Agenda item

Transfer of Service to Qualis

To consider the proposed transfer to Qualis of the Grounds Maintenance service on 1st April 2023 in accordance with the broad terms and approach proposed within the report and subject to satisfactory conclusion of the statutory consultation exercises, including those staff proposed for TUPE transfer to Qualis.

Minutes:

The Committee scrutinised the transfer of Grounds Maintenance to Qualis ahead of the Cabinet’s decision on 7 November 2022. A Small introduced the report, which proposed to transfer the service on 1 April 2023. Qualis had established a vision for itself as a property company promoting and undertaking property development, management and maintenance. The report provided a high-level summary of the current costs of delivering the existing in-house service, including an indicative Contract Payment in the event of the transfer of the Grounds Maintenance service. The business case for the transfer represented an efficient way to deliver this service. It enabled the Council to reduce its back-office costs and offset these against the Qualis Management charge. However, members needed to be assured that there was a tangible benefit to the Council before any transfer could take place.

 

The Committee had many varied questions covering the following concerns.

 

·     What was the TUPE (Transfer of Undertakings (Protection of Employment)) process for the staff involved in this service transfer and what support would be available to them? A Small (Strategic Director and Section 151 Officer) advised the Council would provide reassurance. There would be a statutory consultation phase, group meetings would be arranged and there would be provision for individual conversations, as the Council would follow best practice with support from the People (Human Resources) Team.

·     Since the establishment of the current set-up, was it proving costly? The Finance Portfolio Holder, Councillor J Philip, remarked that where two organisations have structures in place, it was more efficient to use one, so back-office staffing would be rationalised and not duplicating made it more efficient. Also, the Council might get more for the same prices.

·     In terms of future proofing to reduce unnecessary costs should the Council transfer services quicker because with a shorter interim period there would be less time between the duplication and non-duplication of services? The Finance Portfolio replied that it was proper to look at service transfers in a measured way and not rush this. The Council did not want to transfer too much, too quickly.

·     With the net revenue budget increasing to over £1.1 million if the management fee was included, would the Council be paying just the management fee to Qualis at the start of the contract? The Finance Portfolio Holder replied that on the adjusted revenue figures, the additional management fee for Grounds Maintenance would enable Qualis to make a proportionate reduction in its charge for Housing Repairs in the first year, which benefitted the Council. It was recognised there was a movement between the Housing Revenue Account and the General Fund, but this balanced out.

·     What data would be looked at to quantify and show in five years’ time that it had been the right decision to transfer this service to Qualis, and how would we know? The Finance Portfolio Holder replied that scrutiny of the contract’s progress and financial performance would be monitored throughout the five-year contract, much the same as any other external contractor was.

·     As some members had been contacted by residents about housing repairs not being done or delayed after this transfer of service, there did not seem to be effective scrutiny in place in terms of housing repairs and Council tenants, but another service transfer was being proposed. The Finance Portfolio Holder advised that more jobs were being done on time with better scheduling of the Housing Repair workforce.

·     Not convinced that the housing maintenance transfer had been a good move or that there would be any financial gain, why transfer another service? The Finance Portfolio Holder reiterated that the way Qualis was providing housing maintenance was better because more jobs were being done on time and with a significant improvement in finances, he was convinced this was good value. Qualis could run services differently. It was important to try to make the Council work more efficiently, as long as the service transferred was being delivered.

·     There was no evidence of the Council working in consultation with the staff moving to Qualis under TUPE terms or with trade unions. Also, the higher turnover of the workforce in the Ground Maintenance team would lead to the development of a two-tier system as new staff joined, who were likely not to be offered the same benefits as staff transferring under TUPE terms and conditions. The Finance Portfolio holder advised that TUPE did protect those people moving across from one organisation to another.

·     What was the financial benefit to the Council? The Finance Portfolio Holder added that being further forward in budget planning helped to grow that service for a better return.

·     Would the management fee taper down? The Finance Portfolio Holder replied that this would be reviewed at the end of each year.

·     Would Qualis have maintenance costs in running the depots? The Council would review this in a year to see what the equipment and fleet looked like, as there was no sense in selling the fleet to Qualis.

·     Did Qualis have its own HR team, and would HR services become a shared service? The Finance Portfolio Holder confirmed this. A Small continued that service transfers might help reduce the Council’s HR service and therefore, capture efficiencies. Although the option for a shared HR service had been investigated when Qualis was set up, it had been agreed it was better to have separate HR services. However, a shared HR service with another local authority might be an option in the future. The Finance Portfolio Holder commented that the Council had a shared service for Internal Audit.

·     If it was expected that back-office staff could be reduced, were wider staff cuts probable in the current economic crisis? The Finance Portfolio Holder advised that with a £30 million staff budget and a potential 5% rise in salaries, the Council was looking at redundancies hopefully in posts that were currently vacant and moving staff, as its aim was to protect Council services. Therefore, there would be some difficult decisions ahead as the Council did not want to have forced redundances.

·     The Grounds Maintenance team looked after the Roding Valley Recreation Ground for Loughton Town Council, which had received an award from the Essex Playing Fields Association for doing outstanding work. The Town Council had advised the Grounds Maintenance Team of this and expressed its gratitude, as it was their work that had resulted in the Town Council receiving the award. The Grounds Maintenance office staff were always very helpful. The Finance Portfolio Holder commented that the people working for Qualis did appreciate the opportunity to work for the company and it was important not to reduce the quality of work, which was why monitoring would be undertaken by the Council’s retained Ground Maintenance Supervisor to work closely with the equivalent Qualis role. The Finance Portfolio Holder also met with the Qualis Group Managing Director once a week. Key Performance Indicators would measure Qualis’ performance to ensure delivery against these KPIs was tracked, which was the same for other contractors; and would allow service delivery to be monitored.

·     What effect would the transfer have on clients, would the service be better and what contingencies would the Council have? The Finance Portfolio Holder anticipated the work to be done more efficiently and cheaper with better work co-ordination. Qualis had established itself as a property company promoting and undertaking property development, management and maintenance, which grounds maintenance aligned to.

·     Obviously, the Finance Portfolio Holder believed the transfer of Grounds Maintenance was the right decision for the Cabinet to take on 7 November but after the transfer, who would make the decision on the costs and terms of contracts with the parish councils? The Finance Portfolio Holder replied that the current contracts would stay in place and that Qualis would negotiate the contracts with individual clients going forwards.

·     Was there a record that previous service transfers had been a success? The Finance Portfolio Holder replied that Housing Maintenance had been a success and Asset Management a resounding success. Therefore, he was convinced Qualis had achieved a positive change. There would be a £4.2 million gap in the budget, so it was important to move forward with this service transfer.

 

However, the Committee’s recommendation to Cabinet following a lively debate was that at this stage the Committee felt unable to support the transfer of Grounds Maintenance to Qualis, as a proposed motion was carried.

 

RESOLVED:

 

That the Committee recommended to Cabinet that it felt unable at this stage to support the transfer of Grounds Maintenance to Qualis.

Supporting documents: