CASE STUDY: CREATING A SOCIAL ENTERPRISE ASPIRE … · CASE STUDY: CREATING A SOCIAL ENTERPRISE – ASPIRE COMMUNITY BENEFIT SOCIETY BACKGROUND Always keen to be at the forefront

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CASE STUDY: CREATING A SOCIAL ENTERPRISE – ASPIRE COMMUNITY BENEFIT SOCIETY BACKGROUND Always keen to be at the forefront of innovation in the public sector, Leeds City Council encouraged and nurtured the development of a public service staff-led mutual to deliver its in-house care and support services for adults with learning disabilities. THE CHALLENGE Like many councils, Leeds City Council faces a transformation challenge with regards to Adult Social Care. This is in relation both to the scope of what it can sustainably deliver (as demand for services increases whilst funding is under pressure) and the need to move from being a provider-council to one which mainly commissions services and develops community capacity. In 2013/14 the in-house Leeds Learning Disability Community Support Service (LDCSS) had a net budget of £20.9m and a staff team of over 700 people provided supported living, day services, respite care and crisis services to over 800 of the city’s most vulnerable people. The service was viewed as a high performing and well respected service by commissioners and other key stakeholders. Although the service had delivered cashable efficiencies from its controllable budget totalling 14% over the previous four years, it still found itself unable to compete in the marketplace in terms of price. Consequently, despite being a highly regarded service, its share of the care delivery market in Leeds had fallen from around 40% to 20% as independent providers took advantage of an increasingly competitive environment. Hence the need to look creatively at ways of delivering services in the future that would continue to give citizens the best quality support whilst providing staff with good pay and working conditions and delivering best value to the Council. THE VISION Better Lives for People in Leeds enshrines Leeds City Council’s vision for the delivery of social care and support. The strategy commits to ensuring the best possible services are available to people with care needs, including those with a learning disability. Adult Social Care had already reconfigured its day services by replacing large segregated centres with smaller bases located in community settings in partnership with other services run by the Council, public and independent providers, to offer a wider than ever variety of daytime activities. Similarly, hostel-type accommodation had been replaced with new-build houses, bungalows and blocks of flats within communities. The new accommodation gives tenants (formerly residents) greater independence and choice in relation to whom they live with, how they live their lives and how they are supported.


These transformations set the scene for developing an innovative new delivery model for care and support services to people with learning disabilities. The challenge was to identify a service delivery vehicle that could protect both services and jobs at a time of unprecedented austerity in relation to public funds. From the outset it was envisaged that the solution could lead to the TUPE transfer of 700 staff to a new organisation, establish an exemplar employer paying at least the Living Wage Foundation’s Living Wage to all new employees, and that any new organisation would be able to win new work in competition. WHAT WE DID 1. Making our mind up The service successfully bid for Social Enterprise Investment Funding (SEIF) which enabled the senior management team to work with a range of legal, financial and technical consultants in order to explore whether or not there was a viable business case for developing a new vehicle to deliver services. The first step was to undertake a detailed options appraisal considering do nothing, straight outsource, Local Authority Trading Company and Social Enterprise. The option of outsourcing through competition to the market offered the prospect of more immediate financial savings for the Council but was likely to be contentious and would not help address low pay issues in the care sector in Leeds. Equally, whilst the development of a wholly-owned trading company might have appeared to some stakeholders as a more traditional and safer option than development of a social enterprise, that option faced difficulty competing on price in the market. The development of a social enterprise offered an exciting opportunity to realise the Council’s ambitions to become smaller, more influential and to support the development of civic enterprise from within, particularly when set within the context of the comprehensive spending review and increasing demographic pressures. Importantly, it also provided the Council with an opportunity to take a different approach to the market retraction that had been implemented in other areas of its provider services. The decision was therefore taken to explore the development of a social enterprise in the form of a staff-led public service mutual. For the Council it was concluded that this approach would offer an organisational structure that could protect jobs and services whilst at the same time providing the city with a new flexible provider that could deliver good growth in response to demographic pressures. A social enterprise would be in a much stronger position to provide long-term continuity of care to those people and families with whom the service had built strong links over the years. The new organisation would lead the way as a socially responsible local employer in the marketplace, sustaining and developing good quality jobs. The


social enterprise would learn to trade and be able to maintain and grow a quality service whilst retaining its position as a trusted provider of choice and it would deliver back office efficiencies through a negotiated process with the Council, in line with the ‘Enabling Corporate Centre’ programme. For the staff it was thought the social enterprise option would provide the opportunity for staff to influence their own destiny, and that the service would have the chance to survive and thrive in the marketplace by growing a competitively priced but high quality service offer. 2. Building momentum Whilst there was broad support for development of a social enterprise, further work was undertaken following discussions with the Trades Unions to test out a range of alternative models, including secondment of staff, which maintained employment of the workforce with the Council. However it was found that these did not provide the range of benefits to the Council that the social enterprise model offered. With executive board approval to explore the proposal further, the management team within the service and SEIF consultants moved forward to develop an Outline Business Case based on a wide array of assumptions. Initially the proposed legal model was a Community Interest Company (CIC) with an asset lock to ensure that private profit could not be distributed by way of dividends. Subsequently this was amended to a Community Benefit Society to take advantage of a change in law which enabled the new organisation to maintain similar values to a CIC but operate like a company in terms of issuing shares to staff members, raising community investment and being able to apply for exempt charitable status whilst still retaining the asset lock. Family carers and people who used the service were initially anxious that the proposals could have had a negative impact on the quantity and/or quality of the service they received. However, the service team was able to build on the existing trust and confidence family carers had in the leadership of the service. Key for families was that this was a staff-led initiative rather than an imposed outsourcing. Informal discussions with staff moved to formal consultation at this point. Every member of staff had the opportunity to attend large-scale engagement events at which trade union representatives were given time to speak with their members. A monthly ‘Future Matters’ group was established with staff representation at all levels from all services, Frequently Asked Questions packs were shared and senior managers attended all 20 monthly staff meetings held across the city for 18 months to update staff on the proposals, seek their views and answer questions. Ultimately a staff survey was undertaken which drew a 73% response rate. Of these respondents, 78% of staff members voted in favour of moving the service to a social enterprise.


3. Negotiating The positive staff survey enabled the service to successfully apply for Cabinet Office funding through the Public Sector Mutual programme. This provided further expert advice to enable check and challenge of the assumptions within the Outline Business Case together with support for developing this into a robust Final Business Case. The contract between the Council and the newly-formed social enterprise needed to provide an appropriate balance of risk and reward; it needed to provide the Council with flexibility to meet increasing budget pressures during the contract period and ensure the new organisation became a sustainable provider able to meet customer needs and statutory requirements. A project board chaired by a Chief Officer from Adult Social Care was established which included Lead Member representation alongside Trades Unions representatives and appropriate support from HR, finance and procurement. A shadow board was also established made up of senior managers from the service. A total of 21 work streams were identified across the 2 boards and key personnel were allocated to lead and deliver the work packages. Heads of Terms were agreed. In respect of the service to be commissioned, one contract was developed with 4 appendices (one for each of the functions: supported living, day services, respite and crisis services) together with a schedule of prices for each which reflected different levels of support needs. Feedback gathered from people who used the service was used to shape the service specifications. Managers were careful to ensure the specifications reflected the services that were being delivered to reassure service users and family carers that their services would not change and that they would continue to be supported by people they had come to know and trust. The services proposed to be the subject of the social enterprise model were Part B services under the EU procurement regulations. This meant that, despite the value of the services, the full notice and award requirements did not apply. A challenge for the project team was the uncertainty around the potential impact of the new EU draft Directive. However, due to delays in its implementation, the spin out was approved prior to new procurement rules becoming law in the UK. In respect of services to be bought back, detailed work was undertaken on both the Council side (establishing the commercial rates for leased back buildings, providing ‘pick lists’ of services available to be bought back and costings) and on the social


enterprise side (undertaking an IT inventory, providing base data about customers and considering which services to buy back). Other key challenges that had to be fully considered were implications for taxation of the legal vehicle selected, pensions, mitigating against potential equal pay claims, establishing who was in/out of scope for TUPE, developing licence/lease agreements for Council buildings from which services would continue to be delivered, State Aid and indemnities. Throughout this period additional preliminary activities had to be undertaken on the social enterprise side in preparation for a possible spin out: staff chose a name for the new organisation, a domain name was secured, branding was developed, Council policies and procedures were reviewed and revised to make them fit for the new organisation’s purpose and negotiations were opened with existing suppliers about them supplying the new organisation. At the conclusion of all this intense period of activity a draft contract was developed that would enable the Council to realise future efficiencies generated from reducing the cost of providing back office functions over the lifetime of the contract. The reduction in costs will also benefit Aspire through an improved unit cost making its services more competitively priced in the market. 4. Stepping out In order for the new company to be able to ring-fence risk on the main contract and have a structure able to be replicated for future growth, it was decided to set up a group structure. Therefore Executive Board gave formal approval for LDCSS senior managers to register 2 new organisations ahead of the spin out. Aspire Community Benefit Society Limited (a company limited by guarantee) would undertake the care and support activity. It would be the public face of the Aspire group and be the employing organisation of all TUPE’d staff. Aspire Services (Leeds) Ltd would be a wholly-owned subsidiary company of Aspire CBS (a company limited by shares). It would hold the main contract with the Council and there would be a flow-down contract between Aspire Services and Aspire CBS. As a CBS, the organisation is formally registered with, and regulated by, the Financial Conduct Authority who automatically entered the organisation on the Register of Companies held at Companies House. Once the companies were set up they could open bank accounts and appoint Directors to the Boards – without these actions the contract could not be signed. The Council ultimately awarded Aspire a five year (plus one year option) contract based on standard terms and conditions, worth £21m per year. Aspire will buy back a wide range of Council back office services (including HR, finance, payroll, IT, transport, soft and hard facilities management) for between 2 and 5 years and this


will enable the Council to downsize its back-office functions in a managed way. Transfer also took place of associated IT and office equipment assets which were used by staff for delivery of its services. The contract is being monitored by the Council’s own monitoring officers and there is an annual review. At the point of signing the contract the Council released a small amount of working capital to cover essential mobilisation costs such as purchasing Microsoft licences and for the development of a website. These costs were subsequently repaid to the Council from the social enterprise’s budget. The new company applied to CQC to become a registered provider and the Head of Service was interviewed as to his suitability to be the Responsible Person in his role as Chief Executive designate. The Council prepared to TUPE transfer all 700+ members of staff and supported them to remain in the West Yorkshire Pension Fund by indemnifying Aspire for any historic losses in the pension scheme related to this group of staff. HOW IT’S WORKING NOW Full service commencement was on 1st August 2015 (only 2 months later than had been anticipated at the start of the process in mid-2013). The focus of attention initially was on ensuring a smooth and safe transition for staff, family carers, stakeholders and, most importantly, people who use the services. This was achieved through the reassurance of continuity: delivering the same services from the same buildings by the same staff as previously. CQC registered Aspire as a service provider and the list of registered managers was updated. Inspections of all 4 respite services have been undertaken and all received a rating of ‘overall Good’. In addition separate service user, family carer and staff satisfaction surveys have achieved excellent return rates and indicate high levels of satisfaction. Aspire has been awarded Exempt Charitable status by HMRC. The organisation has issued a nominal £1 share to every permanent member of staff who has passed their probation period. These members of staff have voting rights at Annual General Meetings. Governance of Aspire takes the form of a Board of Directors comprising of (in equal numbers) staff elected by their peers, staff reps nominated by the Trades Unions , people with learning disabilities who use the service elected by their peers, elected members nominated by their peers and Non-Executive Directors recruited for their specialist knowledge and experience together with an independent chair. For the 4 years leading up to spin out, all support worker posts within Adult Social Care had been offered on a temporary basis due to the needs of the market retraction programmes in other services. Therefore, just prior to spin out, all staff employed on temporary contracts who had passed their probation period were made permanent. Since then 50 existing members of staff have opted to increase their


hours from part-time to full-time and 70 new members of staff have been recruited on the Living Wage Foundation’s living wage rate of pay. Aspire has also seen significant improvement in levels of attendance at work and turnover of staff is running at only 6.9%. These improvements together with growth of an additional 600 hours per week in packages of support enabled the organisation to turn a projected loss at the end of the first year of trading (i.e. after 8 months) into a small surplus. SUSTAINING IT IN THE FUTURE Aspire’s Board has identified 4 elements to its business strategy: being the provider of choice for people with learning disabilities, their family carers, staff and commissioners; being financially viable; achieving growth through the development of new services and direct packages of support; and adding social value to the contract by managing resources well to achieve the best outcomes for the people who use the service and the wider community of Leeds. Since the spin out Aspire has seen a significant reduction in sickness absence whilst continuing to use the same policies and procedures. The improved levels of attendance combined with low staff turnover and recruitment of permanent staff to vacant posts has reduced reliance on overtime and agency workers. At the same time demand for Aspire’s services has grown throughout the year and the organisation is successfully delivering several new packages of support. This has been managed by directly employing new one-to-one support workers rather than using agency staff. This has enabled the organisation to provide continuity of care and support to people which is a key aspect in ensuring services are safe, caring and effective. Aspire will continue this direction of travel by proactively managing attendance at work, keeping on top of recruitment and taking on new packages of support. Aspire will continue to build for the future by investing in the training of the next generation of support workers through the We Care Academy and by offering practice placements for health and social care students. Plus, in addition to the myriad of mandatory and elective training offered, staff are being given the opportunity to attain QCF and/or NVQ accreditations. As an ethical employer, Aspire has committed to paying new staff the Living Wage Foundation’s living wage rate and all new employees are in NEST – a defined contributions pension scheme. The Business Case was predicated on a modest achievable rate of growth. Aspire is currently exploring opportunities to develop new services (either alone or in partnership) and reduce its reliance on one main contract, e.g. through increases in the take up of ISFs. The organisation has positioned itself to win new contracts but, rather than chasing every contract that is let, Aspire is taking a strategic, careful,


approach in order to achieve growth whilst maintaining and improving the quality of its current services. Carol Benson Business Development Manager 0113 378 1928 [email protected] www.aspirecbs.org.uk

@AspireCBS

mailto:[email protected]

http://www.aspirecbs.org.uk/

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CASE STUDY: CREATING A SOCIAL ENTERPRISE ASPIRE … · CASE STUDY: CREATING A SOCIAL ENTERPRISE – ASPIRE COMMUNITY BENEFIT SOCIETY BACKGROUND Always keen to be at the forefront