Executive summaryha2.boroughofpoole.com/akspoole/images/att22744.docx · Web viewA financial...

Appendix 3

Pan Dorset Local Authority Trading Company

Business Case

[December 2014]Version 1.73rd December 2014

Table of contents1 Executive summary…………………………………………………………………….3

2 Introduction ……………………………...…………………………………………….18

3. Key Assumptions ...........................................................…………………….……20

4. Pan Dorset LATC – how will it look …………...…………………………….………22

5. Pan Dorset LATC Governance…………………………………..…………….…….31

6. Pan Dorset Five year business plan…………………………………………………38

7 Additional Income Opportunities ……….……………………………………………44

8 Benefits of One Pan Dorset LATC…………………………………………..…..…..52

9 Risks of Joint Ownership and their Management…………………………………..57

10. Implementation…………………………………………………………………………58

Pan Dorset – LATC Business Case of 61

1 Executive summary

1.1 Introduction and BackgroundThis high-level business case is designed to provide an overview and some detail of the:

Benefits and advantages of a Pan Dorset PDL (PDL) Recommended governance structure for the three authorities A financial overview of the company’s forecast performance including Board

and management structures Risks and potential disadvantages Timescales and additional costs of implementation

The Pan Dorset PDL (PDL) involves Dorset County Council (DCC), Bournemouth Borough Council (BBC) and Borough of Poole (BoP) transferring nominated in-house provider services into a jointly owned PDL.

All three authorities have commissioned and will have received options appraisals and detailed business cases on their respective individual LATCs. These commissioned reports have recommended that the PDL model is the most appropriate vehicle for the future of their services and so the three authorities through the “Better Together Programme” have commissioned this high level business case to analyse the opportunity of a jointly-owned LATC and to then recommend a way forward.

2.2 Drivers for creating a Pan Dorset LATC

There are a number of drivers that are either individual to each authority or common in relation to their geographical and demographic situation. These drivers include:

- Better Care Fund and integration- Better Together Programme- Improved service quality for individuals- Maximising available resources e.g. operational workforces and facilities- Scale of savings and efficiencies- Scale of additional income opportunity- Scale of new business opportunity- “Go it alone” disadvantages (e.g. Competition between individual LATCs).- Developing Seamless service pathways across Dorset

1.2 Benefits of One Pan Dorset LATCThis section summarises the benefits, other than financial, that accrue from the PDL.

Meeting the Better Together AgendaThe leaflet “Better Together – Integrated health and Social Care” (included in the appendices) states the objectives of this initiative for the authorities of Bournemouth, Dorset and Poole are:

Improved health and care for residents

A more seamless service for people who access health and social care in the Dorset area

Greater efficiencies and better value for money


One of the initiatives described in the leaflet is – Local Authority Trading Company

The Pan Dorset LATC is the best and only opportunity that the three local authorities will have to meet the above objectives and initiatives in a totally coordinated manner.

The merging of three sets of social care services into one entity with one set of professional managers under the strategic control of the three authorities is an unprecedented opportunity.

The website Dorsetforyou - https://www.dorsetforyou.com/411954 includes the following aspirations:

“Our aim is to overcome the existing cultural and financial barriers that can get in the way of delivering coordinated care and support to the people and communities that we serve”

It is difficult not to agree that the Pan Dorset LATC will go a long way in helping meet those aspirations and so achieve the objectives included in “Transformational Challenge Award”

Once established, the joint LATC will then become an exemplar for other services in the three authorities, encouraging new and joined-up thinking across the different directorates and services.

Reputational Benefits

There are benefits accruing from the PDL that are not readily measurable and not necessarily immediately visible and they include the following:

The very high profile that this venture will have in both the region and nationally. The PDL will be the very first jointly owned LATC in the UK in the field of adult social care. All three authorities will be seen as pioneering and innovative for joining in this project. This will enhance the reputation of each of the authorities and raise the profile of the Dorset partnership in central government and other regions

The consequences of “not creating the PDL”, this may appear a negative approach to adopt, but if the PDL is not taken up, the three authorities involved will still have to decide the future of their services. It is extremely likely that at least one if not two single LATCs would be the result of not establishing the PDL. We would then see two single LATCs competing in the same towns for the same customers and same staff. This situation would potentially lead to one winner and one loser,

Income GenerationThe PDL can be more ambitious in the levels of private income it can generate without breaching the Teckal exemption rules. At the time of externalisation the Pan Dorset LATC will be able to derive 20% of its income away from the three local authorities, for example within the private payer market. Having a combined income from the three local authorities of circa £36.5 million per year means that the PDL can seek to generate £9.13 million per year without breaking the Teckal exemption rules. This is significantly higher than the income potential of individual LATCs, as the table below illustrates.


https://www.dorsetforyou.com/411954

LATC Local Authority Income p.a. £M

Maximum Private Income p.a. £M

Pan Dorset LATC £36.4 £9.1

Dorset LATC £25.4 £6.35

Bournemouth LATC £8.7 £2.18

Poole LATC £2.3 £0.57

This high exemption ceiling means that the PDL can look ambitiously at the private market without having to limit its targets due to the Teckal exemption limits.

Both Bournemouth and Poole have large potential demand from which they can attract new self-funder income, but as single LATCs Teckal would limit them because their respective Council contract values do not provide sufficient headroom to really penetrate the market. Adding Dorset County Council’s contract value of £25m pa into the joint PDL allows an additional £6.25m of self-funder income to be earned without breaking Teckal rules.

Efficiency and economies of scaleThe PDL will be able to achieve greater efficiencies and economies of scale as a result of the following:

Income contributions from three authorities mean that a number of costs associated with the PDL are effectively spread. This includes the costs associated with the Pan Dorset PDL such as the Executive management team and costs of governance.

Rationalisation within certain management tiers for example Heads of Service. This is a post implementation restructure based on the amalgamation of job roles that, on transfer into the PDL, were separate to each transferring service. The outcome of this rationalisation does not mean that staff are lost, rather it offers the PDL the opportunity to redesign its management capacity to support new areas of the business for example the management of services for private payers.

Consolidation of services within certain geographical areas. Particularly where the three local authority services share a close proximity and service type. For example where day centres within a proximity support the same client group with similar services it is possible to consolidate the service within one day centre and utilise the other day services to provide a different range of service to a different client group. This, therefore, enables the PDL to diversify its product range and support the local authorities in meeting different demands. This may have particular scope with expanding LD day support with transition clients.

Service and Financial Critical MassThe term “critical mass” is used to describe the size that any organisation must reach to be able to withstand the threats and risks faced by a commercial organisation. In our view the PDL will reach that critical mass and some of the benefits accruing from that are:

Ability to withstand shortfalls in additional income over time Sufficient staff numbers for more effective manpower planning


General perception of financial security enhanced leading to easier recruitment

Market penetration easier with high profile brand and reputation

The nature, size and geographical spread of the new PDL will benefit each of the partner services in the following ways:

The size of the new PDL will make the additional income targets transferred from the single Bournemouth LATC less risky as there is a greater financial foundation behind the plans.

Poole’s two day centres will not be working in isolation, and their high quality, complex services can be provided to other non-residents of Poole.

Dorset’s reablement services and day services in Christchurch will be able to offer services to the elderly in neighbouring high density urban areas of Poole and Bournemouth.

Pathways to Care A PDL will be able to offer a single point of access and coordinated support activity across the three local authority areas, supporting the Better Together strategic approach to service delivery1.

All professionals seeking to refer into the PDL will be able to contact one organisation regardless of the geographical boundaries that exist. This is a significant benefit particularly to G.Ps, Acute Hospitals and health providers whose services may cut across different local authorities.

Other benefits include:Workforce Recruitment All three local authorities recognise the challenges in recruiting suitable front line care staff. This is the effect of the wider recruitment market and the well-documented specific shortfalls in the number of people attracted to employment within social care services. As a result the ability to recruit and retain staff is of paramount importance to the future delivery of services and the realisation of new opportunities described earlier in this business case.

Operating as a PDL offers the opportunity to coordinate recruitment campaigns and allocate resources to attract staff within a much wider pool, than could be achieved by individual PDLs. Moreover the PDL mitigates the real risk associated with separate LATCs competing for the same staff within the same recruitment pool.

Overall therefore the PDL offers a much stronger chance of recruiting support staff than would be the case with individual trading companies for each local authority.

Market PositionAs a circa £38 million business with over 1,400 staff and services across, Bournemouth Dorset and Poole, the PDL will enjoy a significant market position within the independent sector. The scale of this trading entity offers clear opportunity as described in Section 7, to generate significant new income and effectively compete for business. Whilst there are established provider markets in many of the

1 Better Together Business Plan (2014 – 2017) page 18 Table 1 “Programme and Project Descriptions”


local authority areas, there are very few able to offer a one -stop shop to social care across the whole county of Dorset. This should be seen as an exciting and major opportunity for the PDL. In contrast this potential is severely limited and extremely difficult to achieve with separate LATCs for each authority.

Of note also is the market position that the PDL will have on a regional basis. That is, the PDL will also have the real opportunity to penetrate new markets within different neighbouring counties based on its range of more specialised product. The decision to penetrate new markets will be part of the strategic planning process and decision making of the PDL. The ability to plan in this manner, however, really comes from the scale and market significance of a PDL rather than as an individual LATC.

1.3 Assumptions The assumptions adopted and used in the individual business cases for all three authorities have been kept and used in the PDL business case. These assumptions include the following broad subjects:

Staff terms and conditions – these will not change. All staff will TUPE over on their existing Terms and Conditions (Ts & Cs), including pension rights, holiday entitlements and sick pay policies.

New employees in new services will be recruited on appropriate rates as decided by the PDL

Procurement and organisation of back office support functions Bournemouth Borough Council’s service requirements for their TUPE’ed staff and services will be supported by Mouchel as they are now, and Dorset’s will continue to be provided by their own in-house corporate services. It has been assumed that Poole’s requirements will be provided by Dorset services. There is an assumption that by the end of year 3 the PDL will have reviewed its support service provision.

Property arrangements – all buildings used and occupied by the services will be leased to the PDL by the individual authorities or their nominated vehicles. No assets of any significant value will be transferred to the PDL

Finance Assumptions – The financial assumptions detailed in the individual business cases have been adopted in the PDL. As a high level review the financial results are a consolidation of the individual BCs, with revisions for the following areas:

o Reduction in costs through geographical efficiencieso Redesign of the executive teamo Reduced executive and governance costso Increase in administration costs due to differing support service

provision

Commissioning Assumptions – no additional commissioning assumptions have been adopted for the PDL. However it is recognised that over time the nature of the PDL will allow the individual commissioning authorities to have a more joined-up approach to service demand through services being delivered without worrying about artificial boundaries.


Integration with the local health sector will become a significant factor in the development of new services in the region. Although this effect has not been included in any of the financial forecasts.

1.4 How will the Pan Dorset LATC look? The new PDL will not be a small organisation, with a turnover of over £38m and over 1,400 staff it will be a major employer in the region and touch many peoples’ lives through their care provision and employment.

Pan Dorset LATC Full Time Equivalent Staff Numbers

AuthorityFTE Nos on

Transfer

Bournemouth Borough Council 262.05Dorset County Council 797.73Borough of Poole 64.38

Total FTEs in Pan Dorset LATC 1,124.16

The actual number of staff who will be TUPE’ing over is more likely to be over 1,400 as many of the above posts are filled by two, or sometimes three part-time staff.

The services that the above establishment provides are broadly analysed below, showing which authority is transferring what services

The table includes services that have been in scope for the individual LATC business cases and have now been amalgamated into the PDL.

Summary of the scope of servicesService Category DCC BBC BoP

Day Services

Residential care and supported housing

Employment, Enterprise and Training

Reablement

Shared Lives

Community Support X

The above services occupy over 50 separate buildings and locations across Bournemouth Dorset and Poole. The details of the locations and buildings are held in the individual LATC business cases.

The PDL has an additional income target of £6.9m in year 5, (see section 7 for details) and this high level of non-Council income is a result of the three authorities joining together which has increased the Teckal exemption threshold to £9.13m (i.e. 20% of the total Council contract values).


The affect of the income can be seen below in the profit and loss forecast for the first 5 years of trading.

Pan Dorset LATC Profit and Loss Account for the First Five yearsDescription Year 1 Year 2 Year 3 Year 4 Year 5

£ £ £ £ £IncomeDorset CC Contract 25,772,058 25,644,474 25,324,875 25,198,566 25,135,412Bournemouth BC Contract 9,346,153 9,346,153 9,252,691 9,159,229 9,065,768Borough of Poole Contract 2,491,242 2,332,747 2,405,280 2,360,061 2,365,432Other Income 910,476 2,353,887 4,580,389 5,966,011 7,403,511Total Income 38,519,929 39,677,260 41,563,234 42,683,868 43,970,123ExpenditureStaff Costs 30,636,194 31,472,523 33,295,510 34,490,446 35,821,251Rent for Properties 1,160,000 1,160,000 1,160,000 1,160,000 1,160,000Supplies & Services 4,943,174 4,904,561 4,904,561 4,904,561 4,904,561Total Service Expenditure 36,739,368 37,537,084 39,360,071 40,555,007 41,885,812Contribution to Group 1,780,561 2,140,176 2,203,163 2,128,861 2,084,311Exec Man & Board Costs 247,200 339,075 339,075 339,075 339,075Audit, Insurance, legal 137,500 137,500 137,500 137,500 137,500Marketing, Finance Support 148,800 273,800 273,800 273,800 273,800CSS Support Services 600,000 600,000 600,000 400,000 400,000Total H.O. Function 1,133,500 1,350,375 1,350,375 1,150,375 1,150,375Support Svs % of Income 2.94% 3.40% 3.25% 2.70% 2.62%Profit before Int & Depr 647,061 789,801 852,788 978,486 933,936Deprec'n Chge @ 5% pa 11,000 11,000 11,000 11,000 11,000Net Profit before Tax 636,061 778,801 841,788 967,486 922,936Corp Tax rcble/(payable) (3,007) (9,241) (18,553) (27,046) (31,080)Annual Profit or (Loss) 633,055 769,561 823,235 940,441 891,856

Retained Profits/(Losses) 633,055 1,402,615 2,225,850 3,166,290 4,058,147

Full details of the financial forecasts including balance sheets can be found in section 6.

As part of the business case analysis, each Council must be able to value the net financial benefit that any project generates for a Council. This business case is no different and below is the Value for Money comparison that has been performed to illustrate how much benefit the PDL will generate as a whole to the combined Councils. We have then calculated the share for each partner Council, as per the recommended partnership arrangements (see section 5 below), and compared each Council’s share of the joint benefit with its individual LATC benefit as calculated in the single LATC business cases.

Pan Dorset LATC Value for Money Comparison

Description5 Years

Receipts5 Years

Contract Spend

5 Years Budgets no

Change£ £ £

Cost of current In-House Services


181,477,031Cost of Contracts to 3 Authorities from the LATC 185,200,141Income to Council from Charges to LATCRe- Corporate Support Services 2,600,000Fixed Assets Purchased (Desks etc.,) 220,000Property Rental Income 5,800,000Dividends available to three authorities 4,058,147Income and earnings available to 3 authorities (12,678,147)Net Cost of Contract 172,521,994 (172,521,994)Saving on all 5 year Budgets £8,955,038Share of Net Benefit to each Authority Sgle LATC Joint Share Incr in BenefitBournemouth Borough Council 828,014 1,154,524 326,510Dorset County Council 6,855,129 7,568,302 713,173Borough of Poole 232,212 232,212Total net benefit 7,683,143 8,955,038 1,271,895

Overall the three contributing Councils enjoy an additional £1.2m of financial benefit by establishing the PDL, which is then shared out in the agreed proportions, which are based on the relative values the current budgets for the services that have been brought into the PDL. See section 5 for more details.

The table below gives a summary of how benefits and profits are shared between the three authorities.

Analysis of Budget Input to PDL and Members on ESG

Authority Gross Budget % of Total Members on

ESG£m %

Dorset County Council 25.40 69.78% 5Bournemouth B Council 8.70 23.90% 3Borough of Poole 2.30 6.32% 2

36.4 100.00% 10

How will the PDL govern itself internally?

Arrangements for PDL Internal GovernanceIt is recommended that the PDL has an Executive Board independent of the Council and made up of the following positions:

Independent Chair – this could be a local individual with good links to the public sector who understands the world of local authorities and the health sector who would bring a high level of knowledge of the services and the social care landscape

Managing Director – the combination of care services experience and successful and substantial commercial experience will be essential. An ability to work in a transformation role will be an essential as part of the MD’s role will be to push through the cultural and commercial change that the services need.


Finance Director – with a strong commercial background and experience of managing a company of £30m+ turnover SMEs would be ideal.

Business Development Director – with a strong service / commercial background and experience of delivering business growth targets within a company of £30m+ turnover in the social care arena will be essential. This role will be recruited to towards the end of the 1st year of trading

Non-Executive Directors with skills that fill major gaps on the Board, such as legal and marketing, these would be selected from local candidates/applicants

The PDL will have a turnover of over £38m in its first year and will touch the lives of thousands of residents in the Dorset area. This organisation will be a very high profile company locally and nationally, as the first jointly owned social care LATC in the UK. The selection of the executive team will be crucial in the success of the PDL, and the individuals with the skill sets and experience needed may only be available from a national recruitment process.

We recommend that there are no Members from any Council on the Executive Board. If there are members on the Board, in our view this distorts the commissioner/provider relationship with the PDL and creates potential for significant conflicts of interests for any Members on the PDL Board. It also creates legal responsibilities that Member and Officers may not want to take on. This is further complicated by having three authorities from which the members could be selected, raising questions over representation etc. for each authority.

The PDL Executive Board would meet officially once every month and would deal with all aspects of the management of the PDL.

The table below outlines the total cost of employing the executive posts that we have outlined above. The full cost of employment includes:

Salary Pension contributions at the current LGPS level – 13% National Insurance contributions of the PDL – 11% Cost of support costs such as – mobile phone, travelling expenses and some

admin support – 5%The above additions apply to the 3 executive director posts.The base salaries that we have recommended are:

Managing Director of £40m company – circa £100,000 Finance Director of £40m newly established company – circa £80,000 Business Development Director of new market entrant - circa £75,000

We have scheduled the Business Development Director and manager and the marketing team to be recruited at the beginning of the second year.

The Independent Chair costs have been forecast at £500 per month plus £100 expenses, the Non-Executive Directors are paid expenses only at £100 per month. They would be expected to attend one formal Company Board meeting per month. These terms are similar to other roles that we have helped develop in earlier LATCs.

The recruitment of these posts will be through the Executive Shareholder Group and the costs will be split between the three authorities.

Pan Dorset LATCBoard, Executive and External Service Costs


Summary PostsNos

Additional Costs

£BoardChair Person New 1 7,200Managing Director New 1 130,200Finance & Commercial Director New 1 105,000Business Development Director New 1 91,875Non Executive Directors New 4 4,800Total Board Costs 339,075

ManagementFinance Manager New 3 148,800Marketing Team New 2 75,000Business Development Mgr New 1 50,000

273,800

External Services purchasedInsurance Premiums New 70,000Bank Charges New 7,500External Audit New 40,000Legal Advice New 20,000

137,500

Total HO and Business Support function 13 750,375

The funding of all the executive posts will be in the same proportions as the profit share, whereas the costs of the additional management resource £273k and external purchase £137.5k will be financed out of efficiency savings and additional income contributions. The share of the costs of the executive team are shown below:

Pan Dorset PDL Share of Executive CostsAuthority % Share Share of Cost

Bournemouth Borough Council 23.90% 81,039Dorset County Council 69.78% 236,607Borough of Poole 6.32% 21,431

Total FTEs in Pan Dorset LATC 100.00% 339,075

The PDL will be a company limited by shares and 100% owned by 3 Councils. It will be registered with Companies House and has to follow all statutory obligations of a limited company and will have the following key characteristics:

Teckal ComplianceIt will be “Teckal” compliant and therefore have “teckal exemption”. This is a piece of European Union case law allowing Councils to transfer services into externally managed entities without having to follow competitive tendering rules and procedures.


Able to tradeThe PDL will be able to trade in the open market and charge for those services that currently, as an in-house provider, it cannot do. This ability will allow the PDL to market and sell its services to customers including SDS Direct payment holders, and private payers. The PDL will also be able to sell services to residents of other authorities and other public bodies including the NHS and CCGs

Independent of the Councils (Operationally)Whilst the councils will have 100% ownership, the PDL will have an Executive Board as described in detail in section 4.3. This Board will have a legal responsibility to act in the best interest of the Company, but will be guided strategically by Pan Dorset Executive Shareholder Group as described in Section 5. The Executive Board and management team will follow its own internal governance processes rather than having to follow Council-wide processes and procedures. This will speed up decision-making processes, allowing the PDL to react quickly to market changes and service user demands

Rebate Surpluses and benefits back to the councilAs 100% shareholder, the Councils have total control over the treatment and destination of all surpluses generated by the PDL. This could mean deciding to invest in additional new PDL services, or rebating the surpluses back to each authority for the delivery of existing Council services. The decision-making process and the rules governing the distribution and sharing of surpluses are detailed in section 5.

A contractual / commercial relationship for the provision of care servicesIn order to protect the Councils’ current high-level of quality in service delivery in all areas, there will be supply contracts with the PDL for all the social care services the company will provide. These contracts will be specifically drafted for each authority and will have negotiated quality requirements and Key performance Indicators (KPIs) that will need to be met on a monthly basis.

Use of current corporate servicesThis includes services such as ICT, HR and Financial Transactions processing. The PDL will need to maintain the current support services that the individual directorates currently enjoy, to ensure that services are provided as they are now. There will need to be put in place a service contract between the current support service providers - Mouchel for BBC and Dorset CC’s own corporate services and the PDL. The provision of support to the Poole services could be delivered by either Mouchel or Dorset CC corporate services.

1.5 How will the Pan Dorset LATC be governed?Effective governance is an essential component in creating the PDL in order to ensure the requirements of the Teckal Exemption are satisfied, for example the need for all three councils to demonstrate that they exert control and influence over the PDL.

There is also a requirement to achieve a balance between the Councils’ strategic control and influence whilst still enabling the Directors of the PDL to have operational responsibility for delivering their strategic objectives. If this balance is broken, the outcome is either a company that is so hide-bound by council decision-making that it becomes a “shadow directorate” or a company that is uncontrolled and therefore failing to meet Teckal exemption requirements, and so open to challenge and potential closure.

The structure recommended to meet the above objectives is described below:


The PDL will report quarterly to the Executive Shareholder Group (ESG) whose role will be to exert the control and influence described as necessary in the above paragraph.

This role of influence and control will be fulfilled in the quarterly meetings by:

Reviewing the PDL’s performance in quarterly held meetings where the executive of the PDL will report on:

o Service and Quality performance – matched against contractually agreed service levels, using Key Performance Indicators (KPIs) as a summary guide

o Financial results against signed-off business plans

o Review of future service developments and opportunities

Reviewing and ratifying the annual five-year business plan to be presented by the executive team every November/December in line with authority budget setting timetables

Receiving and assessing any additional ad-hoc requests

The ESG would hold 10 members, plus 2 advisors from each authority (typically the Director of Adult social care and one finance representative), making a total of 16 possible attendees.

The Chair would be selected from one of the members and that position would have the casting vote in a tied vote. The chairmanship would rotate between the authorities on an annual basis and the hosting of the meetings and any admin support would also rotate annually or bi-annually.

The table below details the service budgets committed by each authority and the resulting membership to the ESG



ESG£m %


36.4 100.00% 10

This structure means that for “majority” decisions there is an opportunity for a well-argued decision to win the vote with the Chair’s casting vote. It is envisaged that the future decisions on the PDL business plans and results will be made on sound business lines and not on history.

The above majority voting structure will apply to the majority of decisions to be made by the ESG; however, there are certain subjects and decisions that are termed “reserved matters” that protect minority partners in the PDL.

Reserved matters are those subjects where a unanimous decision is needed if a vote is required. A unanimous vote means that one member of the ESG can effectively prevent a decision from going through, even though 9 out of 10 members have voted yes. Reserved matters are typically subjects that are fundamental to the partners and


the constitution of the joint PDL. The following list is a preliminary list that will be developed during implementation:

Changes in the constitution of the partnership Changes in Terms and Conditions of staff New Partners joining the PDL Sale of Shares Strategic Direction of the Services and Company

It is also recognised that these ESG meetings will be properly constituted and managed in a similar way to other Council bodies, so there will be administrative rules and protocols to follow.

A Shareholders’ Agreement would also be put in place to restrict and control what shareholders and Directors can do on behalf of the PDL. As there are three shareholders, the aims of this agreement are:

To manage and govern the relationships between the shareholders, including decision-making and voting rights

To restrict the abilities and authorities of the PDL Directors, so that the Councils and Members are satisfied that the assets and employees of the Company are adequately protected

The relationships and voting powers of the shareholder representatives have been recommended in detail in section 5.2.

This Shareholders’ Agreement is also necessary to define and regulate voting rights because it has been recommended that the voting rights will not be directly reflected in the shareholdings of each Council. It is recommended that all three councils have the same nominal number of shares in the PDL. This is because it is much easier and simpler to amend the Shareholders’ Agreement for a change in profit share and voting rights than it is to change the number of shares owned by each council to reflect the new voting rights.

The Shareholders’ Agreement will also deal with the unlikely possibility of the PDL being sold for a capital sum to a private provider.

For the restricting of Directors’ actions and powers we recommend the following limited authorities and restrictions are placed on executive Directors:

Directors will be authorised to act and deliver the outcomes as defined by the latest Business Plan for the PDL that has been ratified and agreed by the ESG

Directors cannot give themselves any form of payment or benefit outside that agreed in the ratified Business Plans

Directors cannot commit the Company to any form of loan agreement without express agreement from the ESG.

Directors cannot remove any other directors without the agreement of the ESG

Directors cannot pay themselves a bonus or any form of pay increase

The ESG is a vital part of the PDL plan as it ensures that the three partner Councils do not lose their control of the performance and direction of the Company that they have jointly created.


1.6 Risks of Joint Ownership and their ManagementThere are inevitably risks associated with a project of this size that spans across three authorities and 50+ locations. The key issue is identifying possible risks that are insurmountable or commonly known as “deal breakers”.

Senior Officers and experienced consultants in the field of LATC implementation have a view that the only “deal breakers” could be in the constitution decision-making of the PDL. This would be caused by an inability to agree on terms.

Managing risks in ImplementationThe single biggest risk for the implementation stage sits around any technical changes to the ICT and network communications that would be needed to allow the PDL to function efficiently.

By their nature these costs are difficult to identify and cost until the project is under way. If there are technical issues that can be solved, but only at a very high cost, the pragmatic solution is to look to the PDL to find “work-arounds” that mitigate the issue.

Managing risks the PDL post implementation.Other potential disadvantagesEach authority will lose immediate and direct control of its services in the PDL as opposed to controlling its own single LATC. By its nature the LATC model means that Councils lose management control of their services anyway, but that is seen as one of the benefits.

Unfair profit sharing is a possibility if the agreed ratio calculation becomes inappropriate. The remedy would be to revise the ratio calculation, and that would be a reserved matter and so need a unanimous vote on the ESG.

Double running of support services is a potential danger to the smooth and efficient running of the PDL. This situation is unavoidable for the short term, so it could be an issue that will cost all three authorities through a lack of efficiency savings and additional administration costs. These costs will not last forever, as these support services will be integrated into one provider after 3 years. The immediate objective of this will be increased process efficiencies and reduced costs of administration.

Legal challenges from the market may be more likely as the PDL will be very high profile within the region and will significant market influence.

1.7 ConclusionThe conclusion of this Business Case is that the PDL is a unique opportunity for the three authorities to partner up in a jointly owned company that will benefit the finances and services of all three authorities through synergy and cooperation. The PDL will be much greater than the sum of its parts and this opportunity will never present itself again.

1.8 Next Steps – Implementation

High level timeline and milestones Based on the respective Councils approving the business case in December 2014 there will be three key “go live” milestones. These are as follows:


1. The PDL will go live on the 1st July 2015 and receive the transfer of DCC provider services, staff and properties.

2. On 1st July 2015 the PDL will receive the transfer of BBC provider services, staff and properties.

3. On 1st October 2015 the PDL will receive the transfer of BoP provider services, staff and properties.

The milestones described above in effect create a semi-phased approach to the complete go live of the PDL. Phasing of go live is necessary as a result of the different stages of readiness the three local authorities will be at. For example in November 2014 DCC began the implementation process for a single PDL. This has enabled work to proceed in advance of PDL implementation. Therefore by 1st July 2015 DCC will be in a position to “go live”.

BBC has started preliminary background work on the implementation with an aspiration of going live in July 2015.

BoP, following approval of the business case, will be in a position to begin implementation from January 2015. As a result their “go live” date is later.

The go live timescales also recognise the risks inherent in the implementation process. Council Officers have not implemented an LATC before, nor dealt with the complexity associated with a PDL and therefore there is a risk that the resource requirements are underestimated in time and financial terms. To mitigate this risk, experienced implementation consultants are informing council corporate teams of the implications and requirements of the process, and could be involved in the actual implementation itself.


2 Introduction

2.1 The purpose and background of the Business Case

This high-level business case is designed to provide an overview and some detail of the:

Benefits and advantages of a Pan Dorset LATC (PDL) Recommended governance structure for the three authorities a financial overview of the company’s forecast performance including Board

and management structures Risks and potential disadvantages Timescales and additional costs of implementation

The Pan Dorset LATC (PDL) involves Dorset County Council (DCC), Bournemouth Borough Council (BBC) and Borough of Poole (BoP) transferring nominated in-house provider services into a jointly owned LATC.

All three authorities have commissioned and received options appraisals and detailed business cases on their respective individual LATCs. These commissioned reports have recommended that the LATC model is the most appropriate vehicle for the future of their services and so the three authorities through the “Better Together Programme” have commissioned this high level business case to analyse the opportunity of a jointly-owned LATC and to then recommend a way forward.

2.2 Drivers for creating a Pan Dorset LATC

There are a number of drivers that are either individual to each authority or common in relation to their geographical and demographic situation. These drivers include:

- Better Care Fund and integration- Better Together Programme- Improved service quality for individuals- Maximising available resources e.g. operational workforces and facilities- Scale of savings and efficiencies- Scale of additional income opportunity- Scale of new business opportunity- “Go it alone” disadvantages (e.g. Competition between individual PDLs).- Seamless service pathways across Dorset

Better Together ProgrammeThe three authorities are following this programme and recognise the inherent benefits in working in an integrated way across the region.

Maximising resourcesAt the moment the three workforces are operating within artificially drawn boundaries. This leads to inefficiencies with the possibility of staff from different authorities working within yards of each other, when in a coordinated world, only one employee would be able to complete both assignments within the same journey. This is only one example of efficiencies being driven coordinated working

Scale of savingsAll three authorities are facing unprecedented savings requirements over the short and medium term. They wish to continue to provide high quality services that can be sustained over the longer term. All opportunities to achieve savings must be fully


explored, and all individual options appraisals for these services concluded that the PDL model was effective in generating and providing savings to their respective authorities. It can be safely assumed that individual savings potential will not be lost if amalgamated across the three sets of services.

Scale of Additional Income opportunitiesThe PDL model develops the legal ability to sell social care services at a surplus to those members of the general public who need some form of social care and who may be ineligible for support from their local council. Using this model allows profitable services to help subsidise other services within the same company and to increase the level of service provided. A joint LATC will avoid duplication of service and allow all residents to avail themselves of all the services within the joint company.

Scale of new business opportunityCovering a larger geographical area and serving a greater number of potential clients will increase the potential market for services to be provided by the PDL. An increased market can only offer greater new service opportunities, covering both urban and rural needs.

"Go-it Alone" disadvantagesAs establishing an LATC is a primary objective for two of the authorities in the group of three, there is a possibility that if the PDL is not established across the region then there may be services competing with each other as single LATCs. Not only will this result in the loss of all the benefits of economy of scale and integration listed above, it will also result in the following:

Duplication of new service development as the single LATCs look to meet the same market demand with a new service provision

Increased competition at the high quality end of the care market, potentially threatening margins and increasing the risk of reducing prices through lower quality provision

Increased competition for quality staff to start new service offers, potentially risking higher costs to attract new recruits

Undue attention paid to PDL competitors, distracting the management team from improvements from the inside.


3. Key Assumptions

3.1 Key Assumptions the business case is built upon.

Financial

The assumptions adopted and used in the individual business cases for all three authorities have been kept and used in the PDL business case. These assumptions include the following broad subjects:

Staff terms and conditions – these will not change. All staff will TUPE over on their existing Terms and Conditions (Ts & Cs), including pension rights, holiday entitlements and sick pay policies. This will mean that the PDL will have three sets of similar but ultimately different Ts & Cs to manage. There will be a process to harmonise Ts & Cs over the first three years.

New employees in new services will be recruited on appropriate rates as decided by the PDL

Procurement and organisation of back office support functions – the provision of support services as identified in the individual Business Cases for Dorset and Bournemouth will be kept. So, Bournemouth’s service requirements will be supported by Mouchel as they are now, and Dorset’s will continue to be provided by their own in-house corporate services. It has been assumed that Poole’s requirements will be provided by Dorset services. There is an assumption that by the end of year 3 the PDL will have reviewed its support service provision.

Property transfer arrangements and heads of terms with the PDL – all buildings used and occupied by the services will be leased to the PDL by the individual authorities or their nominated vehicles. No assets of any significant value will be transferred to the PDL

Finance Assumptions – The financial assumptions detailed in the individual business cases have been adopted in the PDL. As a high level review the financial results are a consolidation of the individual BCs, with revisions for the following areas:

o Reduction in costs through geographical efficiencieso Redesign of the executive teamo Reduced executive and governance costso Increase in administration costs due to differing support service

provision

Commissioning Assumptions – no additional commissioning assumptions have been adopted for the PDL. However it is recognised that over time the nature of the PDL will allow the individual commissioning authorities to have a more joined-up approach to service demand through services being delivered without worrying about artificial boundaries.

Integration with the local health sector will become a significant factor in the development of new services in the region. Although this effect has not been included in any of the financial forecasts.


(Detailed set of assumptions were included within the appendices of the single business cases)

Implementation Timetable

The implementation of a single LATC takes 9-12 months, as our previous experience of 5 successful implementations has shown.

Dorset CC members recently signed-off the implementation of their LATC to go-live date 1st July 2015, giving themselves 9 months to implement from 1st November 2014.

Bournemouth Borough Council members will be reviewing their single LATC business case and the Pan Dorset LATC business case at the same time in mid-December. Our recommended go-live date for either Bournemouth’s single LATC or the transfer of its staff and services into the PDL is 1st July 2015. Background development work is already is train

Borough of Poole’s review timetable is similar to Bournemouth’s with a decision to be made in December 2014, however we would recommend that the integration into the PDL takes place 5 months later than Bournemouth’s services, so we are looking at a go-live date for Poole of 1st November 2015.

We envisage that the Pan Dorset LATC will be set up with its agreed governance structure from 1st July 2015 so that the three sets of staff can be TUPE’ed as per the implementation timetables outlined above.


4. Pan Dorset LATC – how will it look?4.1 What is an LATC? An LATC is a company limited by shares and 100% owned by a Council. It is registered with Companies House and has to follow all statutory obligations of a limited company.

The PDL will have the following key characteristics:

4.1.1 Teckal ComplianceIt will be “Teckal” compliant and therefore have “teckal exemption”. This is a piece of European Union case law allowing Councils to transfer services into externally managed entities without having to follow competitive tendering rules and procedures.

To qualify for “Teckal exemption”, the Company has to be under the control and influence of an Authority, in this case the three authorities. This is achieved by each authority owning the same number of share totalling 100% and having a strong governance structure as detailed in section 5 of this business case.

The Company must also provide services that were provided while inside the Authorities and must be in the same economic arena, in this case the provision of social care

The Company must have at least 90% of its income derived from the provision of services to the Council, i.e. the three authorities. This figure is due to be reduced by EU legislation to 80% at the time of externalisation. Once services have been externalised, there is legal debate as to whether “Teckal” still applies, and there is at least one trading LATC whose stated ambition is to have 50% of its income from outside its shareholder Council contract.

4.1.2 Able to tradeThe PDL will be able to trade in the open market and charge for those services that currently, as an in-house provider, it cannot do. This ability will allow the PDL to market and sell its services to customers including SDS Direct payment holders, and private payers. The PDL will also be able to sell services to residents of other authorities and other public bodies including the NHS and CCGs

4.1.3 Independent of the Council (Operationally)Whilst the council will have 100% ownership, the PDL will have an Executive Board as described in detail in section 4.3. This Board will have a legal responsibility to act in the best interest of the PDL, but will be guided strategically by Pan Dorset Executive Shareholder Group as described in Section 5. The Executive Board and management team will follow its own internal governance processes rather than having to follow Council-wide processes and procedures. This will speed up decision-making processes, allowing the PDL to react quickly to market changes and service user demands

4.1.4 Rebate Surpluses and benefits back to the councilAs 100% shareholder, the Councils have total control over the treatment and destination of all surpluses generated by the PDL. This could mean deciding to invest in additional new PDL services, or rebating the surpluses back to each authority for the delivery of existing Council services. The decision-making process and the rules governing the distribution and sharing of surpluses are detailed in section 5.


4.1.5 A contractual / commercial relationship for the provision of care servicesIn order to protect the Councils’ current high-level of quality in service delivery in all areas, there will be supply contracts with the PDL for all the social care services the company will provide. These contracts will be specifically drafted for each authority and will have negotiated quality requirements and Key performance Indicators (KPIs) that will need to be met on a monthly basis. These contracts could have financial penalties included to ensure that the three authorities receive best value for the services it receives.

4.1.6 Use of current corporate servicesThis includes services such as ICT, HR and Financial Transactions processing. The PDL will need to maintain the current support services that the individual directorates currently enjoy, to ensure that services are provided as they are now. There will need to be put in place a service contract between the current support service providers - Mouchel for BBC and Dorset CC’s own corporate services and the PDL, where the PDL agree and define the range of services and service levels that the providers should deliver. The provision of support to the Poole services could be delivered by either Mouchel or Dorset, the final decision will be made on practical and technical factors during the implementation stage. Just as in the service contract described above, this contract should allow the PDL to receive good value for money and high quality services from both providers.

4.2 What are the generic benefits of the LATC?

The benefits of establishing a single LATC are listed below and relate to service users, staff, the Council and other stakeholders including residents who currently do not deal with any local authority service at all in the social care arena.

Service Quality – The LATC builds on existing service quality and continuously improves the service experience to customers through quality assurance programmes, for example service excellence assurance models.

Customer – The LATC is able to deliver services to more people in need of social care support, including customers in receipt of a direct payment, customers who are private funders and informal carers of people in need of social care support. Whilst at the same time the LATC creates more customer choice in the market place for services. Councils currently cannot “sell” their services to private individuals who wish to purchase some care provision.

Workforce Quality - The LATC retains and builds on the existing asset of experienced, committed and well-trained staff. For example working towards and achieving nationally recognised accreditations, such as the Investors in People Award, enhance the development of the workforce including boosting leadership skills and management effectiveness

Organisational Performance – The creation of an LATC results in driving overall organisational performance through commercialisation. This includes improvements in workforce practices, patterns and management. This translates into greater overall efficiency savings set out in Section 7.

Innovation - The LATC stimulates entrepreneurship within the organisation and workforce in terms of service offerings to customers and commissioners


for example the design of services that encourage independence, enable greater focus on prevention and avoidance of high cost long - term provision.

Cultural – The LATC as an externalised trading company, creates a new culture based on greater autonomy, accountability and quicker decision - making. It shapes a whole new identity based on quality provision, which encourages workforce pride in the new company and a sense of a vested interest in its future success. In effect it creates the ethos of the public sector environment with the commerciality of the independent sector.

Business Sustainability and Diversification – The LATC is able to pursue new business opportunity and income streams beyond the baseline services, which contributes to its sustainability. For example, bidding for new business and penetrating new health and social care markets. This applies especially to the market serving NHS discharge and intermediate care.

Reputation – The LATC is able to become a provider of choice for end users, carers and commissioners and the employer of choice within the recruitment market place, for example being in the Times 100 Best Companies to Work For. (This happened to Sandwell Community Trust)

Council retention of control and flow back of the benefits. – The legal structure of the PDL means that the Council partners retain control of the company and as a result benefit from the success of its trading activity. This includes flow back of benefits associated with efficiency savings and income growth.

The Provider of Last Resort – The Councils have a statutory duty to provide care when the assessed needs are critical and substantial. The PDL can help ensure that the three Councils can meet that obligation by being contracted to provide expert management and service provision when private sector providers fail in the level of quality delivered or leave the market altogether.

Partnerships – The PDL is able to support local third sector organisations through partnership working.

The Care Act – as the implementation of the provisions of the Care Act proceeds, the PDL provides the opportunity to support this. For example shaping service offers to respond to people with personal budgets and supporting the provision of preventative services.

4.2 How will the PDL Operate Internally?

4.2.1 Arrangements for PDL Internal GovernanceIt is recommended that the PDL has an Executive Board independent of the Council and made up of the following positions:

Independent Chair – this could be a local individual with good links to the public sector who understands the world of local authorities and the health sector who would bring a high level of knowledge of the services and the social care landscape

Managing Director – the combination of care services experience and successful and substantial commercial experience will be essential. An ability to work in a transformation role will be an essential as part of the MD’s role


Managing Director

Financial Director

Finance Managers

Business Support

Operational Managers

Business Development

Director

Business Development

Manager

Marketing

will be to push through the cultural and commercial change that the services need. A Job Description can be found in the Appendix B

Finance Director – with a strong commercial background and experience of managing a company of £30m+ turnover SMEs would be ideal. This role will support the cultural shift and encouraging commercial thinking and experience in new start-up or transformational organisations will be essential.

Business Development Director – with a strong service / commercial background and experience of delivering business growth targets within a company of £30m+ turnover in the social care arena will be essential. This role will be recruited to towards the end of the 1st year of trading

Non-Executive Directors with skills that fill major gaps on the Board, such as legal and marketing, these would be selected from local candidates/applicants

The PDL will have a turnover of over £38m in its first year and will touch the lives of thousands of residents in the Dorset area. This organisation will be a very high profile company locally and nationally, as the first jointly owned social care LATC in the UK. The selection of the executive team will be crucial in the success of the PDL, and the individuals with the skill sets and experience needed may only be available from a national recruitment process.

We recommend that there are no Members from any Council on the Executive Board. If there are members on the Board, in our view this distorts the commissioner/provider relationship with the PDL and creates potential for significant conflicts of interests for any Members on the PDL Board. It also creates legal responsibilities that Member and Officers may not want to take on. This is further complicated by having three authorities from which the members could be selected, raising questions over representation etc. for each authority.

Because the governance mechanisms for this PDL are so important we have devoted a whole section (5) in the business case that recommends to The Councils the appropriate governance mechanisms and structures.

The PDL Executive Board would meet officially once every month and would deal with all aspects of the management of the PDL.

The executive team of Managing Director, Financial Director, and Business Development Director would be expected to meet on a very regular basis, as one of the significant advantages for this type of organisation is its small size relative to Councils, enabling the executives to be based in the same building and so working together formally and informally on a day-to-day basis. The key areas of responsibility for each executive post include the following:

Managing Director – Business strategy and planning; operational performance: culture change; interface and reporting with Councils/Shareholders

Financial Director - responsibilities would cover Finance; I.T; Property; Procurement; commercial contracts.

Business Development Director – New income generation; bids and tenders; marketing and sales; development partnerships; website.

Senior Operational managers- there are 4 experienced senior operational managers who will be TUPEing over into the PDL from their respective councils. These senior managers will report to the Board via the MD and be directly responsible for the quality and delivery of the care provided to all service users.


The table below outlines the total cost of employing the executive posts that we have outlined above. The full cost of employment includes:

Salary

Pension contributions at the current LGPS level – 13%

National Insurance contributions of the PDL – 11%

Cost of support costs such as – mobile phone, travelling expenses and some admin support – 5%

The above additions apply to the 3 executive director posts.

We have included salary costs that we feel would be attractive to the right calibre of applicant, taking into account the attraction of working in the Dorset area and the size and nature of the newly established business. Inevitably the market and candidate availability will dictate the salaries actually to be paid in order to recruit the right executives. Our estimates are based on very recent experience in Buckinghamshire where the MD was recruited for a £9m PDL. This experience leads us to recommend that the posts be advertised at 20% less than the maximum quoted below, to gauge the attractiveness of the job role, the working environment and the area. This then allows the posts to be re-advertised at higher rates if there is little interest from the right calibre of applicant.

The base salaries that we have recommended are:

Managing Director of £40m company – circa £100,000

Finance Director of £40m newly established company – circa £80,000

Business Development Director of new market entrant - circa £75,000

We have scheduled the Business Development Director and manager and the marketing team to be recruited at the beginning of the second year as the PDL will need a year’s trading to understand its own services, decide where its staff recruitment will come from and to analyse the care market in the area.

The Independent Chair costs have been forecast at £500 per month plus £100 expenses, the Non-Executive Directors are paid expenses only at £100 per month.


They would be expected to attend one formal Company Board meeting per month. These terms are similar to other roles that we have helped develop in earlier PDLs.

The recruitment of these posts will be through the Executive Shareholder Group and the costs will be split between the three authorities.

Pan Dorset LATCBoard, Executive and External Service Costs

Summary PostsNos

Additional Costs

£BoardChair Person New 1 7,200Managing Director New 1 130,200Finance & Commercial Director New 1 105,000Business Development Director New 1 91,875Non Executive Directors New 4 4,800Total Board Costs 339,075

ManagementFinance Manager New 3 148,800Marketing Team New 2 75,000Business Development Mgr New 1 50,000

273,800

External Services purchasedInsurance Premiums New 70,000Bank Charges New 7,500External Audit New 40,000Legal Advice New 20,000

137,500

Total HO and Business Support function 13 750,375

In designing the above executive team and structure, we have not simply consolidated the costs of the Dorset and Bournemouth and Poole PDLs in their single PDL business cases, but designed and shaped the team on the size and the nature of the organisation. This has allowed us to reduce the costs of business development and marketing as we feel it is not necessary to double these costs when there are two sets of services. On the other hand we have increased the costs of insurance and external audit fees as the company is significantly bigger.

The funding of all the executive posts will be in the same proportions as the profit share, whereas the costs of the additional management resource £273k and external purchase £137.5k will be financed out of efficiency savings and additional income contributions. The share of the costs of the executive team are shown below:

Pan Dorset PDL Share of Executive Costs


Operational Services

Day Services Accommodation Based Services

Reablement Services

Employment, Enterprise and

Training

Community Support and Shared Lives

Authority % Share Share of Cost

Bournemouth Borough Council 23.90% 81,039Dorset County Council 69.78% 236,607Borough of Poole 6.32% 21,431

Total FTEs in Pan Dorset LATC 100.00% 339,075

4.2.2 Organisation of operational services The table below summarises the services that have been in scope for the individual PDL business cases and have now been amalgamated into the PDL.

Summary of the scope of services

Service Category DCC BBC BoP

Day Services

Residential care and supported housing

Employment, Enterprise and Training

Reablement

Shared Lives

Community Support X

(Detailed scope of services to be included within the appendices of the business case)

There is a similar scope of services within DCC, BCC and BoP (day services and employment services only). As a result there is the opportunity to:

Organise along common service lines;

Integrate service delivery where services are closely aligned geographically or in terms of a service pathways, such as reablement;

Achieve service efficiencies for example where the same levels of operational management overlap within a similar geographic area.

We recommend that services area organised within the PDL along service lines in order to:

Maximise integration of services and staff

Ensure a common and consistent approach to managing performance.

Establish single management reporting lines for each service area, headed up by an Operational Service Manager for each.

Provide the platform for the expansion of existing services

Provide the framework for developing new service offerings

Proposed configuration of operational services


Although we have recommended that the services are managed on a service type basis, we are asking the PDL to ensure that it allows management to look at delivery on a locality level so that staff in the same locality can be switched services to maximise capacity and outputs and avoid additional temporary and agency staffing costs.

4.2.3 Staffing of operational servicesThe following table gives the details of the current budgeted establishment numbers for the services that are in scope for the PDL across the three authorities

Pan Dorset LATC Full Time Equivalent Staff Numbers

AuthorityFTE Nos on

Transfer

Bournemouth Borough Council 262.05Dorset County Council 797.73Borough of Poole 64.38

Total FTEs in Pan Dorset LATC 1,124.16

The actual number of staff who will be TUPE’ing over is more likely to be over 1,400 as many of these posts are filled by two, or sometimes three part-time staff.

The new PDL will not be a small organisation, with a turnover of over £40m and over 1,400 staff it will be a major employer in the region and touch many peoples’ lives through their care provision.

As the new organisation gets to grips with its new position in the market, the service managers will be tasked with identifying areas of overlap and duplication that can be eliminated, freeing up capacity that can be utilised on expanding other services in the PDL that will be generating net contributions to the organisation.

4.2.4 Arrangements for PDL Support ServicesThe PDL will start from go-live with the current services providers, as detailed below. This means that it will have two sets of back-office services from Dorset CC and Mouchel through Bournemouth BC. This is not a sustainable position in the medium to long term and there will be an opportunity to harmonise these services within 3 years.

Dorset CC will be providing all support services from within their existing corporate services structure, to the staff and locations that are transferring, the services provided will include:

HR including payroll


ICT hardware, networks and software Financial transaction processing

Bournemouth BC will be providing the above services to their transferred staff through their support services partner Mouchel.

Borough of Poole would appraise the options for the provision of support services, and select the solution accordingly.

4.3.5 Arrangements for Property UtilisationThe three authorities will not be transferring any land or building assets to the new PDL. All the buildings used or occupied by the services in scope will be leased to the PDL by the relevant owner authorities.

A list of properties is held in the appendices attached to this Business Case, the buildings and properties used are located all over the County.

The leases will be linked to the service contracts, so if services are re-located or transferred, the leases on the buildings that have been freed up will be terminated.

The authorities as the landlords will have the responsibility and the budget for major repairs and maintenance.

One of the identified benefits of the PDL and the integration of three sets of services is the opportunity to consolidate delivery of services into certain buildings, freeing up less frequently used properties for either a change of use or for sale and subsequent capital receipt.


5. Pan Dorset LATC Governance Effective governance is an essential component in creating the PDL in order to ensure the requirements of the Teckal Exemption are satisfied, for example the need for all three councils to demonstrate that they exert control and influence over the PDL.

There is also a requirement to achieve a balance between the Councils’ strategic control and influence and still enabling the Directors of the PDL to have operational responsibility for delivering their strategic objectives. If this balance is broken, the outcome is either a company that is so hide-bound by council decision-making that it becomes a “shadow directorate” or a company that is uncontrolled and therefore failing to meet Teckal exemption requirements, and so open to challenge and potential closure.

It is anticipated that the PDL will have a structure and relationship to the Councils as set out in the following sections.

5.1 The Pan-Dorset LATC and the CouncilsThe design of the PDL will reflect a number of key relationships, governance and contractual arrangements for the Councils and the new company.

There are four main relationships that the three Councils will have with the Company:

1) As the 100% shareholder with monitoring arrangements via the Executive Shareholder Group.

2) As individual authority commissioners with a contract/s for service delivery by the PDL

3) As contract holders for delivering business support services to the PDL.

4) As operational partners with the PDL in the delivery of strategically important services that form part of the Councils’ access pathway including integration and social independence

The above relationships are fundamentally the same as with any single LATC as the first three have to be in place to provide a legally acceptable framework and governance mechanism for the legally registered company and the service contracts.

The fourth relationship may actually become simpler to manage and develop because the PDL will offer one destination and one contact point for potential partners and all referrals/enquiries, irrespective of the location and nature of the service request or query.

It is recommended that the PDL have a structure and relationship to the Councils as set out in the diagram below.


The recommended structure is based on single LATC structures that have been established with LATCs in:

Northamptonshire Buckinghamshire Aberdeen Scottish Borders (in implementation)

It involves the creation of two companies (a service delivery company and a ‘support function’ company) managed by the same Board.

The ‘support function’ company ensures the LATC has the most VAT efficient structure and does not carry a VAT liability in the provision of Care Quality Commission (CQC) registered services. This is required because services regulated by CQC are VAT exempt meaning the Company would incur VAT on support costs of those regulated services but would be unable to reclaim the exempt VAT thereby incurring an additional cost.

The support company holds the contractual relationships with the three commissioning Councils, as well as all the property leases and support service SLAs with the two providing Councils.

The care company will employ all the care staff and will be registered with CQC as the provider, and will provide all the care requirements to service users, and invoice the support company for that care provision. These two companies will be in a “VAT Group” which creates a simple structure for VAT, allowing the support company to hold all the VAT relationships with suppliers and customers.

This structure helps to avoid increasing the cost of unclaimable input VAT by several hundred thousand pounds.

The two companies would always be managed as one, in effect; there would be a seamless relationship between the two companies, managed by one Board


The structure also allows new businesses or existing services to be created as separate companies under a group company structure.

The underlying nature of the two sets of contracts will be determined during the implementation stage where conditions and deliverables will be agreed with the various parties. Any services provided by the Council to the Company have to be provided at a commercial rate in order to avoid issues of State Aid.

5.2 Three Councils Members and the PDL – The Executive Shareholder Group (ESG)

This section will:

1) Describe the nature and duties of the ESG

2) The recommended structure of the ESG including representation from all three Councils including the voting rights and protocols for decisions on the PDL

1) The Nature and Duties of the Executive Shareholder GroupThe ESG will exert influence and control over the PDL on behalf of the three partner Councils, this role has to be fulfilled to comply with the Teckal exemption. More importantly this group will be representing the three authorities’ short term and strategic requirements for adult social care from these services and will have delegated powers from their respective authorities to make decisions on their behalf.

This role of influence and control will be fulfilled in quarterly meetings by:

Reviewing the PDL’s performance in quarterly held meetings where the executive of the PDL will report on:

o Service and Quality performance – matched against contractually agreed service levels, using Key Performance Indicators (KPIs) as a summary guide

o Financial results against signed-off business plans

o Review of future service developments and opportunities

Reviewing and ratifying the annual five-year business plan to be presented by the executive team every November/December in line with authority budget setting timetables

Receiving and assessing any additional ad-hoc requests

2) The recommended structure of the Executive Shareholder GroupThe structure and composition of the ESG as described below has been designed and agreed through a process that included:

Workshop with Officers of all three authorities, including legal, commissioning and provider representation

Meeting with the directors of all three adult social care services with officers to agree the structure in light of their own Council requirements

Independent legal review of the recommended structure to ensure that all agreed recommendations would stand up to legal scrutiny

In the above process there were several important factors that had to be recognised and taken into account in the design of the structure:

The size of the services being transferred into PDL from each of the authorities, it was agreed that the 2014/15 gross budget for the services in


scope from each authority would be a reasonable measure. This would represent the “stake” that each authority would have in the PDL

The structure needs to be flexible over time so that if authorities commit additional services to the PDL, thus increasing their “stake” in the PDL, then the voting structure would need to change to reflect that

The voting rights of all three authorities would be reflected in the composition of the ESG and not in the number of shares held in the PDL. Therefore the shareholding of all three authorities would be equal

The voting structure had to allow for debate and decisions to be made with a real opportunity to constructively win “hearts and minds” of the group. This could only be achieved by not having a majority that could never be overturned

Certain fundamental decisions could only be decided on a unanimous vote, thus allowing any one member to have the veto on that decision. All the subjects in this area are called “reserved matters” and will be described and detailed below.

The size of the group needs to be manageable in terms of the number of attendees and advisors. It was generally agreed that by keeping the attendee numbers relatively low, the following would be achieved:

o Accumulated knowledge and history of the services and the PDL

o Continuity of attendance by Members

o Efficient use of meeting time and decision-making

With above factors taken into account the workshop and the Directors meeting, attended by legal representation designed the following structure for discussion, debate and recommendation by members of the three local authorities:

The ESG would hold 10 members, plus 2 advisors from each authority (typically the Director of Adult social care and one finance representative), making a total of 16 possible attendees.

The Chair would be selected from one of the members and that position would have the casting vote in a tied vote. The chairmanship would rotate between the authorities on an annual basis and the hosting of the meetings and any admin support would also rotate annually or bi-annually.

The table below details the service budgets committed by each authority and the resulting membership to the ESG



ESG£m %


36.4 100.00% 10

This structure means that for “majority” decisions there is an opportunity for a well-argued decision to win the vote with the Chair’s casting vote. It is envisaged that the


future decisions on the PDL business plans and results will be made on sound business lines and not on history.

Without question, this structure will need a brave and historical decision so that the future of all these services can be in the hands of sound, business professionals who understand the commissioning needs not only of their council owners but also understand the potential market opportunities available to the PDL.

The above majority voting structure will apply to the majority of decisions to be made by the ESG, however, there are certain subjects and decisions that are termed “reserved matters” referred to above that protect minority partners in the PDL.

Reserved matters are those subjects where a unanimous decision is needed if a vote is required. A unanimous vote means that one member of the ESG can effectively prevent a decision from going through, even though 9 out of 10 members have voted yes. Reserved matters are typically subjects that are fundamental to the partners and the constitution of the joint PDL. The following list is a preliminary list that will be developed during implementation:

Changes in the constitution of the partnership Changes in Terms and Conditions of staff New Partners joining the PDL Sale of Shares Strategic Direction of the Services and Company

It is also recognised that these ESG meetings will be properly constituted and managed in a similar way to other Council bodies, so there will be the following administrative rules and protocols to follow:

Required notice period of meetings Pre-published agendas and papers Clerked minutes and actions Protocols for substitutes and quorum rules

Exit strategies need to be available to any one of the three councils. The details need not be determined in this paper, but the basic principle will be that the two remaining shareholders will have pre-emptive rights which will give either or both of them the right to buy the shares of the exiting council at a value to be calculated at the time of exit. If neither of the remaining councils wish to buy the shares, the exiting council will then be free to dispose of its shares within the limits of the Teckal exemption rules.

5.3 Shareholder AgreementThe Shareholder Agreement is a legal document allowing the shareholders, in this instance, the three Councils, to restrict what shareholders and Directors can do on behalf of the PDL. As there are three shareholders, the aims of this agreement are:

To manage and govern the relationships between the shareholders, including decision-making and voting rights

To restrict the abilities and authorities of the PDL Directors, so that the Council and Members are satisfied that the assets and employees of the Company are adequately protected

The relationships and voting powers of the shareholder representatives have been recommended in detail in the above section 5.2.


This Shareholders’ Agreement is also necessary to define and regulate voting rights because it has been agreed that the voting rights will not be directly reflected in the shareholdings of each Council. It is recommended that all three councils have the same nominal number of shares in the PDL. This is because it is much easier and simpler to amend the Shareholders’ Agreement for a change in profit share and voting rights than it is to change the number of shares owned by each council to reflect the new voting rights.

The Shareholders’ Agreement will also deal with the unlikely possibility of the PDL being sold for a capital sum to a private provider.

For the restricting of Directors’ actions and powers we recommend the following limited authorities and restrictions are placed on executive Directors:

Directors will be authorised to act and deliver the outcomes as defined by the latest Business Plan for the PDL that has been ratified and agreed by the ESG

Directors cannot give themselves any form of payment or benefit outside that agreed in the ratified Business Plans

Directors cannot commit the Company to any form of loan agreement without express agreement from the ESG.

Directors cannot remove any other directors without the agreement of the ESG

Directors cannot pay themselves a bonus or any form of pay increase

The above restrictions are in no way unusual or restrictive and we would not expect them to limit any recruitment process for any executive director.

5.4 Other Contractual Relationships with the Pan Dorset PDL1) Contractual relationship for the provision of services by the PDL to the

councilsThis is where council commissioners of adult services monitor on a monthly basis contractual performance of the PDL. This allows continual scrutiny of service delivery levels and gives commissioners significant ability to fully understand their commissioned services and the factors that affect performanceEach council will have its own supplier contract with the PDL that will specify and regulate on the following areas:

Detailed specifications and descriptions of the services provided

Quality of delivery of services

Outcomes and outputs expected of the services

Contractual and legal aspects of the contract

It may be decided that the commissioners from all three councils meet monthly with the senior operational managers to discuss the provision of service across all the locations so that a more strategic view of the whole of service delivery can be seen. This could help in the re-design of services and delivery.

2) Contractual relationship for the provision of support services by the councils to the PDL


This is where Dorset County Council (DCC) and Bournemouth Borough Council (BBC) are the providers of business support services to the PDL including:

HR providing transactional processing, payroll and advice ICT providing all hardware, networks and software on an on-going basis

including daily support Financial Transaction Processing providing systems and processing for

purchase orders, purchase invoices, payments, sales invoicing and receipts.

In this arrangement, the DCC infrastructure will support ex DCC employees, services and locations. BBC, through its existing contract with Mouchel will provide the same to its employees etc.

In order to protect both parties there will be contracts and service level agreements (SLAs) in place that will:

Specify the services to be provided

Detail the performance levels to be provided

Contain contractual and legal aspects including poor performance penalties


6. Pan Dorset Five year high level business plan

6.1.1 Methodology used in developing the High Level Business CaseThe fundamental design of the financial results included in the high-level business case is a consolidation of the financial results in the Dorset single LATC business case and the results from the Bournemouth single LATC business case. Adding in the values for BoP further enhances the consolidated results. These values include service budgets, potential savings and additional income opportunities.

Assumed additional costs and savings that occur as a result of the new PDL have then revised the consolidated values.

The one area that is not covered in the single LATC business cases is the subject of profit share and how it is distributed out to the three authorities, this question is dealt with in section 6.1.4.

If required, the single LATC business cases can be made available for reference.

6.1.2 Financial Assumptions included in the Business Case As in the section on methodology above the financial assumptions used in the single LATC business cases have been carried over into this high-level business case, the major assumptions have been described in section 3 above and all individual LATC assumptions are available in the appendices.

Below are the headline assumptions contained in single LATC business cases that will not change in the Pan Dorset PDL high-level business case:

Buildings used and occupied by all services will be leased from their respective councils. No assets will be transferred to the PDL

All TUPEed staff will keep their current terms and conditions of employment

The three authorities will transfer their respective pension funds for their staff as fully funded. If there are pension deficits to be paid for, these can still be made by the PDL on top of their required pension contributions to keep their new fund fully provided for.

Current pension provision will be continued through admitted body status into the LGPS

No redundancies or staff reductions have been included in the efficiency savings

It is recognised that some assumptions such as depreciation rates may differ in the single LATC models and will need to be harmonised if the PDL is implemented, however it has been assumed that this harmonisation will not have a significant effect on the financial results of the PDL.

One area where the single LATC assumptions were significantly different was that of the provision of support services to the PDL. This is a significant issue and so has been dealt with separately below

Support Service ProvisionThe single LATC business cases have the following assumptions in relation to support services:

Dorset CC will be providing all support services from within their existing corporate services structure, these services will include:


HR including payroll ICT hardware, networks and software Financial transaction processing

Bournemouth BC will be providing the above services to their single LATC through their support services partner Mouchel.

Borough of Poole would look to either BBC or DCC to be their provider of support services for their 60+ staff. We do not see the need for BoP to provide their won support services because the number of staff involved and the complexity of service required are relatively low.

It is the intention that the support services will be harmonised after between 18 months and 2 years by following all relevant procurement rules. We have estimated that process will cost an additional £100k.

6.1.3 Summary of Financial ResultsThis section contains the forecast profit and loss account and the balance sheet for the Pan Dorset LATC for the first five years of trading. The Profit and Loss Forecast (P/L) is where the elements of cost efficiencies, new management costs and additional income all come together to show how the company will perform in the market and still deliver the cost savings required by the three Councils.

We have produced a full set of financial results that include balance sheets, a value for money comparison, extracts from which are below:

Pan Dorset LATC Profit and Loss Account for the First Five yearsDescription Year 1 Year 2 Year 3 Year 4 Year 5

£ £ £ £ £IncomeDorset CC Contract 25,772,058 25,644,474 25,324,875 25,198,566 25,135,412Bournemouth BC Contract 9,346,153 9,346,153 9,252,691 9,159,229 9,065,768Borough of Poole Contract 2,491,242 2,332,747 2,405,280 2,360,061 2,365,432Other Income 910,476 2,353,887 4,580,389 5,966,011 7,403,511Total Income 38,519,929 39,677,260 41,563,234 42,683,868 43,970,123ExpenditureStaff Costs 30,636,194 31,472,523 33,295,510 34,490,446 35,821,251Rent for Properties 1,160,000 1,160,000 1,160,000 1,160,000 1,160,000Supplies & Services 4,943,174 4,904,561 4,904,561 4,904,561 4,904,561Total Service Expenditure 36,739,368 37,537,084 39,360,071 40,555,007 41,885,812Contribution to Group 1,780,561 2,140,176 2,203,163 2,128,861 2,084,311Exec Man & Board Costs 247,200 339,075 339,075 339,075 339,075Audit, Insurance, legal 137,500 137,500 137,500 137,500 137,500Marketing, Finance Support 148,800 273,800 273,800 273,800 273,800CSS Support Services 600,000 600,000 600,000 400,000 400,000Total H.O. Function 1,133,500 1,350,375 1,350,375 1,150,375 1,150,375Support Svs % of Income 2.94% 3.40% 3.25% 2.70% 2.62%Profit before Int & Depr 647,061 789,801 852,788 978,486 933,936Deprec'n Chge @ 5% pa 11,000 11,000 11,000 11,000 11,000Net Profit before Tax 636,061 778,801 841,788 967,486


922,936Corp Tax rcble/(payable) (3,007) (9,241) (18,553) (27,046) (31,080)Annual Profit or (Loss) 633,055 769,561 823,235 940,441 891,856

Retained Profits/(Losses) 633,055 1,402,615 2,225,850 3,166,290 4,058,147

The above table shows how the PDL is performing financially, with a profit of £4.0m after 5 years, which could contribute to the three Councils’ savings requirements. This is the real benefit of the Councils being in control in that all the profits, whatever the value, are directly under their control. If the Councils (as the purchasers) pushed the block contract price (Contract income in the above table) of the PDL’s services down to the bare minimum, they would enjoy a reduced contract price, but (as the Shareholders) they would not have a high-retained profit available to it.

In the table above the contract prices for all three authorities have been reduced from year 3 onwards so that some of the efficiency gains are translated into a reduced contract price for services.

At the end of year 5 the company has built up its reserves in the form of retained profit to £4.0m, as shown in the Balance Sheet table below. This retained profit would be available for rebating to the three Councils in their profit sharing ratios, shown in the section below or for re-investment in additional services. Both the reduced contract price and the retained surplus represent savings to any of the three Councils.

A key dynamic in this financial analysis is that the more net profit the Company’s new services can generate, the more savings or reinvestment are available to the three partner Councils:

Pan Dorset LATC Balance Sheets for the First 5 yearsDescription Year 1 Year 2 Year 3 Year 4 Year 5

£ £ £ £ £Net Fixed Assets 209,000 198,000 187,000 176,000 165,000Debtors 78,886 129,033 194,421 240,189 270,849Bank account 3,153,454 3,908,743 4,734,274 5,685,637 6,592,774Current assets 3,232,340 4,037,776 4,928,695 5,925,826 6,863,623Supplier Creditors (313,718) (310,659) (310,659) (310,659) (310,659)Creditors VAT (1,755,354) (1,774,483) (1,794,153) (1,805,156) (1,813,249)Creditors Income Tax & NI (736,008) (738,578) (766,279) (792,475) (815,287)Corp Tax debtor/(creditor) (3,007) (9,241) (18,553) (27,046) (31,080)Current Liabilities (2,808,086) (2,832,961) (2,889,645) (2,935,335) (2,970,276)Total Net Assets 633,255 1,402,815 2,226,050 3,166,490 4,058,347Capital and ReservesShare Capital 200 200 200 200 200Retained Profit/(Loss) 633,055 1,402,615 2,225,850 3,166,290 4,058,147Shareholders' Funds 633,255 1,402,815 2,226,050 3,166,490 4,058,347

6.1.4 Profit Share Model for the shareholders, BBC, DCC and BoPThe profit share model as described below has been designed and agreed through a process that included:


Workshop with Officers of all three authorities, including legal, commissioning and provider representation

Meeting with the directors of all three adult social care services with officers to agree the structure in light of their own Council requirements

Independent legal review of the recommended structure to ensure that all agreed recommendations would stand up to legal scrutiny

In the above process there were several important factors that had to be recognised and taken into account in the design of the profit share mechanism:

The size of the services being transferred into PDL from each of the authorities, it was agreed that the 2014/15 gross budget for the services in scope from each authority would be a reasonable measure. This would represent the “stake” that each authority would have in the PDL at the outset

The structure needs to be flexible over time so that if authorities commit additional services to the PDL, thus increasing their “stake” in the PDL, then the profit share would need to change to reflect that

Below is a table that shows the relative size and share of the budgets that are being transferred into the PDL, and these have been used to agree the profit share percentages as shown.



ESG£m %


36.4 100.00% 10

The above proportions will be recalculated on an annual basis as part of the business plan process and it is suggested that no change to the proportions will take place unless the change is over £250k. This allows the management to focus on the day-to-day management of the services and not worry about small changes in activity.

The above profit share proportions will be applied to surpluses after all costs and taxes have been accounted for, in other words, net retained profit. All surpluses are directly affected by contract price reductions, which reduce the cost of services to each Council, and it has been agreed that to guarantee contract savings to each council, the contract prices charged by the PDL will reduce by 1% each year. This ensures that:

The PDL focuses on efficiencies and additional income so that it can provide the contract price reduction to partner councils

Partner councils receive their required reduced costs for their budget savings before the net surplus is shared out

The above profit share proportions and processes would apply to any losses sustained by the PDL. In other words, each partner will share the losses in the same way that they share the surpluses.


6.1.5 Value for Money ComparisonThis section deals with the financial effect the PDL could have on the Councils’ financial position in relation to adult social care.

The next table holds the value for money calculation that illustrates how much net benefit the Councils would enjoy if the PDL were adopted. This calculation measures the financial benefit by comparing the cost of the services if nothing changed over the next five years with the net cost the Councils would pay to the PDL for providing those same services.

Pan Dorset LATC Value for Money Comparison

Description5 Years

Receipts5 Years

Contract Spend

5 Years Budgets no

Change£ £ £

Cost of current In-House Services 181,477,031Cost of Contracts to 3 Authorities from the LATC 185,200,141Income to Council from Charges to LATCRe- Corporate Support Services 2,600,000Fixed Assets Purchased (Desks etc.) 220,000Property Rental Income 5,800,000Dividends available to three authorities 4,058,147Income and earnings available to 3 authorities (12,678,147)Net Cost of Contract 172,521,994 (172,521,994)Saving on all 5 year Budgets £8,955,038Share of Net Benefit to each Authority Sgle LATC Joint Share Incr in BenefitBournemouth Borough Council 828,014 1,154,524 326,510Dorset County Council 6,855,129 7,568,302 713,173Borough of Poole 232,212 232,212Total net benefit 7,683,143 8,955,038 1,271,895

As referred to before, as the 100% shareholders of the PDL, the Councils have total control over the destiny of the accumulated profits and could ask them to be transferred back to them to financially support other areas of social care or the wider Council requirements. The model above has assumed that the Councils have not taken any retained surpluses out of the PDL. The table below shows that the Councils are saving £8.9m between them by establishing and commissioning the PDL to provide its services and to sell additional services to SDS clients and other self-funders in the wider Dorset areas including Bournemouth and Poole.

The shares for each of the partner authorities of the benefits accruing over the first five years of trading from the PDL have been shown at the bottom of the table.

The results in the table show that each of the Authorities has increased its benefits value over the 5 years from the establishment of the PDL. In other words, between the three authorities the Pan Dorset LATC will generate £1.2m more of savings/better value than if it is not done and the individual authorities go it alone with single LATCs.


This is a compelling financial argument in favour of the Pan Dorset LATC, especially in these times of severe austerity and budget restrictions imposed on all Councils.

The benefits accruing to each individual authority through the PDL are shown in the last column of the above table.


7 Additional Income Opportunities for the Pan Dorset LATC

7.1 Summary of new income opportunitiesA Pan- Dorset LATC will be able to generate substantial additional income of up to £9.13 million per year by the fifth year of trading. This figure is the maximum that the PDL can earn from non-Council contracts without breaking the “Teckal” exemption rules. The main source of this income will derive from individual customers who want to or have to purchase services privately. That is, they either do not meet the local authority eligibility criteria or have made a choice to purchase privately.

Private purchasers will pre dominantly be people over the age of 65, living in the more affluent areas of the county. Other client groups such as people with a learning disability or physical disability are mostly local authority funded as they normally have insufficient capital or income of their own. In these cases it is more likely that direct payment of social care personal budgets will be made in order to choose how support needs are to be met.

Across the county of Dorset it is estimated that in 2015 there will be 140,000 people aged 65 and over unable to manage at least one self-care activity or domestic task.2 Approximately 53% of these people are assumed to be private payers, based on the regional profile of social care service for the South West of England3. As a result we estimate an older people self -payer market of 75,000 in 2015, rising to 83,000 by 2020.

The PDL will aim to secure between 1% and 3% of this market by year five of trading. The development of this size of customer base will occur incrementally over the first four years of trading. This is because the PDL will need to time to increase its staffing resources and build capacity within operational services. The estimated proportion of customers sourced within each local authority area will be proportionate to the overall populations of older people in Poole, Bournemouth and Dorset. The chart below sets this out as a percentage of the total over 65 population.

The table below illustrates how the additional income from new and existing services builds up over the first five years of trading. We have given the PDL a year in which to set itself ready for developing new income streams and we expect years four and

2 Projecting Older People Population Information System (POPPI): www.poppi.org.uk; accessed 19/10/15.3 Care of Elderly People UK Market Survey 2012/13 (Laing and Buisson 2013) page 214.Self -Funded Social Care for Older People (PSSRU Paper 2007); Projection Expenditure Page 23.People Who Pay for Care Quantitative and Qualitative Analysis of Self Funder in Social Care (Oxford Brooks University January 2011)


DCC 63%

BBC 19%

PBC 18%

Source of Self Payers by Local Authority Area

http://www.poppi.org.uk/

five to show significant increases in revenue generation. We have assumed a net profit of 9% on additional service income.

Analysis of Non- Local Authority Turnover from New ServicesNew or Existing Services Year 1 Year 2 Year 3 Year 4 Year 5

£ £ £ £ £Existing services 788,863 803,725 898,610 898,610 898,610New services 0 1,150,000 3,234,375 4,617,780 6,055,280

Total £788,863 £1,953,725 £4,132,985 £5,516,390 £6,953,890

7.2 New Income Generation OpportunitiesThere are two phases of income generation that are open for the Pan Dorset LATC to develop over the first five years of trading. These are as follows:

1. First phase income, which seeks to increase income generated by a number of services and facilities formerly provided within local authorities, for example sale of meals to people attending day services. There will also be the opportunity to sell transferring social care services to private payers, something existing in - house services are unable to do being part of local authorities.

2. Second phase income, which seeks to introduce into the private market place new social care products delivered by the PDL. There are two products identified for the purposes of this business case which are seen as viable for development as a result of the demographic and needs based context described above. These services are a Regaining Independence Service and a Specialist Dementia Support Service.

7.2.1 First Phase Income Generation Opportunities

Each local authority operates a number of transferring services that generate income. Income is derived principally from catering and rental of rooms and facilities in Day centres. Within the Pan Dorset LATC this income generation will continue.

In addition, maximising the sale of current capacity within certain operational services can generate other income, for example day service and residential care placements.

The table below sets out a combined income of £4.25 million over five years that will be generated from the transfer of existing services into a Pan Dorset LATC. For the first three years of trading income increases incrementally as existing capacity is maximised. After year three, any further income growth will come from additional service delivery.

Analysis of Non- Local Authority TurnoverService Area Income Year 1 Year 2 Year 3 Year 4 Year 5

Residential Care Placements £6,000 £12,000 £24,000 £24,000 £24,000

Day Services Placement £15,625 £31,250 £62,500 £62,500 £62,500

Home Care provision £17,500 £35,100 £70,200


Meals and Catering Services £676,638 £688,375 £703,010 £703,010 £703,010

Rental Income from Day centres £35,100 £37,000 £38,900 £38,900 £38,900

Total £750,863 £803,725 £898,610 £898,610 £898,610

7.2.2 Second phase income generation opportunities

Two new products are recommended for development by the PDL. The rationale derives from engagement with staff teams from existing provider services, our direct experience in managing LATCs and from market research and analysis of key demographic data from the Office of National Statistics (ONS), which highlight gaps in the private market for services that can support people to regain their independence and services that specialise in supporting people with dementia. In summary these services are as follows:

a.) A Regaining Independence Service (RIS)This service will be designed to provide short term, outcome focussed support to maximise a person’s ability to live independently in his or her own home. It is recommended that this service operationally align with the existing reablement services and potentially intermediate residential care services. We see an opportunity for the PDL to provide extended forms of “reablement” or short term support that for example continue on a private basis after the initial statutory local authority 6- week package has ended.

b.) A Specialist Dementia Support ServiceThis service will provide specialist dementia support to people living in their own homes, so that their functional abilities are maintained for as long as possible. It is recommended that where possible this service share an operational relationship with existing or proposed dementia facilities. For example this specialist support service could operate as a “spoke” out of existing facilities acting as a “hub” in terms of management, staffing and operational delivery to customers in the community.

7.2.3 New Income Projections

There are a number of assumptions built into the projected income from the two new products described above. These assumptions are as follows:

24% of the total target market will be people with dementia. This prevalence is an average based on Office of National Statistics projections for people over 65 years of age 4

4 The most recent relevant source of UK data is Dementia UK: A report into the prevalence and cost of dementia prepared by the Personal Social Services Research Unit (PSSRU) at the London School of Economics and the Institute of Psychiatry at King’s College London, for the Alzheimer’s Society, 2007.


76% of the total target market will be people joining the Regaining Independence Service.

The price point for both services is based upon an hourly rate. This hourly rate is set at £20 per hour (plus VAT).

60% of contracted staff hours will be contact time with customers. 40% will be non-contact time that covers for example staff-travel and back office activity the cost of which is built into the hourly rate. The non-contact time is anticipated to be higher within the rural areas of Dorset and balanced overall with activity that takes places with more densely populated areas.

An 8% profit margin is built into the hourly rate.

Sales to private customers will increase at an incremental level each year of trading from 25% in year 1; 50% in year 2; 75% in year 3; 100% in years 4&5.

Customers will purchase an average number of hours based on the specifications of each service. For the Regaining Independence Service the specification assumes an average of 80 hours per person. This represents a short-term service (up to 10 - weeks) aimed at maximising independence. The Specialist Dementia Support Service assumes an average of 390 hours per person. This represents an intensive support intervention of 15 hours per week over a 6-month period.

Service costs will predominantly relate to front line staff, based on a maximum annual requirement, plus a training premium to meet the requirements of each service. The recruitment of the total establishment will be incremental reflecting the growth of a customer base over the first five years of trading.

Taking into account the assumptions, the table below sets out the anticipated turnover in year five, based on a market share target of between 1% and 3%.

Market Share

Regaining Independence

Income(Millions)

Dementia Support Service Income

(Millions)

Total(Millions)

1% £0.9 £1.4 £2.32% £1.8 £2.8 £4.63% £2.7 £4.2 £6.9

The staging of new income generation is outlined in the Table below and is reflected in the PDL’s financial performance in section 6:

Analysis of Non- Local Authority Turnover from New ServicesService Area Income Year 1 Year 2 Year 3 Year 4 Year 5

£ £ £ £ £Regaining Independence 450,000 1,265,625 1,687,500 2,250,000Residential dementia unit 305,280 305,280Dementia Support Services 700,000 1,968,750 2,625,000 3,500,000Total £0 £1,150,000 £3,234,375 £4,617,780


£6,055,280

The ambition of the forecast new sales reflect the synergies and opportunities that exist for the joint owned company, as opposed to two or three single competing companies all providing the same services to the same people.

7.2.4 Critical Success Factors for realising the income generating potential of a Pan Dorset LATC.

In order to realise this new income, there are a number of critical success factors that need to be addressed by the PDL, as part of its business strategy, over the first five years of trading. These factors are as follows:

Financial investment Investment will be needed to build a private payer customer base. The level of investment will be higher in the first two to three years because of the need for example to raise awareness of the PDL brand and product range, attract new staff resources and develop the internal business infrastructure to support a private payer customer base. Financial resource therefore to support pan - Dorset marketing and recruitment campaigns is of paramount importance to the success of new business. In addition the PDL will need to consider the effect of upfront operational costs, for example the need to have staff in situ for induction and training prior to the delivery of the new services to customers.

Relationship with Private CustomersThe purpose of a customer relationship will be to acquire new customers, as well as retain and derive more revenue from existing ones. The nature of the PDL business will require the development of individual and personalised customer relationships in order to succeed. Such relationships need to be based on the creation of bespoke packages of support that precisely fit the needs of the customer. They are also reliant on the regular follow up and survey of customer experience; transparency of terms and conditions of service and customer expectations being met. A regular communication flow with customers will also be needed that creates a sense of being part of a quality brand. Such communication includes for example the creation of a customer newsletter that promotes the PDL, showcasing it products and new offers.

To support this type of customer relationship we recommend that the PDL consider establishing a “one-stop shop” infrastructure for customers.

Key features and selling points of a “one- stop shop” include:

Ease of contact for all customers, for example the creation of a single PDL telephone number and website. There is also the potential for example to direct customers from DCC, BBC and BoP to the PDL via the “My Life My Care” web portal.

A holistic assessment as well as information, advice and guidance for customers who would benefit from a broader range of PDL services.

The provision of bespoke person centred support focussed on the individual customer and / or family and delivered by high quality front line staff.

PDL services available to people along the scale of acuity (for example low, moderate, substantial and critical needs)

The ability to adapt the service offer to respond to new health and social care developments including the introduction of personal health budgets. This


could also include adding into the “one stop shop” other new products and features such as telehealth, telecare and small aids to daily living.

Channels to the Private Payer MarketEffective channels to market will be needed to create awareness of PDL products and enable customers to purchase. A number of channels have been identified that require development and on-going cultivation. These include the following:

Channels into acute hospitals at the point at which it is determined that a person will require social care support on discharge but is not eligible for local authority funding. We are aware from dialogue with acute hospitals that opportunities exist to support the discharge process of self paying customers through offering responsive care services that enables a person to return home and increase levels of independence.

Maximising the use of the Pan Dorset Portal “My Life My Care” provides a crucial channel to private payers searching for care services from a trusted provider. It is recommended that this portal has a clear link to a PDL website which needs to have a level of both sophistication and simplicity enabling the customer to easily navigate the product range and make immediate contact for enquires or purchases. Over the first five years of trading the PDL should consider the potential of e–shopping as an enhancement to this channel to market, which is becoming an essential component for many private sector providers.

Knowledge, networks and relationships built upon at a locality level to create additional channels to market. We are aware of other LATCs who have developed a strong network of relationships with local services including G.P.s, retail outlets and community groups. Where this has happened sales of services have experienced a marked increase.

Perceived Added Value of Pan Dorset LATC ServicesThe PDL will be part of the independent sector market and therefore exposed to competition from other care providers. In order to develop a position within the market place and successfully build the target customer base it is essential that the added value marketed by the Pan Dorset LATC becomes a compelling reason for people to purchase services. The required added value messages can be summarised as follows:

The PDL is a trusted provider backed by all three local authorities. In our experience of working with focus groups of private customers this is of primary importance when considering the purchase of social care services. This becomes even more important for example where families are purchasing services on behalf of a loved one and want the assurance they will be cared for by a trusted operator.

The PDL maintains the values and ethos of public sector provision whilst having the responsiveness of the private sector. This means it will be driven by supporting the best interests of the customers it serves rather than exclusively being driven by profit motives. At the same time the PDL will need to be able to develop the levels of customer service associated with best


practice in the private sector. This will include ensuring that the customer has access to quality services in a timely and responsive manner.

The PDL is a provider of quality services built upon a skilled and qualified workforce. Defining standards of quality and best practice needs to be at the heart of any PDL market development. Regulatory compliance will only satisfy national minimum standards (for example CQC standards). Therefore internal quality assurance systems will need to be designed to ensure all service offers conform to recognised standards of best practice. Not only will this reinforce the trusted provider status of the organisation but also it will be a significant selling point related to the PDL brand.

The PDL’s new products are completely different to long-term generic service provision, which is typified by, for example, domiciliary care. Instead the PDL will offer short–term outcome focussed alternatives, seeking to maximise independence rather maintain dependency. The products will also contribute to avoiding or slowing down the need for high cost services such as residential care. In order to develop a successful business the PDL has to astutely deliver this message to its target customers.

Development partnerships Realising the potential of new services will include developing the right strategic partnerships. This is particularly so where the PDL may seek to enhance its product offerings. For example it may wish to consider enhancing its regaining independence service to include other key service offers. This could include developing relationships with providers of Telecare, Telehealth and Community Equipment.

Furthermore the engagement with health partners may provide the PDL with a key strategic business opportunity for example to develop an integrated health and social care product offering to private customers. This would greatly enhance both regaining independence and specialist dementia services whilst developing the uniqueness of private payer services.

PDL WorkforceThe ability to recruit staff with the required values and abilities is the lifeblood of new business opportunities. Over the course of the first five years of trading the PDL will need to recruit, induct and train a new staff workforce so as to meet the projected growth in support hours purchased. This will need to involve a Dorset – wide recruitment campaign promoting the PDL as an employer of choice within the local market with attractive terms and conditions of service.

As the potential to enhance service offers is realised (for example health related services) the PDL may consider the recruitment of multi – skilled staff teams that include physiotherapists, occupational therapists, nutritionists and nurses.

The recruitment of a significant number of full time equivalent staff will have an effect on both overhead costs and management structure. As described above, this will require a level of financial investment at the outset plus addressing identified “breakpoints” for example in-line management reporting ratios.


8 Benefits and advantages of a Pan Dorset LATCMeeting the Better Together AgendaThe leaflet “Better Together – Integrated health and Social Care” (included in the appendices) states the objectives of this initiative for the authorities of Bournemouth, Dorset and Poole are:

Improved health and care for residents

A more seamless service for people who access health and social care in the Dorset area

Greater efficiencies and better value for money

One of the initiatives described in the leaflet is – Local Authority Trading Company

The Pan Dorset LATC is the best and only opportunity that the three local authorities will have to meet the above objectives and initiatives in a totally coordinated manner.

The merging of three sets of social care services into one entity with one set of professional managers under the strategic control of the three authorities is an unprecedented opportunity.

The website Dorsetforyou - https://www.dorsetforyou.com/411954 includes the following aspirations:

“Our aim is to overcome the existing cultural and financial barriers that can get in the way of delivering coordinated care and support to the people and communities that we serve”

It is difficult not to agree that the Pan Dorset LATC will go a long way in helping meet those aspirations and so achieve the objectives included in “Transformational Challenge Award”

Once established, the joint PDL will then become an exemplar for other services in the three authorities, encouraging new and joined-up thinking across the different directorates and services.

Reputational Benefits

There are benefits accruing from the PDL that are not readily measurable and not necessarily immediately visible and they include the following:

The very high profile that this venture will have in both the region and nationally. The PDL will be the very first jointly owned PDL in the UK in the field of adult social care. All three authorities will be seen as pioneering and innovative for joining in this project. This will enhance the reputation of each of the authorities and raise the profile of the Dorset partnership in central government and other regions

The consequences of “not creating the PDL”, this may appear a negative approach to adopt, but if the PDL is not taken up, the three authorities involved will still have to decide the future of their services. It is extremely likely that at least one if not two single PDLs would be the result of not establishing the PDL. We would then see two single PDLs competing in the same towns for the same customers and same staff. This situation would potentially lead to one winner and one loser,

Service and Financial Critical Mass


https://www.dorsetforyou.com/411954

The term “critical mass” is used to describe the size that any organisation must reach to be able to withstand the threats and risks faced by a commercial organisation. In our view the PDL will reach that critical mass and some of the benefits accruing from that are:

Ability to withstand shortfalls in additional income over time Sufficient staff numbers for more effective manpower planning General perception of financial security enhanced leading to easier

recruitment Market penetration easier with high profile brand and reputation

The nature, size and geographical spread of the new PDL will benefit each of the partner services in the following ways:

The size of the new PDL will make the additional income targets of the single Bournemouth LATC less risky as there is a greater financial foundation behind the plans.

Poole’s two day centres will not be working in isolation, and their high quality, complex services can be provided to other non-residents of Poole.

Dorset’s reablement services and day services in Christchurch will be able to offer services to the elderly in neighbouring high density urban areas of Poole and Bournemouth.

Pathways to Care A PDL will be able to offer a single point of access and coordinated support activity across the three local authority areas, supporting the Better Together strategic approach to service delivery5.

All professionals seeking to refer into the PDL will be able to contact one organisation regardless of the geographical boundaries that exist. This is a significant benefit particularly to G.Ps, Acute Hospitals and health providers whose services may cut across different local authorities.

An example to illustrate the benefits of the PDL is Reablement services. Currently both the Royal Bournemouth Hospital and Poole General Hospital serve people living in each local authority area. Discharge planning for patients with social care needs, therefore has to consider which Reablement team (Dorset CC, Bournemouth BC or Poole BC) will need referring to, each with a differing admin process and pathway to navigate. From a Reablement provider perspective, each Reablement service will allocate separate staffing resources to support referrals from these hospitals. A PDL will facilitate the move to a single assessment, referral and intermediate care delivery pathway, whereby one organisation will be providing Reablement. Therefore the fragmentation highlighted above can be removed and in turn resources used more effectively and efficiently across health and social care.

Income GenerationThe PDL can be more ambitious in the levels of private income it can generate without breaching the Teckal exemption rules. At the time of externalisation the Pan Dorset LATC will be able to derive 20% of its income away from the three local authorities, for example within the private payer market. Having a combined income from the three local authorities of circa £36.5 million per year means that the PDL can seek to generate £9.13 million per year without breaking the Teckal exemption

5 Better Together Business Plan (2014 – 2017) page 18 Table 1 “Programme and Project Descriptions”


rules. This is significantly higher than the income potential of individual LATCs, as the table below illustrates.

LATC Local Authority Income p.a £M

Maximum Private Income p.a £M

Pan Dorset LATC £36.5 £9.13

Dorset LATC £25.4 £5.0

Bournemouth LATC £8.7 £1.74

Poole LATC £2.4 £0.48

This high exemption ceiling means that the PDL can look ambitiously at the private market without having to limit its targets due to the Teckal exemption limits.

Both Bournemouth and Poole have large potential demand from which they can attract new self-funder income, but as single LATCs they would be limited by Teckal because their respective Council contract values do not provide sufficient headroom to really penetrate the market. Adding Dorset County Council’s contract value of £25m pa into the joint LATC allows an additional £5m of self-funder income to be earned without breaking Teckal rules.

Efficiency and economies of scaleThe PDL will be able to achieve greater efficiencies and economies of scale as a result of the following:

Income contributions from three authorities mean that a number of costs associated with the PDL are effectively spread. This includes the costs associated with the Pan Dorset LATC such as the Executive management team and costs of governance.

Rationalisation within certain management tiers for example Heads of Service. This is a post implementation restructure based on the amalgamation of job roles that, on transfer into the PDL, were separate to each transferring service. The outcome of this rationalisation does not mean that staff are lost, rather it offers the PDL the opportunity to redesign its management capacity to support new areas of the business for example the management of services for private payers.

Consolidation of services within certain geographical areas. Particularly where the three local authority services share a close proximity and service type. For example where day centres within a proximity support the same client group with similar services it is possible to consolidate the service within one day centre and utilise the other day services to provide a different range of service to a different client group. This, therefore, enables the PDL to diversify its product range and support the local authorities in meeting different demands. This may have particular scope with expanding LD day support with transition clients.

Workforce Recruitment All three local authorities recognise the challenges in recruiting suitable front line care staff. This is the effect of the wider recruitment market and the well-documented specific shortfalls in the number of people attracted to employment within social


care services. As a result the ability to recruit and retain staff is of paramount importance to the future delivery of services and the realisation of new opportunities described earlier in this business case.

Operating as a PDL offers the opportunity to coordinate recruitment campaigns and allocate resources to attract staff within a much wider pool, than could be achieved by individual LATCs. Moreover the PDL mitigates the real risk associated with separate LATCs competing for the same staff within the same recruitment pool.

Overall therefore the PDL offers a much stronger chance of recruiting support staff than would be the case with individual trading companies for each local authority.

Market PositionAs a £36.6 million business with over 1,400 staff and services across, Bournemouth Dorset and Poole, the PDL will enjoy a significant market position within the independent sector. The scale of this trading entity offers clear opportunity as described in Section 7, to generate significant new income and effectively compete for business. Whilst there are established provider markets in many of the local authority areas, there are very few able to position, so as to offer a one -stop shop to social care across the whole county of Dorset. This should be seen as an exciting and major opportunity for PDL strategic business development over the first five years of trading. In contrast this potential is severely limited and extremely difficult to achieve with separate LATCs for each authority.

Of note also is the market position that the PDL will have on a regional basis. That is, the PDL will also have the real opportunity to penetrate new markets within different counties based on its range of more specialised product. An example of this can be seen from Essex Cares LATC, which over the first three years of trading was successful in developing Reablement services outside of Essex. This included securing a county–wide contract for the delivery of services to West Sussex County Council. The decision to penetrate new markets will be part of the strategic planning process and decision making of the PDL over and above opportunity presented within Bournemouth Dorset, and Poole. The ability to plan in this manner, however, really comes from the scale and market significance of a PDL rather than an individual LATC.


9 Risks and disadvantages of joint ownership and their management

9.1 Identifying and managing risks in ImplementationThe single biggest risk for the implementation stage sits around any technical changes to the ICT and network communications that would be needed to allow the PDL to function efficiently.

By their nature these costs are difficult to identify and cost until the project is under way. If there are technical issues that can be solved, but only at a very high cost, the pragmatic solution is to look to the PDL to find “work-arounds” that mitigate the issue. The problem with this type of solution is that in the long run they lead to inefficiencies which is exactly what the PDL is designed to eradicate.

These unavoidable inefficiencies can then lead to reduced savings and profit, which can only be remedied by some form of investment, which may be out of the financial reach of the PDL so the three councils, would be asked to help find or fund a solution.

9.2 Managing risks the PDL post implementation.Other potential disadvantagesEach authority will lose immediate and direct control of its services in the PDL as opposed to controlling its own single LATC. By its nature the LATC model means that Councils lose management control of their services, but that is seen as one of the benefits. Having to share control of the joint LATC means that priorities and initiatives from other authorities will become part of the decision-making and this may take precedence over other individual policies etc.

Unfair profit sharing is a possibility if the agreed ratio calculation becomes inappropriate. The remedy would be to revise the ratio calculation, and that would be a reserved matter and so need a unanimous vote on the ESG.

Double running of support services is a potential danger to the smooth and efficient running of the PDL. This situation is unavoidable for the short term, so it could be an issue that will cost all three authorities through a lack of efficiency savings and additional administration costs. These costs will not last forever, as these support services will be integrated into one provider after 3 years. The immediate objective of this will be increased process efficiencies and reduced costs of administration.

The future required migration of services into one system is the solution to the double running of support services. This migration project will be difficult and time-consuming on management time and potentially specialist support and help.

Three differing sets of terms and conditions of employment will be the problem facing the HR teams supporting the company. These will only be harmonised over the medium to long term and will cause some management and employment issues.

Legal challenges from the market may be more likely as the PDL will be very high profile within the region.


9.3 Exit strategy

9.3.1 Transition of PDL services into the independent marketThis illustrates how the PDL is not a destination for the services, but a potential transition situation. If the PDL were a great success financially, then there would be a possibility of a cash purchase from the private market.

9.3.2 Breaching the conditions of the Teckal ExemptionThis only applies if the Councils want to re-award their service contracts without going to a tender process. The ambition of the PDL would be to become efficient enough to be able to win the contracts without the Teckal exemption.

9.3.3 Failure of the PDL to deliver the proposed business planThe above reason is only one of several that relate to one or more partners wanting to leave the agreed structure. The most typical reasons for exit would be:

Additional savings need by an authority over and above those available through the PDL

Possible sale to another provider with capital receipts and guaranteed savings available as part of the sale price

Forecast savings not being achieved, leaving the market as the only cheaper but less palatable alternative

Inequality of profit-share that cannot be agreed by the three authorities

Change in political sentiment

These few reasons highlight the need to have exit facilities in the shareholders’ agreement has been agreed in principle.


10. Implementation

10.1 High level timeline and milestones Based on the respective Councils approving the business case in December 2014 there will be three key “go live” milestones. These are as follows:

4. The PDL will go live on the 1st July 2015 and receive the transfer of DCC provider services, staff and properties.

5. On 1st July 2015 the PDL will receive the transfer of BBC provider services, staff and properties.

6. On 1st October 2015 the PDL will receive the transfer of BoP provider services, staff and properties.

The milestones described above in effect create a semi-phased approach to the complete go live of the PDL. Phasing of go live is necessary as a result of the different stages of readiness the three local authorities will be at. For example in November 2014 DCC began the implementation process for a single LATC. This has enabled work to proceed in advance of PDL implementation. Therefore by 1st July 2015 DCC will be in a position to “go live”. BoP, following approval of the business case, will be in a position to begin implementation from January 2015. As a result their “go live” date is later.

The go live timescales also recognise the risks inherent in the implementation process. Council Officers have not implemented an LATC before, nor the complexity associated with a PDL and therefore there is a risk that the resource requirements are underestimated in time and financial terms. To mitigate this risk, experienced implementation consultants are informing council corporate teams of the implications and requirements of the process, and could be involved in the actual implementation itself.

10.2 Structure of implementationImplementation will be underpinned by the following work streams:

Future State - includes developing the operating model, service design and governance

Commercial and Legal - includes statutory registration, establishing service specifications and the tax & cost implications

Systems and Infrastructure - establishing and implementing the approach to finance, operations, property and HR

Communications and marketing - engaging key stakeholders and ensuring effective communication with staff & service users

Benefits realisation - developing business plans and reporting so that benefits can be measured and achieved

Each of the above workstreams will at some point involve the creation of “Chinese walls”, which will prevent any conflicts of interest occurring in the negotiation and delivery stages of the implementation. As an example, commissioning officers who will manage the future service contract for cannot act on behalf of the PDL in the drafting of service contract.


10.3 Implementation roadmapKey stages of implementation will involve both activities common to the three local authorities and individual to each.

Common activities will include for example establishing the Executive Shareholder Group, deciding the company name and appointing the PDL board.

Individual activity under taken by each local authority includes property leases, support service SLAs and the TUPE transfer of staff into the PDL.

The table below sets out each common and individual milestone and timings, leading to the phased go live dates of July and October 2015.

10.4. Programme managementImplementation will involve a complex programme of work involving a number of Council Directorates. This will involve the utilisation of a programme and project management approach with a dedicated project manager and dedicated personnel from each of the identified Directorates as follows:

Finance HR IT Legal Contracts and Procurement Property Communications Provider Services

The Programme will be overseen by an experienced consultancy. An indicative project resource plan has been developed and this should be firmed-up as part of the mobilisation phase. Strong sponsorship of this programme will be important to ensure that council resources are available to deliver the required outcomes and outputs on time.


It is expected that the Programme will have a governance structure that drives the programme forward and is able to make decisions, support the mitigation of risks and issues and approve any change requirements as the Programme continues to be delivered.

10.5 Stakeholder engagementStakeholder engagement is critical to the success of the PDL. Ensuring operational staff, service users and carers and trade unions are engaged with and support the PDL not only lends itself to an easier transition but also to a more successful organisation.

At the Business Case stage the views of a number of key stakeholders has been considered. These include the leads of corporate services as well as a range of staff tiers within provider services.

10.6 Change managementA clear change management strategy will be designed at the beginning of the implementation phase. Service areas should feel engaged with the process and operational managers need to have ownership of the programme. Articulating clear goals and delivery plan as well leadership from above are critical success factors.

Communication activities with service users and carers will involve regular briefings and opportunities for service users and carers to voice any concerns. As part of this process Corporate Communication will implement a detailed communications plan.

The PDL executive team will play a key role in moving the culture of the new organisation through change management and their recruitment and appointment are essential elements in this process.

10.7 Post go-liveThe new organisation is not expected to begin new trading immediately. Services and staff will need time to grow accustomed to their new identity and relationship to the Councils. At post go-live the PDL may wish to consider the potential for future income generation in terms of business planning and measuring additional capacity requirements. This timeline has been assumed in the financial case for the PDL.

As outlined above the recruitment and appointment of PDL executive managers is not a straightforward process. We therefore recommend that once the new executives are in post there is an agreed hand-over period of one or two months between any interim or implementation management and the new executive team.

This hand-over period will be designed to deliver the following:

History and background on the Business Case

Cultural change expectations

Detailed knowledge of systems and structures

Introduction of new team to staff and service users


The above outcomes are designed to prevent the new executives from “re-inventing the wheel” and wasting valuable time trying to understand system processes and procedures.


Executive summaryha2.boroughofpoole.com/akspoole/images/att22744.docx · Web viewA financial...

Documents

Transcript of Executive summaryha2.boroughofpoole.com/akspoole/images/att22744.docx · Web viewA financial...