would
influence the selection of the legal form of the new body that was
appropriate for the range of cultural and learning services:
Charitable status;
Not for profit;
Asset lock;
Ability to employ staff;
Financial benefits – rate relief / lottery bidding / gift aid;
Ability to contract;
Ability to maintain a public service ethos;
Ability to develop shared ownership by individuals / staff;
Ability to provide statutory and non-statutory services;
Ability to benefit non-members; and
Ability to provide limited personal liability for board members
11. Proposed governance arrangements
• The County Council had determined that a board of twelve members
would act as charity trustees and an accountable body for the
conduct and strategic direction of the new organisation. The board
would elect an independent chair and would allow observer status to
the County Council’s appointed commissioning officer. The twelve
member board would be made up of the following:
Staff member (x1) – elected by all employees (all employees are
members)
Society ‘community’ members (x 4) – elected by all members of the
society (excluding staff) and / or ‘friends’ groups
Selected and appointed (x4) – recruited via an open process – selected
by appointments panel
Nottinghamshire County Council (x2) - appointed – Chair of Culture and
Culture opposition spokesperson
Ex-officio – CEO / Chief Operating Officer for the society
12. Anticipated benefits: for the PSM
The potential PSM is seeking to achieve the following benefits,
amongst others:
• Be outcome focussed, enterprising and business-like;
• Develop new ways to attract funding, including increasing access to
grant funding;
• Be straightforward to commission;
• Provide an opportunity to deliver real ownership and leadership
through local communities; be locally accountable, and responsive
to local wants and needs through its membership;
• Draw on its strength from being embedded in the local community;
• Exploit new freedoms to market and income generate to increase
take up of services and income levels;
• Provide space to innovate and be free of unnecessary bureaucratic
constraints; and
• Deliver an entity that is flexible and scalable, able to quickly respond
to change.
13. Anticipated benefits: for local communities
The new operating model to be developed by the PSM aims to:
• Provide greater opportunities and experiences to individuals, groups
and communities across the county;
• Be more responsive to local changing needs and wants than
previously possible as a local authority entity;
• Ensure that local people have a strong voice and engagement with
the direction of the services and the choices that are made;
• Offer local people and groups a direct opportunity to engage and
become involved in the ownership and leadership of local services;
• Provide more opportunities through ‘at cost’ or lower service
charges for particular activities and experiences;
• Provide additional direct benefit to members and customers through
the deployment of any surpluses generated; and
• Potentially create the opportunity for greater synergy between
services thus enhancing the overall offer to individuals and groups
across the County.
14. Anticipated benefits: for the local authority
The new operating model to be developed by the PSM is expected to:
• Ensure the delivery of a clear, specified and costed contract, in line
with the Council’s defined priorities;
• Be locally accountable and responsive to local wants and needs;
• In the longer-term deliver cheaper services due to more competitive
pricing of overheads, a stronger focus on its cost base and attracting
other funding opportunities;
• Offer commissioners strong, community-focused and community-
based responses to the identified priorities of the council;
• Deliver a sharper, more business-focused organisation, clear about
its outcomes and impact;
• Offer a real alternative to other external service providers;
• Generate surpluses that will stay local; and
• Deliver an entity that is flexible and scalable, able to quickly respond
to change
16. Our approach
• The main areas of our joint working with the potential PSM team,
and the key activities undertaken, are outlined over the following
slides;
• From the start we adopted a collaborative approach, committing to
regular attendance at project team meetings to contribute to reviews
of workstream progress and provide insights to any challenges
being faced;
• It was important to be flexible as the specific support requirements
evolved over the course of the project, e.g. a changing requirement
for legal advice due to the new procurement regulations that came
into force in this period, and an increased need for advice relating to
IT and systems;
• We provided fortnightly updates to the project lead in
Nottinghamshire, Peter Gaw, and in calls with the Cabinet Office,
also fortnightly
17. Legal and governance support
• The requirement was for technical and advisory support to test the
suitability of a Community Benefit Society with charitable status
• Our legal team from Browne Jacobson reviewed the committee
paper outlining the proposal to spin out to a Community Benefit
Society and advised on contract award and procurement
implications, state aid and on the choice of body, recommending a
charitable company (limited by guarantee) as the best option
• The council decided on a Community Benefit Society as its preferred
form, following the models adopted for library services in Suffolk and
York
• We also provided advice on charity registration, membership
structures, tax and pension implications
• Ahead of and following the introduction of new Public Contracts
Regulations we provided advice on the implications of changes to
the procurement timetable and associated risks
18. Legal and governance: issues and opportunities
• The next major step for the potential PSM is for the contract to be
awarded and the registered society established;
• They will then be able to appoint a shadow board that will steer them
towards full implementation in April 2016 – the intention is to have
this shadow board in place by the autumn of 2015;
• The team are very clear about the make-up of the board in terms of
the balance between roles: one NCC councillor, one member of
staff, four community representatives, four by appointment (selected
for relevant skills) and the CEO in an ex officio role;
• They will need also to develop clarity about the skills mix required –
there are clear opportunities to involve people who will add real
value to the development of the PSM and we have discussed with
the team a range of useful skills including marketing (PR and
commercial nous), financial and technical
19. Business and financial planning
• The requirement was for technical and advisory support to enable
the potential PSM to update and develop the initial business plan
into a five year commercial business plan with accompanying robust
and updateable financial model
• We carried out a thorough review of the existing business plan,
highlighting areas where it would most benefit from strengthening
and focusing our efforts and activities on supporting the potential
PSM to do so. This included:
Workshops for managers and staff to consider market opportunities and
income streams;
A more thorough analysis of stakeholders, especially external, and
development of communication messages;
• We developed a sophisticated spreadsheet modelling financial
scenarios for the first five years of the PSM, based on identified
likely, pessimistic and optimistic financial forecasts, and briefed the
team on its future application
20. Business planning: issues and opportunities
• The business plan will sit alongside the transition plan and set out
the vision for the new entity, direction of travel, and rationale for
change; it will serve as the road map for the services moving
forwards;
• Some question marks remain about the precise range of services
that will be spinning out (see the challenges about learning services
described below for one example);
• The financial model is a tool that can be used as the work to
establish the potential PSM progresses and as budgets (costs and
income) are more firmly established – there will be opportunities to
diversify income streams once the PSM is set up that are not
currently available to local authority services
21. Business planning: market analysis & development
• The potential PSM asked specifically for help in developing this area
of the business plan
• We ran an initial workshop for managers and staff to consider new
market opportunities and income streams
• As well as introducing them to the principles of marketing and
encouraging the adoption of a commercial mind-set, the workshop
identified a range of opportunities to enhance existing products and
develop new ones, including:
Using libraries as performance spaces
Themed workshops – lunch time or weekend
Lunchtime concerts
An expanded termly prospectus
Music drop-in sessions in libraries with parents and children
Downloadable local history trails
Binding service for personal collections, e.g. theatre or football
programmes
22. Business planning: commercialisation
• A further workshop for managers built on the outputs of the previous
marketing one in order to:
extend and enhance work and thinking on marketing to date; and
promote the potential PSM’s creativity, imagination and
innovation with regard to longer-term entrepreneurial activity
• These objectives were intended to support an overarching purpose
of developing commercial models that would help to grow the
business and ensure financial sustainability
• The session introduced the Normann model (see next slide) as a
basis for an exploration of the services’ commercial possibilities, and
the necessary skills and characteristics to be a successful
entrepreneur
• The team were encouraged to consider how their own skills will
support the new organisation to grow and thrive
23. Understanding your place in the marketplace
Principles and Values
The offering
The service
delivery system
[People, Processes,
Premises]
Your image
position in the
marketplace
Target groups’
needs, wants,
(interests)
(Adapted from Normann 1988)
24. Market development: issues and opportunities
• The teams embraced the idea of a more commercial approach with
some enthusiasm;
• They are starting to think about the customer base for existing and
potential new services and how they would promote these;
• However they are still thinking to some extent as individual service
teams (libraries, archives, learning etc.) – going forwards they will
need to develop a more clear, overarching vision for the future of the
company as a single entity;
• This should encompass all the various elements of the services
available and the likely synergies between them;
• Meanwhile more still needs to be done to develop commercial
models that will support the growth of the organisation and its
financial sustainability;
• Some managers, notably in arts and music services, are already
behaving as entrepreneurs, and their skills and experience will be
valuable to the new organisation and in upskilling and building the
confidence of colleagues
25. Staff and stakeholder engagement
• The requirement was for support and tools to engage staff and
stakeholders through the change process and ensure they are well
informed, and to review, advise on and further develop (where
necessary) the Potential PSM’s existing communication plan
• Our early engagement with the team identified that there would be
three strands to this area of activity:
1. Support to engage and inform staff though a series of planned
workshops;
2. Working with the team to carry out further, more detailed stakeholder
analysis and start to shape key communications messages to inform
the communications plan; and
3. Supporting engagement with specific stakeholders both in and outside
NCC
• This area of support is described in more detail in the following
slides, while separate documents provide an outline toolkit for future
projects to consider
26. Staff engagement
• Our legal team advised on issues such as TUPE, pensions (both for
transferring and newly appointed staff) and terms and conditions;
• We met with NCC’s HR team as part of our engagement, to support
the potential PSM in planning for transition and in negotiating the
scope of bought-back HR services
• We provided support for the staff
workshops through a filmed
interview with one of our team,
who provided detailed responses
to the key questions that were
troubling staff. This proved to be
an effective and efficient way of
reaching out to all staff and
providing them with
dispassionate external advice
27. Stakeholder analysis and engagement
• The potential PSM team had already done a lot of work to identify
stakeholders but this had been done in a siloed way (within each
service area) and relatively little had been done to make the link
between stakeholder needs and the communications plan
• We ran a stakeholder analysis workshop
for team members in which stakeholders
were grouped into:
National and regional bodies;
Local bodies; and
Internal
• Each group was analysed to identify the
key stakeholders, headline messages and
approaches to communication for that
group
• This then fed into the further development
of the communications plan
28. Stakeholder engagement
• The main requirement for support in stakeholder engagement was to
provide expert input to a range of meetings with teams internal to
NCC and with a small number of external funders, specifically in
terms of adult community learning;
• Meetings were held with the following internal teams:
HR
IT
Finance
Communications
• We also attended external meetings with the Skills Funding Agency
and Education Funding Agency;
• The aim of all these meetings was to support the potential PSM in
setting out its stall in terms of future relationships with these
stakeholders and new procurement and contracting arrangements
29. Stakeholder engagement; issues and opportunities
• The stakeholder analysis work showed that the potential PSM is
further ahead in its planning for stakeholder engagement than
perhaps they or we realised, because it was not fully articulated in
the business plan;
• The main challenge we posed was, as with the market readiness
work, to move out of the silos of individual service teams to start
thinking like a single entity;
• Where the services have stakeholders in common it will be
important to engage with them in a coherent, joined-up way;
• The work was also helpful in highlighting which stakeholders need to
be kept closely engaged with the development of the potential PSM
and which merely to be kept informed;
• It was also an opportunity to start to shape the key messages,
especially for users and local communities
30. Transition planning
• The requirement was for technical and advisory support to support
the Potential PSM to develop the existing transition plan into a
detailed transition plan to ensure that the potential PSM is ready for
a future go live date
• We reviewed the existing transition plan and agreed a suitable
format
• We developed a more comprehensive plan in a flexible format that
will allow the team to add to and amend the plan as they progress
• Tasks were grouped by workstream: legal, finance, HR, IT,
operations, asset management and communications
• Tasks were broken down into detailed activities, with key risks and
dependencies highlighted
• An overview tab presents a single list of the most significant actions
needed to be ready for a go live date in April 2016
• The transition plan will be an organic ever-changing tool to support
the potential PSM on its journey over the next twelve months
32. Challenge one: public procurement regulations
• Nottinghamshire CC and the potential PSM team had agreed a
timetable for transition which involved seeking approval from the
Parent Body, NCC, to award the contract to the potential PSM in
March 2015
• Changes to public procurement regulations which came into force in
February 2015 (earlier than anticipated) affected this timetable and
also led to a review of the decision to that a Community Benefit
Society would be the preferred form, although that decision was
later re-confirmed
• The impact on the programme was to divert the legal capacity of the
team from some planned activity to focus on providing detailed and
thorough advice to the potential PSM and to NCC to ensure that
plans were modified to satisfy the new regulations
33. Challenge two: learning services contracts
• The Adult Community Learning Service (ACLS) is funded by the Skills
Funding Agency (SFA) to target those adults (19 years +) who are most in
need but to balance this with raising fee-income from those who can afford
to pay
• In order to continue to receive SFA funding the potential PSM will have to
maintain good quality delivery and meet the requirement for use of that
funding as directed by the SFA
• Skills for Employment (SfE) is meanwhile funded by the Education Funding
Agency (EFA) to deliver vocational and personal and social development
learning programmes, with a focus on employability and work experience, to
16-19 year olds
• New contracting arrangements need to be agreed with both funders to
ensure that the potential PSM can continue to offer these services; failure to
do so would mean that it is highly unlikely that learning services would be
able to spin out of the parent body
• However, productive meetings with both have indicated a viable route
forwards and we are confident these services can remain in scope for the
spin-out
35. Challenges facing the future PSM
• One of the main drivers for the spin out is the need to generate
immediate savings (£400,000 per annum) which will be achieved
through a reduction in business rates
• However the new body will almost certainly face further budget
challenges; our ‘worst case scenario’ envisages a possible budget
reduction of one-third by 2020
• There will also be funding challenges in terms of the external
funding received from bodies such as the SFA and EFA, although
for the time being our meetings with them have indicated a strong
willingness to work with the potential PSM to secure learning
services
• A lot of our work therefore has focused on supporting the potential
PSM to build commercial awareness and marketing skills
• These skills will be essential if the new PSM is to survive and thrive
36. Challenges facing the future PSM cont.
• There is a need to develop a more clear, overarching vision for the
future of the company that encompasses all the various elements of
the services available and the likely synergies that will develop from
this;
• We have also recommended the development of a vibrant social
media strategy that encompasses a range of social media and
serves as a platform for increased marketing activity
38. Key next steps for the potential PSM
The key deliverables identified in
the transition plan developed with
the potential PSM include:
• Agreeing a name and branding for
the new organisation
• Agreeing a form with the council's
legal representatives and entering
into a contract
• Establishment of a Registered
Society
• Appointing Shadow Board
members
• Developing a membership strategy
and launch the scheme
• Identifying systems and ICT
requirements and arrange to
procure these
• Identifying HR support needed and
agree buy-back from NCC or
alternative procurement
• Identifying communications support
needed and agree buy-back from
NCC or alternative procurement
• Recruiting a Finance Director
• Setting up financial reporting
systems and a bank account
• Preparing staff resources for new
organisation and TUPE transfer for
existing staff
• Developing a website for new
organisation
It’s going to be a busy year!
39. What does the future hold for Inspire?
• Over the three years following the establishment of the new body
the aim is to:
Establish an effective independent new organisation
Review retained central services with market testing processes
Develop active new governance: board, staff representation,
membership, volunteering, friends groups
Progress new sources of income, funding, commercial
partnerships and sponsorship
Exploit the new freedoms that separating from the local authority
will bring
Diversify funding and income streams
Grow the business in new areas within the cultural and learning
sectors, both in Nottinghamshire and other geographical areas
41. Lessons learned
1. Even in a relatively short time frame of three months the nature of
the support required by a team venturing into new territory such as
the establishment of a PSM can evolve. It was important that both
we, and the team in Notts, remained flexible in responding to
unforeseen needs while continuing to deliver all elements of the
specified support requirements;
2. The timing of the support at the very end of the financial year has
presented some challenges for the potential PSM team, especially
this year in the run-up to a General Election. A project of this nature
doesn’t always run precisely to the timetable originally envisaged,
especially when so many stakeholders are involved. The team
would have liked to have been able to have flexed and extended
our support into the next month or so rather than draw a rigid line at
the end of the year as has been necessary.
42. Lessons learned cont.
3. Some pressures can be foreseen but there needs to be some give
in the planning to allow for the unforeseen; in this case, no one had
anticipated that the new procurement regulations would come into
force so soon after publication (a May 2015 implementation date
was expected);
4. It was extremely helpful to have in our team people who had direct
experience of dealing with key internal and external stakeholders
such as corporate IT, HR and comms teams, and the SFA and
EFA;
5. Our job was made immeasurably easier by the enthusiasm and
hard work of the internal team at NCC who are leading this
programme; it seems likely that with less commitment within this
team it would be much harder to develop a robust plan for
transformation while also maintaining ‘business as usual’
43. Good luck!
We believe Inspire
Nottinghamshire (or
whatever the future name
may become) are in a
strong position to take this
work forwards during the
next critical transition phase
and wish them every
success
We look forward to seeing
the new Public Service
Mutual in operation from
April 2016
