Agenda item

To provide OSMC with further information in respect of the schools traded services, as requested at the meeting on 09 February 2021.

OSMC considered a report (Agenda Item 7), which provided further information in respect of the schools traded services.

Andy Sharp introduced the item and noted that additional information could be provided on other commercial activity at a future meeting if required.

Donna Fox presented the item. She noted that Traded Services were under the governance of the Commercialisation Board, which provided comment and challenge.

She highlighted Section 4 of the report, which showed the range of services provided to schools, with information on: trends in actual and forecast income; forecast for surplus / deficits; and information on viability tipping points.

She noted that the service leads were not experts in commercialisation or trading, but training had been commissioned, which would help them to look at tipping points. She indicated that the training would provide the opportunity to formulate some policy statements about the role of traded services for the Council, articulating their identity and what they intended to do.

She noted that the intention was to build the reputation of the Council through the quality of the traded services offered and that ultimately, it was for Education to look at every learner and make sure they had the best possible chance to fulfil their full potential and ambitions.

The Chairman asked about an item on the charts labelled as ‘schools self-funding provision’.

Dona Fox noted explained that this was an insurance buy-back service, which schools could choose to take up, or they could source an alternative provider (e.g. DfE risk protection arrangement). She indicated that this was different to the other traded services.

Councillor Garth Simpson noted that there were 20 products within the Schools Traded Services portfolio, which were different in character and required different inputs from Council staff and external providers. He acknowledged that some services were in decline, but pointed out that there was no discussion of the unique selling proposition to schools. He recognised that service leads were not commercial experts, but suggested that marketing was common sense. He accepted that some schools converted to academies, which were more aggressively run, but highlighted the knowledge within the Education service. He noted the compromises made with respect to pricing policy, which he assumed related to smaller schools. He asked if there were account managers looking after specific schools, and if there were product specialisms. He also suggested running a Pareto analysis to see which services could be dropped where they added little value to allow other, higher value services to be introduced.

Donna Fox stated that there were individual financial managers within Melanie Ellis’s team and there was one business trading account manager in School Improvement who worked with other services. This account manager worked with external groups from other local authorities and her expertise had been used across the Education service to look forensically at what traded services could do. She explained that traded services represented a small part of service leads’ roles and reiterated the potential benefits of the planned commercialisation training.

Councillor James Cole noted that the Council was operating on the basis of cost plus 10 percent, but other industries operated to higher profit margins. He asked if this was the limit of what the market would bear. He also asked about the self-funded schools service and why this was not comparable. He noted the decline and asked if the Council was offering less or if fewer schools were taking up the offer. Finally, he asked if the Council offered its services to the private sector.

Regarding margins, Donna Fox noted that there was a decision as to whether to maximise profit or operate at a tolerable level where schools would continue to buy back services. She highlighted the work of the School Improvement Team where the aim was for schools to achieve good Ofsted grades and noted that each service had to consider the reputation of the Council and the reputation of the schools. She stated that a range of services were provided and it was difficult to compare them. She noted that there had been discussions about whether some services were able to make the 10 percent profit, since schools would be likely to go somewhere else. However, bespoke services represented an opportunity to pursue increased margins. Regarding services offered to the private sector, she confirmed that buy-backs were secured from independent schools and a Berkshire multi-academy trust that was not part of the West Berkshire group. On the issue of insurance buy-backs, she observed that these were bought in for a nominal fee and were therefore different from the other services offered. She suggested that the reduction in buy-backs had been as a result of schools looking to the private market and finding deals that were better suited to their needs.

Councillor Cole asked if the Council was acting as a broker for insurance. Donna Fox did not think that it was.

Councillor Lee Dillon suggested that OSMC needed to look at the wider issue of commercialisation across the Council. He agreed with Councillor Simpson’s comments relating to thinking about business models and strategies and suggested that Councillors would expect this to happen across all commercialisation centres, underpinned by a common strategy. In relation to the tipping point and viability for school services, he asked how many academies would the Council need to lose before it would have issues in sustaining a particular service. He also asked if services were looking likely to meet end of year forecasts. Finally, he asked about how projected income would be used (i.e. kept within the Education service or used to support other Council key performance indicators).

Donna Fox explained that tipping points varied according to the service offered. For example, Payroll looked at the number of buy-backs it received by the cut-off date and the cost charged to those schools divided by the number of staff. However, the School Improvement service had a flexible service where they used headteachers as school improvement officers that could be brought in as required. In the case of HR, if several schools were lost, this caused problems in providing sufficient work for staff. She explained that relationships with academies had been positive in recent months and traded services were offered to every school in West Berkshire. She emphasised that she believed in children rather than labels, so any school could buy back services and this had been attractive for academies. The Service had worked with all West Berkshire’s academies in the last 18 months, which had not been the case previously. She observed that academies tended to pick and choose services, but they were present in meetings with headteachers, which was positive. In terms of projected income, she acknowledged that some forecasts would not be achieved due to Covid, and some services were being focused on Covid recovery. She noted that £30,000 for school improvement was funding two pupil premium champions.

Councillor Dillon asked what the remainder of the £250,000 surplus would be spent on. Also, he noted that service leads did not have specialist commercial knowledge. He suggested that Members would support recruitment of people with these skills.

Resolved that: the report be noted.