COUNCIL 16/12/2014 FOR INFORMATION AGENDA ITEM 8

BOROUGH OF POOLE

HEALTH AND SOCIAL CARE OVERVIEW AND SCRUTINY COMMITTEE

8DECEMBER 2014

ADULT SOCIAL CARE DAY SERVICES – FUTURE SERVICE DELIVERY

  1. PURPOSE

1.1To provide further analysis of the potential Day Service delivery options, including Community Outreach and Support Team (COAST) and a recommendation for proceeding.

  1. RECOMMENDATION

2.1Members recommend to Cabinetfor Council approvalthat officers progress, in partnership with Dorset County Council and Bournemouth Borough Council, plans to develop a jointly owned Local Authority Trading Company (LATC).

  1. BACKGROUND

3.1At the 29 September 2014 Committee meeting,Members requested that:

3.1.1Officers, in developing a full business case for the future service model for Adult Social Care Day Services, consider the range of options including competitive tendering, a Borough of Poole Local Authority Trading Company and a Joint Local Authority Trading Company to determine, which option provides the best value.

3.1.2More detailed work be undertaken on the viability of the Seaview Community Interest Company (CIC) (a form of Social Enterprise Company) and this bid be assessed in the light of other options.

3.1.3The possible differences between the provision of the delivery of Adult Social Care Day Services in urban and rural settings also be investigated.

3.2In response to this request further work has been carried out andis contained within the ‘options appraisal for alternative service delivery models for in-house Adult Social Care services’ (Appendix 1).

3.3This includes a more in-depth appraisal of the Seaview Community Interest Company (CIC) business case and competitive tendering proposal.

3.4Two further reports have been completed to accompany this report:

3.4.1Appendix 2 – Business case for a solely owned LATC

3.4.2Appendix 3 – Business case for a pan Dorset LATC

3.5A copy of the Seaview CIC Business case can be found in Appendix 4 for reference.

3.6The options appraisal report further assesses eachdelivery model against the following three key criteria; all of which must be satisfied in order to be considered moving forward:

3.6.1Provides a medium to long term financial benefit to the council through a viable future

3.6.2Enables the services to thrive and develop new income streams and provide more services to the residents of Poole

3.6.3Provides the council with the security that there is a provider of last resort in case of provider failure in the private market

3.7A paper in relation to the request to identify differences between the rural and urban settings can be found atAppendix 5.

3.8The criterion set out in 3.6.3 above relates specifically to the new duty on councils, under the 2014 Care Act, in responding to provider failure following the learning from the 2011 Southern Cross Healthcare crisis.

3.9The final regulations and guidance place a clear responsibility on the local authority to be the “Provider of Last Resort”, providing expert management and service provision when private sector providers fail in the level of quality delivered or leave the market altogether..

3.10In the case of provider failure, the Council must step in and take action to meet the care and support needs of all those individuals (council funded and private) receiving a service. This includes unregulated services such as day services.

  1. OPTION 1 – COMPETITIVE TENDERING

4.1The enhanced options appraisal has examined the local market and found thatit has limited capacity to respond to a competitive tender.

4.2Commissioners have established that there are a small number of national providers delivering building based day services. These are usually single service examples compared to their much broader services in domiciliary and residential care, suggesting these are more the exception to the norm. These are all client specific services with no one provider offering day services to meet the needs of all vulnerable client groups. From this market analysis, it appears unlikely that a single provider could deliver all three existing services.

4.3Consequently, services would need to be tendered separately, with contract size limiting the opportunities for potential savings and efficiencies and concerns regarding longer term sustainability, ongoing service development and ultimately choice for the client. Experience with both the Care South and Care UK day service contractssupports this view; as neither contract demonstrated value for money and have been, or are in the process of being, brought back in-house as a more cost effective option.

4.4Looking across the country at what other authorities are doing, in the majority of cases councils are retaining their day services for those with the most complex needs in-house, or delivering through joint partnership approaches.

4.5Poole is facing wider capacity issues within the private care market, with a significant impact on hospital discharges, the availability of homecare and now residential/nursing care.

4.6Outsourcing these services would increase the potential level of risk in respect to meeting the new duty under the Care Act, as there would be no alternative solution available to act as the “Provider of Last Resort”.

4.7The competitive tendering option fails to meet each of the three criteria (3.6 above), consequently this option is not recommended.

5.0SOLELY OWNED POOLE LATC

5.1The original options appraisal identified a wide range of advantages for considering a LATC which are set out on page 3 of the business case for a solely owned LATC, (Appendix 2).

5.2However, the key consideration is financial viability and the ability to make savings. The available budget for a Poole only LATC is £2.3m. No council has launched an LATC with a budget of less than £7m and only those holding budgets between £18m and £30m are trading successfully.

5.3The savings potential for these three services alone is limited and estimated to be between £10-12K per year. If this route was followed then as a LATC it would be in direct competition with either a joint Bournemouth and Dorset LATC, or two separate, but still significantly larger, neighbouring LATC’s.

5.4However because the efficiencies and new trading surpluses are not sufficient to finance the management of the company. A solely owned LATC would cost BoP £622,496 more than if the services were left in-house therefore the governance infrastructure for an LATC of this size is cost prohibitive,having a significant impact on the organisation’s ability to generate savings.

6.0PAN DORSET LATC (PDL)

6.1The Pan Dorset LATC model is the only offer that satisfies each of the three criteria set out in 3.6 above and is the recommended option.

6.2As part of a larger LATC (combined budget of £37m), it compares favourably with similar sized LATC’s nationwide that are currently operating well financially.

6.3 For Poole, the financial benefit over five years is£223k. This isbased on Poole receiving a percentage share equivalent to its agreed proportion ofthe overall PDL (i.e. 6.32%).

6.4As part of a wider LATC, Poole will be in a position to develop services in partnership with the neighbouring local authorities, rather than in direct competition.

6.5All of the individual LATC Business Cases include the service of “Provider of Last Resort” to each of the individual councils, but for a Poole only LATC, this could only partially meet this requirement whereas the Pan Dorset LATC could meet all of the requirements..

6.7A full business case for the Pan Dorset LATC has been produced (Appendix 3) and will be further discussed in section 8 of this report and beyond.

7.0COMMUNITY INTEREST COMPANY (CIC) SEAVIEW

7.1Further analysis of the CIC bid has identified a number of concerns regarding the forecast for future business:

7.1.1The forecast for additional Poole clients into the service appears overstated in comparison to the strategic need assessment and usage over the past three years.

7.1.2As per 5.3 above the CIC would be in direct competition with the neighbouring LATC(s) and this could limit the opportunities to attract clients from the surrounding areas.

7.1.3 The extent to which additional therapeutic services income would create £100k of additional income.

7.2Each of the above will impact on the CIC’s ability to reduce the daily charge for clients and therefore inhibit its ability to provide any significant savings to the council.

7.3The CIC bid does not include a strategy for Poole Day Centre or COAST and although the CIC management have been asked to look at this, a revised business case has not been forthcoming.

7.4If Members proposed to support this option, then the recommendation for the remaining services would be to go into a Pan Dorset LATC; accepting that this would be a smaller share still, with potential disadvantages in terms of influence within the new organisation and reduced share of any wider savings achieved.

7.5The CIC could provide a limited service as the last resort in the day service sector, but the Council would not have control over the CIC, so there is no absolute guarantee that the CIC would continue with the support.

7.6The aspirations and outcomes for clients in the CIC business case are in line with the strategic direction for services and should not be lost sight of in whatever model moves forward. However, the CIC bid has failed to meet all three criteria, and the overall view is the model is not financially viable due to its limited size and as such is not recommended.

8.0PAN DORSET LATC BUSINESS CASE

8.1Dorset County Council has now formally agreed to develop an LATC with the opportunity to develop across the county in partnership with Bournemouth and Poole. Bournemouth Borough Councilhas already agreed the LATC service delivery model. All three councils are formally considering the proposal for a pan-Dorset business case in December 2014.

8.2The full Business Case(Appendix 3) sets out the scope, governance arrangements and five-year business plan for the new company,togetherwith the areas for further development and savings projections.

8.3The total value of the services to transfer to the LATC from a Poole perspective equates to £2.3M with a staffing compliment of just over 64 full time equivalents(FTEs). The staffing transfer arrangements for the model provides for the maintenance of existing terms and conditions for staff, although the LATC will retain the right to employ new staff on terms which are appropriate for the market. A Pan Dorset LATC will have a financial value of approximately £37.5M and a staffing contingent of approximately 1,400 staff.

8.4Both Dorset and Bournemouth are including a wider range of services into the LATC, including domiciliary and residential care. This can help ensure that the Council can meet it’s Care Act obligation of ‘provider of last resort’ by the LATC being contracted to provide expert management and service provision if private sector providers fail in the level of quality delivered or leave the market altogether. Additionally, LATC domiciliary and care home services could be expanded into Poole thereby addressing some of the market capacity issues being faced currently.

8.5In a Pan Dorset LATC the support services are envisaged to be provided by either Dorset County Council or Bournemouth Borough Council. The reason for this is that they are both transferring the majority of the staff to the new company, 798 and 262 FTEsrespectively compared to Poole’s 64 FTEs

8.6Table 1 below sets out the benefits, risks and mitigation for the Pan Dorset LATC model:

Pan Dorset LATC
Benefits / Risks and Mitigation
Ability to trade and generate income - The LATC is able to pursue new business opportunity and income streams beyond the baseline services, which contributes to its sustainability / Governance –Members of all 3 authorities will need to agreestrategic direction over the LATC
Mitigation – a 20% share for Poole, on the Executive Shareholder Group membership, will enable Poole Members to influence the strategic direction of the LATC
Service Quality - The LATC builds on existing service quality and continuously improves the service experience to customers / Staff recruitment – Service expansion could be hampered by workforce recruitment
Mitigation – The ability to coordinate recruitment campaigns across the whole of Dorset and the reputational benefits of being linked to local authorities.
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 / Set up arrangements – Delivery of the joint model presents a greater challenge from a logistical perspective, which could delay implementation
Mitigation –Develop and implement a comprehensive delivery plan.
Workforce Quality - The LATC retains and builds on the existing asset of experienced, committed and well-trained staff / Strategic differential – Due to differential service structures and priorities it may be challenging to developed a shared strategy
Mitigation - Arrangements such as the Better Together programme already in place to support shared strategy
Organisational Performance - The creation of an LATC results in driving overall organisational performance through greater entrepreneurship / Growth limit – In order to maintain Teckal compliance the LATC will only be able to trade 10% of its value.
Innovation - The LATC stimulates entrepreneurship within the organisation and workforce in terms of service offering to customers and commissioners
Cultural - The LATC as an externalised trading company creates a new culture based on greater autonomy, accountability and quicker decision - making.
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
The Provider of Last Resort - The LATC can help ensure that the Council 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
Financial – The use of the LATC is anticipated to produce an annual surplus for reinvestment into the Council
Commissioning – the use of the LATC could secure services not currently available in the market and should stimulate market change
Health markets – In the Pan Dorset model the area of operation for the company is coterminous with the CCG and this presents an opportunity to bid for health contracts as a direct single entity

8.7For its internal governance,it is recommended that the PDL has an Executive Board independent of the councils and made up of the following positions:

  • Independent Chair – this could be a local individual who understands the world of local authorities and the health sector.
  • 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. This role will support the cultural shift and encouraging commercial thinking.
  • 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. 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

8.8In order to ensure that partner local authorities are able to manage the delivery of the services within the LATC there will be an Executive Stakeholder Group (ESG) which will act as the strategic decision making body. The membership of the ESG is elected Members from the local authorities and the split of membership is linked to the size of the stake in the company for each partner.

8.9Based on this, the ESG will be constructed as follows:

Authority / Budget Scale (M) / Members (ESG)
Dorset CC / 25.4 (69.58%) / 5
Bournemouth / 8.7 (23.84%) / 3
Poole / 2.4 (6.58%) / 2
Total / 36.5 (100%) / 10

8.10Some of the decisions taken by the ESG will be based on the majority position but there will be a series of “reserved items” for which a unanimous consensus would be required. These reserved matters would be:

  • Approval of the strategic direction for the LATC
  • Changes to the constitution of the partnership
  • Changes in Terms and Conditions of staff
  • New partners joining the company
  • Sale of shares

8.11Other items considered by the ESG will be based upon a majority decision making basis, which due to the voting right split would mean that minority board members would run the risk of not being able to successfully influence the final decision in the way that they would if the services were directly controlled by the Council. There is not a list of “unreserved items” within the business case as these will relate to the wider running of the LATC, but for example as an indication of the areas that would be covered the decisions may address: