City College Norwich Federation Development

City College Norwich Federation & Shared Services Development... 2.1 Original Proposal To create a legally compliant federation comprising: • City College Norwich CCN an existing statut

City College Norwich Federation & Shared Services Development

1 Introduction – How the project came about

Background

As far back as 2008 City College Norwich established a subcommittee of its Governing Body - the

Partnership and Federations Committee, whose brief was to develop a strategy in response to a number

of changes in the education sphere but, in particular, to the introduction of Academies by the then

Labour Government

At that time City College Norwich had over 1,000 14-16 year olds from local schools studying one or two

days per week, over 4,000 full-time 16-18 year olds, and had taken the lead within a local partnership of

five schools, Open Opportunity, in the development of collaborative bids to deliver the new diplomas

The bids were very successful, and the College and Open Opportunity developed into one of the

country’s largest deliverers of the new diplomas

Secondary education in Norfolk overall had GCSE scores well below the national average and some of

its schools were in the bottom 10% nationally Earlham High School for example was the fourth worst

performing school in the country, with a 5 A*-C score of 6% As a failing school, Earlham was in a prime

position to be converted to an Academy under the rules as they then stood, supported by a number of

sponsors including a lead sponsor The College took the lead in the development to convert Earlham

into an Academy and became the lead sponsor – City Academy Norwich opened its doors in 2009 as an

independent Academy

As the Academy movement flourished, first under the Labour Government and then accelerated under

the Coalition Government, it quickly became clear that Colleges had to have a response in order to

protect the integrity of their vocational provision, to continue to improve outcomes for students and to

remain competitive in the market for 16-18 year olds City College Norwich’s response was to look into

the possibility of creating a federation comprising secondary schools, FE Colleges, primary schools, and

possibly private training providers and a University Technical College, (UTC), should the College be

successful in bidding for one A fundamental component of the federation was to be a shared services

company which would deliver all of the non-teaching related activities for all organisations within the

federation This was in order to remove from the Academics the “heavy lifting” associated with the

delivery of services allowing them to focus on improving students’ education at all levels, giving more of

them the opportunity to progress to Higher Education (HE) and employment

The College was then successful in obtaining funds from the Efficiency Innovation Fund (EIF), managed

by the Association of Colleges (AoC) to carry out a feasibility study, the results of which led to the

successful bid for more substantial funding to create the federation with a shared services company at its

heart (see appendix 1)

(www.aoc.co.uk/shared-services/citycollegenorwich-federationdevelopment)

2 The Plan

The feasibility study or business case (see link appendices 2, 3 and 4) (www.aoc.co.uk/shared-services/

citycollegenorwich-federationdevelopment) clearly indicated that services could be delivered much

more effectively and efficiently via a single company, bringing together College and school staff, than

had previously been the case under the auspices of the local authority This meant that a better service

could be provided at less cost and that any savings made could be ploughed back into educational

delivery in order to help improve student performance This would be achieved via a rationalisation of

services and staff over time with better procurement being key to any early savings

The implementation plan in the business case contains more detail on the original intentions and needs

to be read in conjunction with this document The key implications of the proposal are given below

2.1 Original Proposal

To create a legally compliant federation comprising:

• City College Norwich (CCN) (an existing statutory corporation) itself potentially comprising

CCN Higher Education Centre (HE) (a proposed limited subsidiary company)

CCN Vocational/Technical Institute (FE) (a proposed limited subsidiary company)

CCN Sixth Form College (A Levels) (a proposed limited subsidiary company)

• City Academy Norwich (CAN) (an existing limited company)

• Wayland Community High School (at the time local authority controlled but with Academy

status pending; proposed limited company from September 2011)

• Norfolk University Technical College (UTC) (UTC application pending approval; proposed

limited company from September 2011)

• A manufacturing and electrical training provider - an existing limited company

• Shared Services Company (proposed limited company)

The two key elements of the plan were the creation of (1) the federation, and (2) the shared

services company, and each had different emphases.

2.2 Creating the Federation

The creation of the federation was seen essentially as a legal process taking up to a year and involving

the establishment of each of the above entities as separate companies, except for City Academy Norwich

which was already an independent company The College was also an independent company but the

proposal was to split it into three organisations (see appendix 5)

(www.aoc.co.uk/shared-services/citycollegenorwich-federationdevelopment)

2.3 Creating the Shared Services Company

The creation of the shared services company would require not only a change in legal status for many

individuals but also their actual movement from one organisation to another via TUPE transfer It was

envisaged to be a more sensitive matter, particularly as new academy staff would first have to be TUPEd

into the Academy from the local authority The plan therefore was not to TUPE these staff twice in close

succession Please refer to section 5

3 Creating the Federation

(for a more detailed breakdown of this section please see appendix 6)

(www.aoc.co.uk/shared-services/citycollegenorwich-federationdevelopment)

Original Vision for the Federation

As the College was driving the process, it was initially envisaged that the College would be the lead

organisation, establishing a new body for governance of the federation in addition to having its own

corporation board Over time this approach proved unpopular as it tended to be seen as a College

take-over, rather than the creation of a group of equal partners in the development of the education of Norfolk

people (see appendix 7) (www.aoc.co.uk/shared-services/citycollegenorwich-federationdevelopment)

Structure of a Parent Company

This eventually led to the creation of a parent company called Transforming Education in Norfolk (TEN)

but not before many months had been spent by the College’s lawyers negotiating with two Government

departments (the Department for Education (DfE) and the Department for Business, Innovation and

Skills (BIS)) on modifications to the Instruments and Articles of Governance, not all of which was

wasted At this point, however, the College still required the signature of two Secretaries of State to

approve any changes Progress was slow

Then in December 2011 the Government’s newly proposed freedoms and flexibilities became law

and the requirement to get the Secretary of States’ approval was removed Things began to move

forward slightly more quickly The problem now was that no precedents existed for newly constituted

Instruments and Articles so the departments weren’t entirely sure exactly what they should contain, but

departmental approval was still required

The departments were clear that consultation should take place between the College and its

communities to confirm support for its proposals (see appendix 8) (www.aoc.co.uk/shared-services/

citycollegenorwich-federationdevelopment) When the College asked for guidance in relation to which

particular communities it should consult with, the departments said that it was up to the College to

decide – but that they would be sure to inform us if they thought our choice inappropriate

The College

Around this time, following advice from KPMG, it was decided not to split the College into three

separate entities as it would create a plethora of complications in terms of dealing with VAT (see

appendix 9) (www.aoc.co.uk/shared-services/citycollegenorwich-federationdevelopment) However,

the College continued with its plans to create a separate HE Centre at a new location, for delivery to its

1,500 HE students, as this was thought still to be an appropriate response to the Government’s proposals

relating to fees, loans and (HEFCE) funding

The Academies – Wayland Academy came into being on 1 March 2012

Sponsored by City College Norwich in full knowledge that the federation was being established, which

its head and governors viewed as an added incentive It became the first member of Norfolk Academies

Trust and all future Academies joining the federation will sit within this Trust The Trust was established,

along the lines of many Academy trusts, immediately prior to Wayland becoming an Academy

The UTC

Application had been successful (May 2012) and negotiations began with the Baker Dearing Trust in

relation to the opening date – eventually September 2014 was agreed upon City Academy Norwich was

in its third year of operation as an Academy and could not sit within Norfolk Academies Trust as it was

set up under different regulations with a number of sponsors

The Parent Group

Transforming Education in Norfolk – the parent group, TEN, was established during the summer term

of 2012 and naturally it was anticipated that it would be the owner of the shared services company

However this turned out to not be possible due to the regulations of the Local Government Pension

Scheme (LGPS) Of itself, TEN has no direct income and no reserves, and is therefore not in a position to

underwrite the pensions of all those staff to be transferred into the shared services company

Local Government Pension Scheme – impact on the parent group

There are two ways in which a company can become a member of the LGPS, either as an admitted body

or as a wholly owned company To be an admitted body the shared services company would need to

be able to underwrite the pensions of its staff and, like TEN, it has no direct income and no reserves, so

this was not possible The only alternative was to be wholly owned by a company with the resources to

underwrite LGPS pensions and the only organisation within TEN that could do that was the College

After some to-ing and fro-ing it was finally agreed that a controlling shareholding of 51% would be

owned by the College and 49% by TEN Staff pensions were now safe (see appendix 10) (www.aoc

co.uk/shared-services/citycollegenorwich-federationdevelopment)

4 Creating the Shared Services Company

The key consideration when establishing a new company, apart from its name, is what sort of company

does it need to be? The shared services company has been given the name Norfolk Educational Services

Ltd (NES) as it was envisaged that, at some point, substantial services would be sold outside the

federation so it would have a wider target market within Norfolk

The question of what type of company it should be was much more complex and the key issues were:

• Mutualisation – staff involvement/ownership

• Community Interest Company v Limited Company

• Teckal

Mutualisation – the College recruited the Baxi Partnership to set out various ways of involving staff in

the ownership of the company and getting staff buy-in, most of which had their attractions Although

this route was not in the end selected, for reasons given below, this is still an option going forward if

circumstances were to change In the end staff buy-in has not been a problem within ex- College staff

but there has been some resistance from ex-Academy staff who tend to see the whole process as a

take-over, something which we’ve been keen to counter (see appendix 11) (www.aoc.co.uk/shared-services/

citycollegenorwich-federationdevelopment)

CIC / Ltd Co – the main reason for opting for limited company status was flexibility although

discussions were lengthy The main function of NES is to deliver better services more cheaply and

make savings or profit - whatever it’s called; the important thing is what can be done with it A private

limited company can invest it and/or pay dividends to shareholders in proportions that it decides At its

simplest, in the case of NES this simply means gift-aiding the profit (avoiding corporation tax) to TEN

for re-distribution within the federation In fact it is not quite this simple because making a profit out of

Academies (savings) in this way is not allowed so certain charges have to be agreed instead So moving

the money around the group is possible

In the case of a Community Interest Company, all profits have to be returned to the participating

company in a proportion equal to that of its original stake As we envisaged making investment

decisions based on the needs of individual organisations, rather than on the amount of money they

originally invested, this option was not chosen

Teckal – this is not something that any of the team had heard of before starting along this path but it

proved to be an important consideration Teckal is a European company which brought a case to the

European courts in relation to tendering for services inside and outside federations of companies The

courts ruled that if a company sells services outside its own federated bodies, business for which it

competes on the open market, using the same staff as those used to deliver inside the federation, then

it must put those services delivered inside the federation out to competitive tender, i.e it will have to

compete for the business of delivering services inside the group and of course it might not win One

way around this is to set up different companies with different people, one delivering services inside the

federation, the other outside However, current advice suggests that no legal intervention will occur if

the volume of income earned outside the group is less than 5% of the company’s total turnover (www

aoc.co.uk/shared-services/materials/legal)

Nevertheless it is entirely possible that there are Colleges with large volumes of commercial income

who are already delivering services both inside and outside a group structure of sufficient volume to

cause concern, so this is a point to watch As for NES, service volumes delivered outside the federation

are currently very small but with an aspiration to grow this arm of the business a company called TEN

Commercial Services has been created to provide the capacity for substantial delivery outside the group

Agreements and Contracts – all organisations within the federation have had to pass a motion with

their governing bodies agreeing to join the federation In addition they have all had to sign a Service

Agreement with NES for the supply of services (not a service level agreement) covering a five year

period which sets out the legal relationship between them, in particular in relation to pension liabilities

and penalties for withdrawing early from the agreement This is essential as NES has no income other

than what it receives from the member organisations on an annual basis, nor does it have reserves to

cover pension deficits It will, however, be responsible for pension liabilities for staff TUPEd into the

company from the date of transfer

5 Norfolk Education Services’ Staff

TUPE of Staff – Pension issues

It would be easy to say that all NES staff were TUPEd from their original employer to NES on 1

September 2012 - but it would not be true Yet again pensions reared its head We managed to resolve the

issues related to the LGPS, but the teachers’ pension scheme (TPS) is of a different order As it is funded

centrally from the Treasury it simply is not transferable under any circumstances, which means that if

staff TUPE transfer to a non-teaching organisation the pension cannot be taken with them

Not many staff were in this position (four to be exact - all College staff, two of whom were the

Chief Executive and the Managing Director, both ex-teachers) so another work around had to be

found The simplest solution was to second these staff to NES from the College for a period of five

years, so secondment agreements had to be drawn up in order to protect the pensions of staff in the

TPS Fortunately the transfer of the other 285 staff went more smoothly, technically, but there were

complications

TUPE Transfers

Key points to note in relation to TUPE

are:-• Be clear in the measures letter; ensure that you state exactly what will change for staff members

• Communicate in advance, and often, with the relevant Unions

• Prepare staff lists well in advance, keep a central list

FE Colleges tend to have job roles within defined departmental responsibilities It’s a moot point how

often these are updated but generally they cover roughly the right area; not so for Academies/secondary

schools Staff in Academies and schools do have Job Descriptions of course but often they bear no

resemblance to the duties carried out at all Colleges are in the main departmental; Academies work like

family businesses where everyone “mucks in” This is not a criticism as it is probably the most effective

way of working for a small single organisation, but it makes considerations relating to who to TUPE to

where quite difficult

In addition, this will impact on who should transfer to the shared services company and who shouldn’t

– it depends entirely on what they do and if the paperwork is unreliable it will cause problems The best

option is to speak to each individual and their managers, and keep your own record of what duties they

carry out

The other important realisation is that as long as other Academies are joining the group, at some point in

the very near future restructures will have to be carried out as, although it may be the most effective and

efficient way to run a single Academy, it almost certainly will not be that for a group of them

For further information relating to TUPE processes and examples of letters please see appendix 12

(www.aoc.co.uk/shared-services/citycollegenorwich-federationdevelopment)

Please note: This guide does not replace the requirement for detailed legal advice on the transfer,

and Colleges should obtain independent advice on their specific transfer Circumstances around

LGPS need to be fully checked independently for each organisation wanting to go down this route.

6 IT Systems

The biggest practical challenge in setting up a federation is IT systems Each major software product

has had to be re-examined for suitability for federation use and federation cost We recognised from the

outset that the Service Management and HR systems were not fit for purpose in a federation environment,

so new systems were tendered and purchased quite early on in the process and continue to undergo

implementation module by module

However, negotiation with the company supplying our finance system did not go to plan so the decision

was made to replace it with a new system This was not our preferred option but in order to make sure we had a system which could cope with multiple entities there was no alternative – the finance system was

tendered and a product selected in the summer with a full implementation date of June 2013 Following

further negotiation and the commitment to provide additional resource internally, this was revised to

February 2013 This additional internal resource comprised at least one person working full-time on the

project

In addition, having all of these brand new systems is pointless unless all members of the federation can

access the appropriate parts of them As the HR, finance and student record systems data are managed by

NES, we have embarked on the establishment of an integrated communications infrastructure which will

give all federation members access to their data from those systems on their desktop This is a much more

complicated task than it sounds and we are still encountering difficulties with it However, access to all

major IT systems for all federation members is scheduled to be in place by the end of April 2013

If that were not sufficient, we have also embarked on a project to build a data warehouse which will

facilitate the development of reports from multiple systems This is seen as a pre-requisite for the effective

and efficient use of resources across the federation It will, for example, allow reports to be produced

instantaneously using data from the finance, HR and student records systems Currently phase 1 of this

project has been completed which is the incorporation of the College’s student records data for the last

two years Phase 2 will pull in College HR data, and phase 3 will be a project involving the Academies

and student tracking

At the same time, investigation has led us to the conclusion that all Academies within the federation must

use the same student record system to enable streamlining of data management and reporting, and to

standardise training and development needs A single solution has been selected but currently only one

Academy is using this software so we are embarking on a staff development programme in preparation

for the introduction of this software to at least one and possibly two Academies by the end of March 2013,

before timetabling for 2013/14 begins

The key point here is that effective management of data within the federation is dependent on the data

being accurate, available and structured in a way that is meaningful to users Having a number of

Academies within the federation for example will allow accurate measurement of performance across

a range of key indicators which will in turn enable academic leaders to examine and compare their

performance, and learn from best practice

In terms of managing IT operations, advice was sought from a consultant and the ensuing report is

attached (see appendix 13) (www.aoc.co.uk/shared-services/citycollegenorwich-federationdevelopment) This is a very useful report providing clear guidance on what an IT operating model could look like

However, NES has a lot of work to do before anything else can be achieved

7 So What Have We Got?

We have created a fully functioning federation with, currently, seven member organisations:

• Transforming Education in Norfolk (parent company)

• City College Norwich

• City Academy Norwich

• Wayland Academy

• Norfolk University Technical College (opening Sept 2014)

• Norfolk Educational Services

• TEN Commercial Services

All non-teaching-related services are being delivered by NES, either directly or through contracted-out

services One further secondary school has voted to join the group and a second will be putting the case

to its governing body shortly A number of primary schools have expressed an interest but there are no

firm proposals at the moment The private training provider did not proceed to join the group, but the

legal framework has provision for this to occur at any time in the future

The TEN Group’s Federation model provides for an educational pathway from the start of primary

education, through secondary, with options including the University Technical College (14-19); post-16

opportunities also sit within City Academy’s Sixth Form, the College’s Sixth Form Centre, the College’s

vocational and technical offer including apprenticeships, adult education and HE – a ‘cradle to grave’

offer for all those within the “family” should they desire it

Sep 11 - Nov 11 Establish programme direction, structure and resources

Complete Federation Memoranda of Understanding Implement procurement strategy including determination of in-house and outsourced models

Plan phased integration of services Determine service delivery model Establish account management; demand management; service planning; service management; and supplier relationship management models

Establish shared services company Implement finance system upgrade Start process mapping and improvement Plan soft federation product and services portfolio Engage with UTC project team

Tender HR and CAFM systems upgrades Dec 11 – Feb 12 Roll-out additional services to City Academy Norwich

Establish legal federation Procurement programme continues Continue process mapping, standardisation and improvement Implement HR system upgrade

Market soft federation product and services portfolio Plan UTC product and service provision

Mar 12 – May 12 Roll-out services to Wayland

Procurement programme continues Continue process mapping, standardisation and improvement Implement CAFM system

Norfolk Academies Trust created Wayland Academy up and running, TUPE complete Deliver soft federation product and services portfolio Procure UTC product and service provision

Application submitted for VAT Group (three months to complete) Jun 12 – Aug 12 Implement UTC product and service provision

Deliver Year 1 procurement target Continue process mapping, standardisation and improvement Deliver soft federation product and services portfolio

Plan Year 2 implementation based on progress to date Shared Services company set up

Pension admission status in place with Norfolk Pension Fund Bank accounts in place for all entities in the group

New payroll system (Midland iTrent) launched Tender concluded for new finance system

1 Sept 2012 Go live with Norfolk Educational Services

Oct 2012 Finance restructure completed

Oct 2012 – Feb 2013 New finance system (Open Accounts) goes live

Implementation Timeline