©RedQuadrant 2015 Sarah Wilkie 07944 198812 sarah.wilkie@redquadrant.com

MSP

Inspire: Culture & Learning

Nottinghamshire

A case study

Summary

• The potential PSM comprises libraries, archives and records, learning

and arts services

• In redefining itself and understanding its core business, Notts County

Council is open to new forms of organisation to help sustain services

and reduce costs, including encouraging the spinning out of services

• The potential PSM has identified a number of benefits for itself, for

local communities and for the authority

• We adopted a collaborative and flexible approach, able to respond as

requirements evolved over the course of the project

• We provided technical and advisory support to test the suitability of

the preferred model, reviewed the initial business plan and advised

on its development to a five year commercial business plan and

robust financial model

• A particular focus was supporting the team leading the spin out to

develop a clearer understanding of the commercial and financial

requirements necessary for the potential PSM to grow and thrive

Summary cont.

• We ran a series of workshops focused on marketing skills,

commercialising the service offers and engaging staff and stakeholders

(within and beyond local communities)

• The final output was a detailed transition plan that will ensure that the

potential PSM is ready for its planned go live date in April 2016; this will

be an organic ever-changing tool to support the potential PSM on its

journey over the next twelve months

• A number of challenges have been addressed, including new public

procurement regulations and setting up new contract arrangements

with external funding bodies, but it is inevitable that the potential PSM

will face more as it moves towards that go live date

• However we believe the team leading the spin-out are equipped with

the necessary skills, drive and enthusiasm to build a new entity that will

secure the delivery of these services for the communities in

Nottinghamshire

BACKGROUND

About this case study

• We were appointed by the Cabinet Office to support a potential

Public Service Mutual in spinning out of Nottinghamshire County

Council. Support was required in four areas of activity:

Support requirement 1: Legal and governance

Support requirement 2: Business planning and financial planning

Support requirement 3: Stakeholder engagement

Support requirement 4: Transition planning

• The mutualisation support package had the following objectives:

To enable the potential PSM to develop an initial business plan into a

full five year business plan with a detailed and updateable financial

model;

To deliver a model of governance that services the needs of the

potential PSM; and

To develop a clear understanding of the commercial and financial

requirements necessary for the potential PSM to grow and thrive

• This case study outlines the context for the spin-out, the various

tasks undertaken, and the journey we and Nottinghamshire have

been on over the three months of our engagement.

Services currently delivered by the potential PSM

• Library services

Nottinghamshire Public Libraries

Education Library Service (ELS)

Prison Library –Whatton Prison

• Arts services

Arts Development service

Arts for Children and Young People (including Nottinghamshire

Music Hub)

• Learning services

Adult Community Learning Service (ACLS)

The Skills for Employment Service (SFE)

• Archives and Records services

Nottinghamshire Archives

Records Management Service

Parent body: the business case for change

• The Libraries and Archives business case, approved by Full Council

at its meeting on 27 February 2014, aimed to retain a sustainable

network of libraries and enable the County Council to fulfil its

statutory and legal duties in relation to public libraries and archives;

• It proposed to move the Service to an arm’s length operating model

in 2016/17 to generate immediate savings (£400,000 per annum)

from a reduction in business rates, and to realise other benefits in

establishing trust/social enterprise status;

• A report outlining the full business case for the development of an

arm’s length operating model was presented to Culture Committee

on 3 June 2014;

• On 15th January 2015 a meeting of the Culture Committee agreed

the legal form and governance arrangements for the new arm’s

length operating model for Libraries, Arts, Archives, Information and

Community Learning Services, to be provisionally known as Inspire

– Culture and Learning Nottinghamshire.

CONTEXT FOR OUR WORK

The key drivers for spinning out

• Nottinghamshire County Council (NCC) is reviewing itself in a

fundamental way, prompted by reductions in public finance and

increasing demands for social care;

• In redefining itself and understanding its core business, it is open to

new forms of organisation to help sustain services and reduce

overall costs;

• NCC, in common with other local government services, has seen a

sustained reduction in funding from central government, alongside a

need to invest in children’s and adult social care services;

• Funding allocated to the group of services covered by the PSM has

fallen by over 45% since 2009, with further reductions agreed to

2016 and inevitable beyond that date;

• A fundamental review, Redefining Your Council, is examining the

way the council operates going forwards, with one of its strands for

future development encouraging the spinning out of services

Proposed operating model

• The County Council had determined the following factors that would

influence the selection of the legal form of the new body that was

appropriate for the range of cultural and learning services:

Charitable status;

Not for profit;

Asset lock;

Ability to employ staff;

Financial benefits – rate relief / lottery bidding / gift aid;

Ability to contract;

Ability to maintain a public service ethos;

Ability to develop shared ownership by individuals / staff;

Ability to provide statutory and non-statutory services;

Ability to benefit non-members; and

Ability to provide limited personal liability for board members

Proposed governance arrangements

• The County Council had determined that a board of twelve members

would act as charity trustees and an accountable body for the

conduct and strategic direction of the new organisation. The board

would elect an independent chair and would allow observer status to

the County Council’s appointed commissioning officer. The twelve

member board would be made up of the following:

Staff member (x1) – elected by all employees (all employees are

members)

Society ‘community’ members (x 4) – elected by all members of the

society (excluding staff) and / or ‘friends’ groups

Selected and appointed (x4) – recruited via an open process – selected

by appointments panel

Nottinghamshire County Council (x2) - appointed – Chair of Culture and

Culture opposition spokesperson

Ex-officio – CEO / Chief Operating Officer for the society

Anticipated benefits: for the PSM

The potential PSM is seeking to achieve the following benefits,

amongst others:

• Be outcome focussed, enterprising and business-like;

• Develop new ways to attract funding, including increasing access to

grant funding;

• Be straightforward to commission;

• Provide an opportunity to deliver real ownership and leadership

through local communities; be locally accountable, and responsive

to local wants and needs through its membership;

• Draw on its strength from being embedded in the local community;

• Exploit new freedoms to market and income generate to increase

take up of services and income levels;

• Provide space to innovate and be free of unnecessary bureaucratic

constraints; and

• Deliver an entity that is flexible and scalable, able to quickly respond

to change.

Anticipated benefits: for local communities

The new operating model to be developed by the PSM aims to:

• Provide greater opportunities and experiences to individuals, groups

and communities across the county;

• Be more responsive to local changing needs and wants than

previously possible as a local authority entity;

• Ensure that local people have a strong voice and engagement with

the direction of the services and the choices that are made;

• Offer local people and groups a direct opportunity to engage and

become involved in the ownership and leadership of local services;

• Provide more opportunities through ‘at cost’ or lower service

charges for particular activities and experiences;

• Provide additional direct benefit to members and customers through

the deployment of any surpluses generated; and

• Potentially create the opportunity for greater synergy between

services thus enhancing the overall offer to individuals and groups

across the County.

Anticipated benefits: for the local authority

The new operating model to be developed by the PSM is expected to:

• Ensure the delivery of a clear, specified and costed contract, in line

with the Council’s defined priorities;

• Be locally accountable and responsive to local wants and needs;

• In the longer-term deliver cheaper services due to more competitive

pricing of overheads, a stronger focus on its cost base and attracting

other funding opportunities;

• Offer commissioners strong, community-focused and community-

based responses to the identified priorities of the council;

• Deliver a sharper, more business-focused organisation, clear about

its outcomes and impact;

• Offer a real alternative to other external service providers;

• Generate surpluses that will stay local; and

• Deliver an entity that is flexible and scalable, able to quickly respond

to change

OUR APPROACH

Our approach

• The main areas of our joint working with the potential PSM team,

and the key activities undertaken, are outlined over the following

slides;

• From the start we adopted a collaborative approach, committing to

regular attendance at project team meetings to contribute to reviews

of workstream progress and provide insights to any challenges

being faced;

• It was important to be flexible as the specific support requirements

evolved over the course of the project, e.g. a changing requirement

for legal advice due to the new procurement regulations that came

into force in this period, and an increased need for advice relating to

IT and systems;

• We provided fortnightly updates to the project lead in

Nottinghamshire, Peter Gaw, and in calls with the Cabinet Office,

also fortnightly

Legal and governance support

• The requirement was for technical and advisory support to test the

suitability of a Community Benefit Society with charitable status

• Our legal team from Browne Jacobson reviewed the committee

paper outlining the proposal to spin out to a Community Benefit

Society and advised on contract award and procurement

implications, state aid and on the choice of body, recommending a

charitable company (limited by guarantee) as the best option

• The council decided on a Community Benefit Society as its preferred

form, following the models adopted for library services in Suffolk and

York

• We also provided advice on charity registration, membership

structures, tax and pension implications

• Ahead of and following the introduction of new Public Contracts

Regulations we provided advice on the implications of changes to

the procurement timetable and associated risks

Legal and governance: issues and opportunities

• The next major step for the potential PSM is for the contract to be

awarded and the registered society established;

• They will then be able to appoint a shadow board that will steer them

towards full implementation in April 2016 – the intention is to have

this shadow board in place by the autumn of 2015;

• The team are very clear about the make-up of the board in terms of

the balance between roles: one NCC councillor, one member of

staff, four community representatives, four by appointment (selected

for relevant skills) and the CEO in an ex officio role;

• They will need also to develop clarity about the skills mix required –

there are clear opportunities to involve people who will add real

value to the development of the PSM and we have discussed with

the team a range of useful skills including marketing (PR and

commercial nous), financial and technical

Business and financial planning

• The requirement was for technical and advisory support to enable

the potential PSM to update and develop the initial business plan

into a five year commercial business plan with accompanying robust

and updateable financial model

• We carried out a thorough review of the existing business plan,

highlighting areas where it would most benefit from strengthening

and focusing our efforts and activities on supporting the potential

PSM to do so. This included:

Workshops for managers and staff to consider market opportunities and

income streams;

A more thorough analysis of stakeholders, especially external, and

development of communication messages;

• We developed a sophisticated spreadsheet modelling financial

scenarios for the first five years of the PSM, based on identified

likely, pessimistic and optimistic financial forecasts, and briefed the

team on its future application

Business planning: issues and opportunities

• The business plan will sit alongside the transition plan and set out

the vision for the new entity, direction of travel, and rationale for

change; it will serve as the road map for the services moving

forwards;

• Some question marks remain about the precise range of services

that will be spinning out (see the challenges about learning services

described below for one example);

• The financial model is a tool that can be used as the work to

establish the potential PSM progresses and as budgets (costs and

income) are more firmly established – there will be opportunities to

diversify income streams once the PSM is set up that are not

currently available to local authority services

Business planning: market analysis & development

• The potential PSM asked specifically for help in developing this area

of the business plan

• We ran an initial workshop for managers and staff to consider new

market opportunities and income streams

• As well as introducing them to the principles of marketing and

encouraging the adoption of a commercial mind-set, the workshop

identified a range of opportunities to enhance existing products and

develop new ones, including:

Using libraries as performance spaces

Themed workshops – lunch time or weekend

Lunchtime concerts

An expanded termly prospectus

Music drop-in sessions in libraries with parents and children

Downloadable local history trails

Binding service for personal collections, e.g. theatre or football

programmes

Business planning: commercialisation

• A further workshop for managers built on the outputs of the previous

marketing one in order to:

extend and enhance work and thinking on marketing to date; and

promote the potential PSM’s creativity, imagination and

innovation with regard to longer-term entrepreneurial activity

• These objectives were intended to support an overarching purpose

of developing commercial models that would help to grow the

business and ensure financial sustainability

• The session introduced the Normann model (see next slide) as a

basis for an exploration of the services’ commercial possibilities, and

the necessary skills and characteristics to be a successful

entrepreneur

• The team were encouraged to consider how their own skills will

support the new organisation to grow and thrive

Understanding your place in the marketplace

Principles and Values

The offering

The service

delivery system

[People, Processes,

Premises]

Your image

position in the

marketplace

Target groups’

needs, wants,

(interests)

(Adapted from Normann 1988)

Market development: issues and opportunities

• The teams embraced the idea of a more commercial approach with

some enthusiasm;

• They are starting to think about the customer base for existing and

potential new services and how they would promote these;

• However they are still thinking to some extent as individual service

teams (libraries, archives, learning etc.) – going forwards they will

need to develop a more clear, overarching vision for the future of the

company as a single entity;

• This should encompass all the various elements of the services

available and the likely synergies between them;

• Meanwhile more still needs to be done to develop commercial

models that will support the growth of the organisation and its

financial sustainability;

• Some managers, notably in arts and music services, are already

behaving as entrepreneurs, and their skills and experience will be

valuable to the new organisation and in upskilling and building the

confidence of colleagues

Staff and stakeholder engagement

• The requirement was for support and tools to engage staff and

stakeholders through the change process and ensure they are well

informed, and to review, advise on and further develop (where

necessary) the Potential PSM’s existing communication plan

• Our early engagement with the team identified that there would be

three strands to this area of activity:

1. Support to engage and inform staff though a series of planned

workshops;

2. Working with the team to carry out further, more detailed stakeholder

analysis and start to shape key communications messages to inform

the communications plan; and

3. Supporting engagement with specific stakeholders both in and outside

NCC

• This area of support is described in more detail in the following

slides, while separate documents provide an outline toolkit for future

projects to consider

Staff engagement

• Our legal team advised on issues such as TUPE, pensions (both for

transferring and newly appointed staff) and terms and conditions;

• We met with NCC’s HR team as part of our engagement, to support

the potential PSM in planning for transition and in negotiating the

scope of bought-back HR services

• We provided support for the staff

workshops through a filmed

interview with one of our team,

who provided detailed responses

to the key questions that were

troubling staff. This proved to be

an effective and efficient way of

reaching out to all staff and

providing them with

dispassionate external advice

Stakeholder analysis and engagement

• The potential PSM team had already done a lot of work to identify

stakeholders but this had been done in a siloed way (within each

service area) and relatively little had been done to make the link

between stakeholder needs and the communications plan

• We ran a stakeholder analysis workshop

for team members in which stakeholders

were grouped into:

National and regional bodies;

Local bodies; and

Internal

• Each group was analysed to identify the

key stakeholders, headline messages and

approaches to communication for that

group

• This then fed into the further development

of the communications plan

Stakeholder engagement

• The main requirement for support in stakeholder engagement was to

provide expert input to a range of meetings with teams internal to

NCC and with a small number of external funders, specifically in

terms of adult community learning;

• Meetings were held with the following internal teams:

HR

IT

Finance

Communications

• We also attended external meetings with the Skills Funding Agency

and Education Funding Agency;

• The aim of all these meetings was to support the potential PSM in

setting out its stall in terms of future relationships with these

stakeholders and new procurement and contracting arrangements

Stakeholder engagement; issues and opportunities

• The stakeholder analysis work showed that the potential PSM is

further ahead in its planning for stakeholder engagement than

perhaps they or we realised, because it was not fully articulated in

the business plan;

• The main challenge we posed was, as with the market readiness

work, to move out of the silos of individual service teams to start

thinking like a single entity;

• Where the services have stakeholders in common it will be

important to engage with them in a coherent, joined-up way;

• The work was also helpful in highlighting which stakeholders need to

be kept closely engaged with the development of the potential PSM

and which merely to be kept informed;

• It was also an opportunity to start to shape the key messages,

especially for users and local communities

Transition planning

• The requirement was for technical and advisory support to support

the Potential PSM to develop the existing transition plan into a

detailed transition plan to ensure that the potential PSM is ready for

a future go live date

• We reviewed the existing transition plan and agreed a suitable

format

• We developed a more comprehensive plan in a flexible format that

will allow the team to add to and amend the plan as they progress

• Tasks were grouped by workstream: legal, finance, HR, IT,

operations, asset management and communications

• Tasks were broken down into detailed activities, with key risks and

dependencies highlighted

• An overview tab presents a single list of the most significant actions

needed to be ready for a go live date in April 2016

• The transition plan will be an organic ever-changing tool to support

the potential PSM on its journey over the next twelve months

CHALLENGES FACING THE

TRANSITION PROGRAMME

Challenge one: public procurement regulations

• Nottinghamshire CC and the potential PSM team had agreed a

timetable for transition which involved seeking approval from the

Parent Body, NCC, to award the contract to the potential PSM in

March 2015

• Changes to public procurement regulations which came into force in

February 2015 (earlier than anticipated) affected this timetable and

also led to a review of the decision to that a Community Benefit

Society would be the preferred form, although that decision was

later re-confirmed

• The impact on the programme was to divert the legal capacity of the

team from some planned activity to focus on providing detailed and

thorough advice to the potential PSM and to NCC to ensure that

plans were modified to satisfy the new regulations

Challenge two: learning services contracts

• The Adult Community Learning Service (ACLS) is funded by the Skills

Funding Agency (SFA) to target those adults (19 years +) who are most in

need but to balance this with raising fee-income from those who can afford

to pay

• In order to continue to receive SFA funding the potential PSM will have to

maintain good quality delivery and meet the requirement for use of that

funding as directed by the SFA

• Skills for Employment (SfE) is meanwhile funded by the Education Funding

Agency (EFA) to deliver vocational and personal and social development

learning programmes, with a focus on employability and work experience, to

16-19 year olds

• New contracting arrangements need to be agreed with both funders to

ensure that the potential PSM can continue to offer these services; failure to

do so would mean that it is highly unlikely that learning services would be

able to spin out of the parent body

• However, productive meetings with both have indicated a viable route

forwards and we are confident these services can remain in scope for the

spin-out

CHALLENGES FACING THE

FUTURE PSM

Challenges facing the future PSM

• One of the main drivers for the spin out is the need to generate

immediate savings (£400,000 per annum) which will be achieved

through a reduction in business rates

• However the new body will almost certainly face further budget

challenges; our ‘worst case scenario’ envisages a possible budget

reduction of one-third by 2020

• There will also be funding challenges in terms of the external

funding received from bodies such as the SFA and EFA, although

for the time being our meetings with them have indicated a strong

willingness to work with the potential PSM to secure learning

services

• A lot of our work therefore has focused on supporting the potential

PSM to build commercial awareness and marketing skills

• These skills will be essential if the new PSM is to survive and thrive

Challenges facing the future PSM cont.

• There is a need to develop a more clear, overarching vision for the

future of the company that encompasses all the various elements of

the services available and the likely synergies that will develop from

this;

• We have also recommended the development of a vibrant social

media strategy that encompasses a range of social media and

serves as a platform for increased marketing activity

NEXT STEPS AND FUTURE

DEVELOPMENTS

Key next steps for the potential PSM

The key deliverables identified in

the transition plan developed with

the potential PSM include:

• Agreeing a name and branding for

the new organisation

• Agreeing a form with the council's

legal representatives and entering

into a contract

• Establishment of a Registered

Society

• Appointing Shadow Board

members

• Developing a membership strategy

and launch the scheme

• Identifying systems and ICT

requirements and arrange to

procure these

• Identifying HR support needed and

agree buy-back from NCC or

alternative procurement

• Identifying communications support

needed and agree buy-back from

NCC or alternative procurement

• Recruiting a Finance Director

• Setting up financial reporting

systems and a bank account

• Preparing staff resources for new

organisation and TUPE transfer for

existing staff

• Developing a website for new

organisation

It’s going to be a busy year!

What does the future hold for Inspire?

• Over the three years following the establishment of the new body

the aim is to:

Establish an effective independent new organisation

Review retained central services with market testing processes

Develop active new governance: board, staff representation,

membership, volunteering, friends groups

Progress new sources of income, funding, commercial

partnerships and sponsorship

Exploit the new freedoms that separating from the local authority

will bring

Diversify funding and income streams

Grow the business in new areas within the cultural and learning

sectors, both in Nottinghamshire and other geographical areas

LESSONS LEARNED

Lessons learned

1. Even in a relatively short time frame of three months the nature of

the support required by a team venturing into new territory such as

the establishment of a PSM can evolve. It was important that both

we, and the team in Notts, remained flexible in responding to

unforeseen needs while continuing to deliver all elements of the

specified support requirements;

2. The timing of the support at the very end of the financial year has

presented some challenges for the potential PSM team, especially

this year in the run-up to a General Election. A project of this nature

doesn’t always run precisely to the timetable originally envisaged,

especially when so many stakeholders are involved. The team

would have liked to have been able to have flexed and extended

our support into the next month or so rather than draw a rigid line at

the end of the year as has been necessary.

Lessons learned cont.

3. Some pressures can be foreseen but there needs to be some give

in the planning to allow for the unforeseen; in this case, no one had

anticipated that the new procurement regulations would come into

force so soon after publication (a May 2015 implementation date

was expected);

4. It was extremely helpful to have in our team people who had direct

experience of dealing with key internal and external stakeholders

such as corporate IT, HR and comms teams, and the SFA and

EFA;

5. Our job was made immeasurably easier by the enthusiasm and

hard work of the internal team at NCC who are leading this

programme; it seems likely that with less commitment within this

team it would be much harder to develop a robust plan for

transformation while also maintaining ‘business as usual’

Good luck!

We believe Inspire

Nottinghamshire (or

whatever the future name

may become) are in a

strong position to take this

work forwards during the

next critical transition phase

and wish them every

success

We look forward to seeing

the new Public Service

Mutual in operation from

April 2016

©RedQuadrant 2015 Sarah Wilkie 07944 198812 sarah.wilkie@redquadrant.com

Sarah Wilkie

sarah.wilkie@redquadrant.com