AGENDA ITEM No ....&...... COUNCIL

REPORT

To: POLICY & RESOURCES COMMITTEE Subject: ESTABLISHMENT OF NON PROFIT DISTRIBUTING ORGANISATION TO OPERATE THE COUNCIL'S CULTURAL SERVl CES.

Date: 18 SEPTEMBER 2012 Ref: LMcM/MS

1. INTRODUCTION

The purpose of this report is twofold, to present to the Policy & Resources Committee details of the outline Business Plan for the proposed non profit distributing organisation (NPDO) to operate the council's Cultural Services, and to seek approval to move into the third phase of the process namely, the establishment of the stand alone non profit distributing organisation to deliver the in scope services by 1st April 2013.

2. BACKGROUND

2.1 Previous Committee/Council Decision

Committee is reminded that, at a special meeting of the Learning and Leisure Services committee, held on 22nd September 2011, it was agreed that the Head of Community Information and Learning be authorised to progress the detailed business planning stage of the establishment of an NPDO to operate cultural services, country parks, Kilbowie Outdoor Centre and other associated services by formulating a draft outline business plan for the cultural NPDO, submitting a report to a future meeting of Committee on the outcome of the draft business planning phase.

2.2 Recap on Phase 1 Options Appraisal

2.2. I Drivers for Change

At the initiation of this process a number of key drivers were identified, in that it was understood that the establishment of a cultural NPDO would have to guarantee the following outcomes which are now reflected in both the outline business plan and proposed delivery structure for the NPD0:-

a sustainable future for arts, libraries, museums, parks and outdoor learning services whilst securing savings to the local authority; securing continuous improvement of services;

0 effective partnership working; reaching new audiences; and achieving freedom to operate in a swift and entrepreneurial way.

1 2.2.2 Services within Scope

The services within scope during the business planning phase remained the same as during the options appraisal. These services are:-

* creative services (venues, community arts, museums, archives and play services); libraries and learning through technology; community facilities; Kilbowie Outdoor Centre; country parks; and associated services.

On completion of the phase 1 options appraisal, a financial and performance baseline was established for the in-scope services. At that point in time the in scope services:

expended f 1,600,114 on National Non Domestic Rates payments employed 340.50fte (465 individual employees excluding cleaninglcatering and grounds maintenance) operated 121 facilities

2.3 Component Parts of Phase 2 - Business Plannina

The major elements of the business planning phase, completed between October 2011 and June 2012, were:-

* detailed cost modelling; 5 year budget projections; development of the legal framework (including delivery vehicle); analysis of support services framework; finalising approach to g overnance/manag ement/m on itoring structure; further risk analysis and development of mitigation plan; and setting timeline for implementation of new approach to service delivery (transition road map).

3. CONS1DERATIONS

3.1 Followins the Public Pound Principles and Business Planninq

Committee is advised that in developing the outline Business Plan for L,e establishment of a cultural NPDO, Audit Scotland’s ‘Following the Public Pound’ principles have been used to guide the approach. Careful consideration has been given, from the standpoint of the council, to:

0 clearly articulating the purpose of establishing the NPDO for the in scope services; 0 setting out a suitable financial regime; 0 the monitoring arrangements for the NPDO’s financial and service performance; representation on the board; establishing the basis of involvement in the NPDO; and 0 maintaining audit access to support accountability.

In order to achieve this, the project team took cognisance of the principles outlined in the Audit Scotland report, ‘Arms-Length External Organisations: Are You Getting It Right?’ which is summarised below:

governance for arms length organisations (ALEO) can be complex, strong and effective governance is required from the outset; 2 councils should specify the business practices and standards they expect the ALE0 to observe; clarity about roles and responsibilities is vital; and monitoring of ALEO’s should be risk-based and proportionate.

3.2 The Draft Outline Business Plan

3.2.1 Format and Content

Although the draft outline business plan will require to be adopted and further developed by the NPDO (initially by a shadow board) it represents the foundation stone for the NPDO defining an approach that accords with Audit Scotland’s advance practice model which states “where services are delivered through arms length organisations the Council has a well- developed and strongly based strategy for the delivery of services in this manner which is clearly linked to the council’s wider strategic objectives and priorities”.

The NPDO’s shadow board will further develop the business plan and present the final version to the Council for approval.

The outline business plan for the NPDO sets out:-

aims and objectives of the business plan; mission vision and values; services; context (social, economic, strategic); market analysis; PEST and SWOT analysis; financial strategy and projections; treatment of assets; structure of NPDO; challenges and risks; key delivery outcomes 2013-201 8; and com mun icat ion and marketing.

3.2.2 Mission Statement and Values for Proposed NPDO

The project team has developed an early draft mission and vision statement for the proposed NPDO which has been circulated to all in scope service employees for comments.

The overall mission of the NPDO will be to:-

“deliver in North Lanarkshire high quality and inspiring cultural and outdoor experiences and facilities which promote and increase participation, meet customer and visitor expectations and improve the quality of life”.

The draft values are: customer focus integrity effort continuous improvemen t adaptability quality partnership and collaboration ingenuity equality

3 3.2.3 Summary of Benefits and Costs at Phase 1 - Option Appraisal

High level financial modelling was carried out during the options appraisal which took into account:-

0 potential NNDR saving at 95% relief; 0 indirect overhead apportionment (HR, finance and directorate); 0 increased income at 5%; and 0 VAT input tax restriction and output tax cost.

Within the phase 1 report it was identified that an extensive exercise would be carried out to refine and complete the financial plan during the business planning phase. Further work has been completed to prepare a consolidated reconciliation for all in scope services.

In view of the fact that the inclusion of country parks within the cultural NPDO does not release a saving in terms of NNDR or VAT the Director of Environmental Services is recommending that the operation of country parks be retained in house. The reasons for excluding the Country Parks from the Cultural NPDO are largely twofold in relation to Non Domestic Rates savings and in relation to future opportunities to generate capital receipts or produce additional rental income for the Council. In relation to Non Domestic Rates, there is provision within the rating legislation whereby parks and ancillary facilities are not entered in the Valuation Roll 2 and as such there will be no rates savings by transferring the Country Parks to the new organisation. In addition, the Council are looking to explore the various possibilities of generating capital receipts by means of the sale of land forming part of the parks along with a detailed analysis of opportunities to lease other areas which will provide rental income to the Council.

Likewise with Kilbowie Outdoor Centre, the strong links with schools and the delivery of Curriculum for Excellence, set against a minimal NNDR saving, would indicate that this facility continue to be operated in house within the Council.

3.2.4 Phase 2 - Financial Plan

In building up the Financial Plan for the new NPDO, to existing budgets, potential cost pressures and potential future efficiency savings from the in-scope services have all been taken into consideration. The impact ,on VAT of externalising these particular services has also been investigated and applied. Account has also been taken of the services provided both to and from these services where no charge is currently applied. It is assumed for the purpose of this report that these arrangements will continue.

3.2.4.I Baseline Budgets

Information on existing budgets has been received from both Learning and Leisure and Environmental Services.

4 The sum of potentially transferring budgets totals El8.5miIlion, details of which are detailed in Table 1 below.

Table 1

Creative Services, Building Libraries, Cleaning & Catering Total Community Caretaking Facilities Expenditure Employee Costs 7,621,119 3,023,699 675,096 11,319,914 Property Costs 7,829,669 39,058 7,030 7,875,757 Supplies & Services 1,199,998 12,250 575,352 1,787,600 Transport & Plant 250,396 15,390 3,000 268,786 Administration 1,243,058 285,132 4,360 1,532,550 I Capital Financing I 3,202,980 I 1,091 I 0 I 3,204,071 I PTOB 341,136 0 0 341,136 Other Costs 0 0 Total Expenditure 21,688,356 3,376,620 1,264,838 26,329,814 ./ Income (3,101,095) (3,371,681) (1,306,058) (7,778,834) 2012113 Net Budget 18,587,261 4,939 (41,220) 18,550,980

In establishing an initial management fee for the NPDO, the following budget adjustments require to be applied:-

Opening 201211 3 Budget f 18,550,980

Budget Realignments

Removal of Capital financing Cost budgets (3,204,071) Increased budget for Overheads not currently included 377,518 Play area budget transfer from Environmental Services 306,269 Further realignment to NNDR Budgets 96,867

Estimated Opening Management Fee 2013/14 (before savings) f 16,127,563

3.2.4.2 Future Cost Pressures

In line with North Lanarkshire Council’s 10 year financial plan, cost modelling has been carried out to establish the key financial pressures which the NPDO will encounter over the first 5 years of operation. The business plan assumes these will be fully funded by a management fee uplift.

The following assumptions have been made with regard to increased costs:-

0 energy - 10% increase in year 1 (2013), followed by further incremental increases of 5% years 2014 to 2017; 0 pay inflation - 1% has been factored in each year; 0 increasing employers superannuation rate - 3.8% increase from 2015 to 201 7; 0 auto enrol pension -from 2016 assumes an uptake of 80%; 0 NI Changes - should the discounted rate be removed for employees in the pension scheme;

5 0 transport inflation - based on sample replacement lease costs provided by transport in relation to mobile libraries, the increase in costs relating to a 7 year non-finance lease is €23,000, representing an increase included of approximately 21 %. When applying the rate to all vehicles in the transfer, this would result in additional year on year costs of 40k, phased over 2013 to 2015; and 0 pay and grading model - it has not been possible to quantify the impact of any changes at this stage, but it is likely to be a further cost pressure.

In addition to the funded cost pressures outlined above the following costs have also been taken into account:-

VAT costs €209,846 Provision for additional revenue costs f50,000 Total E 259,846

During the phase 2 business planning phase, the focus of the financial modelling, shifted to take into account the emerging need for the NPDO's business plan not just to drive out efficiencies via NNDR to the value of the original Council efficiency saving of €800K, but for that figure to potentially increase to a level equating to a 15% to 20% reduction in management fee over a three year period commencing on the proposed date of the establishment of the NPDO, 1"April 2013. This approach takes cognisance of the target sum for the Council's overall reduction in revenue expenditure over the financial years 2013/14 - 2015/16. Therefore, savings of f2.5million have been factored into the financial plan for the first 3 years.

After taking into account new cost pressures of f259,846 an estimated saving related to NNDR charitable relief in year 1 of f1,040,154 will be realised. It should be noted however that €200,000 of this saving was taken in 2012/13.

Any additional savings will require to be met through a variety of measures which will require early consideration by the NPDO.

3.2.4.3 Draft Financial Plan 2013 to 2016

I I 2013/14 I 2014/15 I 2015/16 I Opening Budget 16,127,563 15,310,978 14,890,267 Funded Cost Pressures 338,415 274,289 309,870 1 Efficiency Savings 1 -1,155,000 1 -695,000 1 -650,000 I 1 Net Budget I 15,310,978 1 14,890,267 I 14,550,137 I

AS illustrated above, approximately €15.311m (78%) of funding will come from North Lanarkshire Council by way of a Management Fee. The balance of f4.407m (22%) will be derived from a mix of income generating opportunities, both existing and new.

A key task for the new organisation will be to ensure maximum income is sourced from external grant giving bodies such as; Heritage Lottery Fund, Museums Galleries Scotland; Creative Scotland, Biffa, Environmental Key fund, various trusts etc.

3.2.5 Treatment of Assets (facilities, collections and archive)

During phase 2, in order to inform not only the NPDO draft outline business plan, but also the Council's asset management planning process - linked to the development of the composite capital programme for the period 2013114 - 2017/18, condition surveys were refreshed for all community facilities and libraries.

6 As it is proposed that the Council transfer responsibility for and operation of all facilities identified during the phase 1 options appraisal (see Appendix I),it is important that the shadow board during the transition phase are in the best possible position to consider the full implications of the proposed transfer. Up to date condition surveys are critical in this process.

In order to achieve the NNDR saving the in scope facilities will be subject to a 20 year lease agreement between North Lanarkshire Council and the NPDO. Work has already been completed by the project team and legal services on a draft template lease document, based on the lease terms currently in place between the Council and North Lanarkshire Leisure Ltd. The terms of the draft template lease include the following main elements-

@ lease term - 20 years; council will insure premises; NPDO to have in place Third Party and Public Liability Insurance to a minimum value of f5,000,000; 0 either party shall have the option to terminate the lease giving six months written notice; NPDO, as tenant, will be responsible for maintenance of internal parts of buildings; and NLC, as landlord, will be responsible for the maintenance and repair, and when necessary reinstate the exterior and all structural parts of the buildings and to keep them wind and watertight.

Committee is advised that the terms of the lease agreement will be the subject of a future report to Committee to facilitate the granting by the Council of leases at a peppercorn rent.

As with North Lanarkshire Leisure Ltd operated properties, the buildings remain in the ownership of the local authority, however, their future rationalisation, maintenance and/or potential development will be considered by the Council, informed by the NPDO, and the appropriate plandfunding put in place as part of the Council’s asset management and composite capital programme planning process.

With regard to the operation of community use of facilities within schools, which the community facilities team are responsible for letting, Committee is advised that, due to the nature and operation of these facilities there is no intention to lease these facilities to the NPDO. The community facilities team will continue to operate these facilities through a Service Level Agreement (SLA) between the Council and NPDO. The same arrangement will apply to the operation of the Council’s records and museum and art collections management functions which will also be subject to a formal service level agreement between the NPDO and the Council. This is not an uncommon arrangement between arms length organisations and local authorities.

3.2.6 Capital Investment

It is an acknowledged fact that there is a need to invest in the facilities included within the proposed NPDO’s operational portfolio to ensure the future sustainability of services to communities and a maximum return on investment in terms of income generation.

7 The greatest risk to this aim is the condition of certain facilities within the community facilities portfolio. Committee is advised that the recent condition surveys carried out indicate the following, in terms of condition, sustainability and utilisation:-

Table 2

ICI 6 I 31 I 25 I ID1 - I 16 I 5 I

*Key A = performing well & operating efficiently B = satisfactory - performing adequately but shows minor deterioration C = showing major problems and/or not operating adequately D =bad - life expired and/or serious risk of imminent failure

An estimated overall required investment in community facilities of f4,775,667.50 has been identified through the process of refreshing condition surveys. This presents a significant challenge. In order to meet this challenge the NPDO/Council partnership will require to function in a collaborative, realistic and solution oriented manner to do the following:-

identify the next tranche of building rationalisation in accordance with the approach previously taken by the Council in respect of community facilities; consider a limited number of prioritised bids for future capital investment over the period 2013/14 - 2017/18; and continue to successfully bid for external funding.

In addition, and as identified during the phase 1 option appraisal, there is potential to utilise f100,OOO from the overall saving resulting from externalising the in scope services, to prudentially borrow in order to carry out some investment in the community facilities portfolio augmenting the Council’s composite capital programme investment. If this approach is approved, an investment plan relating to the sum released from prudential borrowing will be put together during the transition phase to the NPDO and presented to committee during the next cycle for approval along with the final legal and financial documentation.

3.2.7 Legal/Governance Structure

Research and Assessment

The options appraisal identified a number of different vehicles for delivery of the in scope functions, (in other words legal structures). The relative merits of these potential special purpose vehicles were explored in detail.

Of the possible vehicles for leisure NPDOs, research and experience (e.g. North Lanarkshire Leisure Ltd) would suggest that a company limited by guarantee with charitable status would best meet the council‘s needs in terms of:-

tax relief; National Non Domestic Rates (NNDR) relief; and 0 access to sources of funding not open to a local authority.

The NPDO would also require to establish a subsidiary trading company to cover its activities which are not part of its ‘primary purpose’ such as catering, in order not to compromise charitable status.

8 Committee is asked to note that North Lanarkshire Leisure Ltd has been operating as a company limited by guarantee since 2006 and at the end of financial year 201 1/12, reported significant growth since formation (95% in attendances and 192% in income) which, by implication, would indicate that this particular vehicle for service delivery is flexible, creative and reflects good governance.

However, Committee is asked to note that, since North Lanarkshire Leisure Ltd was created, the law, in respect of procurement and tendering requirements in contracting authorities, like the council, has continued to develop. The current law is that the council, as a contracting authority, can enter into service arrangements for the delivery of works, services etc without applying relevant EU rules and principles providing that the following requirements are met:-

0 that the contracting authority exercises a control over the organisation/person when it is entering into arrangements for services delivery as it exercises over its own departments; 0 the organisation/person with whom it is entering into these arrangements carries out the essential part of its activities with the relevant contracting authority or authorities.

To achieve this, the council requires to be the sole member of the NPDO company to constitute what is termed a ‘Teckal’ compliant NPDO, a term which refers to the case law on which this premise is based.

3.2.8 Proposed Leqal Vehicle for NPDO

Achievina Operational Independence

During phase 3 implementation the NPDO will require not only to be incorporated as a company limited by guarantee (achieved via an application to the Registrar of Companies), but also to apply for and gain charitable status through an application to the Office of the Scottish Charity Regulator (“OCSR”). This, as Committee will be aware, is the lynchpin on which tax efficiencies and NNDR savings depends. OSCR charitable status involves being approved by OSCR to be entered into the Scottish Charity Register which requires the proposed NPDO to pass OSCR’s rigorous charity test and meet the following requirements:-

it must only have charitable purposes; and Its activities must provide public benefit for Scotland or elsewhere.

It is not a condition of passing the charity test that the NPDO must be independent of the local authority. However, the OSCR guidance ‘Meeting the Charity Test: Guidance for applicants and for existing charities’’ states:-

“All charity trustees or applicants need to be alert to the issue of effective operational independence. The 2005 *‘Charities and Trustee Investment (Scotland Act 2005) is explicit about the duties of trustees and the need to guard against conflicts of interest, This may be an issue where a charity has charity trustees who are connected with another body, for instance where some of its charity trustees are also local councillors or council officials or are charity trustees of another charity. In such a case, the charity’s constitutional arrangements and operational procedures need to ensure that decisions involving a possible conflict of the interests (between the charity and the other body to which such charity trustees owe a duty) are taken in the best interests of the charity itselP‘

*‘ The Charities and Trustee Investment (Scotland) Act 2005

9 Balancing OSCR requirements with the Council’s requirement to establish a Teckal compliant NPDO, it is proposed that the articles of association for the NPDO be drafted to reflect that membership of the company established shall be open only to North Lanarkshire Council and that the categories of director include the following:-

* “Partner Director” (elected member of North Lanarkshire Council) “Independent Director” (appointed by North Lanarkshire Council)

Other pertinent features of this approach (as currently in place for NLL Ltd) are that:-

0 the maximum number of directors is 13 (6 Partner Directors, 5 Independent Directors, Trade Union Director, Employee Director); 0 the NPDO would establish a Nominations Committee to carry out the selection and recruitment process for Independent Directors and guide the council in respect of the appointment of appropriate individuals; a Nominations Committee would comprise the Chair of the NPDO and 4 individuals (2 being Partner Directors and 2 being Independent Directors) appointed by the board of directors; and the Nominations Committee would establish an appropriate skills matrix to guide it in selecting and evaluating appropriate candidates for approval by North Lanarkshire Council; and 0 independent Directors would be chosen following open advertisement of available places.

It should be recognised that the significant added value of Independent Directors requires to be maximised via an approach which actively seeks out highly motivated individuals with significant experience in the sector, finance, marketing/sales, project management, the media and/or the law.

3.2.9 Structure of NPDO (Management, Operational Delivery, Sup~ortServices Service Level Agreements)

Formal Emplovee Engagement and Trade Union Consultation

Progressing phase 3 of the process of establishing the cultural NPDO would see the formal I instigation of employee engagement and trade union formal consultation in accordance with the terms of the Transfer of Undertakings (Protection of Employment) Regulations 1982 I (TUPE) in respect of employees who currently deliver the in scope services and who are likely to be in scope for transfer under the TUPE Regulations.

Support Services

In order to achieve a seamless transition to the NPDO the outline business plan developed to date by the project team during phase 2, reflects the need to maintain continuity and stability

through the continuation of existing support services by the Council through a series of initial 1 service level agreements in the following broad areas:-

financial services & ICT (similar in scope to current SLA between Council and NLL); PR, marketing and web development; grounds maintenance; legal services; miscellaneous management support (public protection, NEC, emergency planning, performance reporting, project management (e.g. design projects), procurement etc); HR; equality and diversity; property services; and

10 0 training and development.

The above list is by no means exhaustive but is indicative of the approach proposed.

The terms of such agreements have already begun to be worked up during phase 2 (business planning) in order to inform the financial projections for the NPDO.

Committee is requested to note that, at this stage, it is proposed, following discussion with colleagues in Environmental Services and through investigation of the benefits, that the transfer of the building, cleaning and caretaking employees working within the in scope facilities be formally explored during phase 3 along with the appropriate employees in the leisure catering operation. This potentially affects 113.1 FTE in building cleaning and caretaking and 34.63 FTE in leisure catering.

Draft Operatina Structure for Proposed NPDO

It would be premature to have given significant consideration to the staffing structure for the proposed NPDO at this stage in the process, however, the following broad approach is proposed:-

0 a move away from heavily structured silos based on professional disciplines at a senior management level without compromising front line services; and approach to senior operating manager, finance manager, legal services manager/ company secretary role being fulfilled by officers within the Council (as is the case in at least one other similar arms length organisation recently established) as a more efficient approach than establishing costly additionalhew senior posts within the NPDO dedicated purely to the NPDO.

The approach outlined above, see Appendix 2 for draft operating structure diagram, is firstly about building an effective, efficient relationship with the Council and secondly releasing the potential of managers currently working within the in scope services (with appropriate support via training and development) to grow and develop within an organisational culture and structure which actively fosters cross sector collaboration to develop the quality of services and their income generating potential. During phase 3, further exploration of the approach to senior management arrangements within the proposed NPDO will be developed and proposals reported to committee mid way through phase 3 in the next Committee cycle.

3.2.10 Transition Roadmap

The Shadow Board

In line with the suggested approach to the legal vehicle, it is proposed that, in order to achieve the timescale for the establishment of the NPDO by lstApril 2013, that the Head of Community Information and Learning and Head of Legal Services be tasked with taking the necessary steps to establish the NPDO and facilitate the appointment of a shadow board which will progress the key tasks outlined in the transition roadmap, a copy of which is included in Appendix 3, the most significant elements of which are:-

0 enter into formal engagement under TUPE Regulations with the trade unions and staff potentially affected by the proposed transfer of services to the NPDO; 0 continue work on development of draft business plan from the perspective of the NPDO; 0 complete draft service level agreements with appropriate council services for the provision of services to and by the NPDO; 0 finalise, for approval by the NPDO and the Council, in discussion between the shadow board and the Council, the services agreement and funding agreement for the operational management of the services and facilities to be transferred to the NPDO;

11 0 apply for and secure charitable status from the Office of the Scottish Charity Regulator (0S CR) ; 0 apply for and secure admission to the Strathclyde Pension Fund for NPDO as an admitted body; 0 finalise memorandum and articles of association for NPDO; 0 finalise key contractual documentation in relation to the establishment of the NPDO and the associated transfer agreement; 0 prepare the legal documentation to establish a trading subsidiary, for the NPDO; and

0 finalise leases; and 0 prepare any additional contracts and agreements required.

It should be noted that, in matters where there is a conflict of interest between the Council and the NPDO, legal advisers, will be commissioned to provide independent advice to the NPDO and the shadow board in respect of such matters as recommended by OSCR.

4. CORPORATE CONSIDERATIONS

4.1 Financial lmdications

4.1.1 Risks

Emeraina Risks - Financial Savinas

During the phase 2 business planning phase the focus of the financial modelling changed and the need for the NPDO’s business plan, not just to drive out efficiencies via VAT and NNDR to the value of the original council efficiency savings target of f800K, but for that figure to potentially increase.

The potential new savings figure is based on an anticipated reduction of between 15% and 20% in the Council’s management fee to the proposed NPDO. This reflects the target sum for the Council overall reduction over financial years 2013/14 - 2015116. The NPDO will have to deliver significant savings over its first 3 years in operation and this will put pressure on the operating model and delivery structure as what will be put in place will require to be lean and this will have to be achieved against a historic backdrop of management structures in creative ,I services, libraries and community facilities having been reduced year on year during the Council’s previous efficiency programme. However, the risk of not proceeding outweighs this as it is imperative that the potential of NNDR savings be released. I

Onaoina Risks

I The project team has maintained and regularly reviewed a risk register during phase 1 and 2 i of this project. The key risks at this stage in the process, outlined within this register are:-

0 loss of benefits of economies of scale gleaned by being part of NLC; the robustness of indirect costs data (the challenge of disentangling back office/support I services costs); 0 condition of assets; and 0 future budget savings.

The risk register will be comprehensively reviewed if approval is obtained to proceed to phase 3.

12 4.2 Legal Implications

Progressing the establishment of an NPDO to operate the council’s cultural and associated services will require the Head of Legal Services and her team, with independent legal advice where appropriate] to progress the following:- * establish a shadow board for the NPDO; 0 formalise all legal documentation e.g. services agreement] transfer agreement] leases etc; 0 apply for and gain charitable status for NPDO; and 0 finalise memorandum and articles of association.

In addition, although it is proposed to appoint external legal advisers to initially act for the shadow board of the NPDO during the transition phase, thereafter it is envisaged that the NPDO, once formally established, will appoint the Council to act as it’s agent in relation to the provision of its legal service and the Head of Legal Services will provide this service.

4.3 Human Resource Implications

During the business planning phase, an exercise was completed whereby the personnel team in learning and leisure services reviewed contractual documentation for all of the employees within the in scope services at that point (not including employees of Environmental Services) in preparation for phase 3. No significant issues with contract documents were identified during this exercise.

The transition phase of the process is the most intensive, and certainly sensitive, in dealing with human resources matters.

Throughout the transition phase the Council, via it’s corporate and learning and leisure services HR resources, will be involved in:- * employee and TU consultation around the TUPE implications of the establishment of the NPDO; 0 further checking of contractual documentation; job evaluation of any new/reconfigured posts as required as a result of the establishment of the NPDO; and 0 achieving admitted body status to the Strathclyde Pension Fund for the NPDO.

4.4 Eaualitv Implications

As a stage 1 equality impact assessment was completed at the options appraisal stage, and a stage 2 assessment will be required, it is anticipated that in moving into phase 3, which includes extensive employee consultation and stakeholder engagement, that this will inform the completion of the stage 2 assessment as it will see further engagement with employees and stakeholders identified at stage 1 as being required to identify potential equality impacts of the proposal on people with protected characteristics.

5. RECOMMENDATIONS

The Policy and Resources Committee is recommended to approve the following action:-

(i) that the Head of Community Information and Learning progress the formation of a charitable organisation to manage and operate the in scope cultural and associated services excluding country parks and Kilbowie Outdoor Centre;

13 (ii) that, in accordance with recommendation (i), the Head of Legal Services, the Head of Financial Services, the Head of Human Resources and the Head of Community Information and Learning be authorised to:- - finalise leases - develop managementhervices and funding agreement for the management of the in scope services and facilities - progress obtaining charitable status for NPDO - achieve admission to the Strathclyde Pension Fund for the NPDO as an admitted body;

(iii) that the Head of Community Information and Learning and Head of Human Resources be authorised to enter into formal engagement (under Transfer of Undertakings (Protection of Employment) Regulations 1982 (TUPE) conditions) with the trade unions and the staff presently employed within the in scope services potentially affected by the proposed transfer to the NPDO;

(iv) that the Head of Legal Services be authorised to:- - establish a ‘Teckal’ compliant structure for the NPDO; - establish a shadow board for the NPDO, seeking nominations for 5 Independent Directors; - complete the final drafts of the memorandum and articles of association of the NPDO; - prepare documentation in relation to the establishment of the NPDO and the associated transfer agreement; - prepare the legal documentation to establish a trading subsidiary for the NPDO; - appoint legal advisors to provide independent advice to the NPDO and the shadow board;

(v) that the working title at present for the NPDO be ‘Culture NL’; and

(vi) the appointment of 6 Partner Directors.

Head of Community Information

14 Cultural NPDO ADDendiX 1

Facilities to be Directlv ODerated bv Promsed NPDO via a Lease Aareement

Creative Services Facilities 0 Motherwell Concert Hall & Theatre 0 Sir John Wilson Town Hall 0 Bellshill Cultural Centre 0 Beetroot Recording Studio 0 Wishaw Musicworks 0 Pather Artworks 0 Summerlee Museum of Scottish Industrial Life 0 Summerlee Photomedia Studio North Lanarkshire Heritage Centre (homes the Council's Archive) 0 Shotts, Colzium, Cumbernauld and Kilsyth Local Museums

0 Bellshill Cultural Centre 0 Eastfield Library 0 Newarthill Library 0 Chapelhall Library 0 Kilsyth Library 0 New Stevenston Library 0 Chryston Library 0 Wishaw library 0 Shotts Library 0 Cleland Library 0 Old Monkland Library 0 Newmains Library 0 Library 0 Motherwell Library 0 Viewpark Library 0 Condorrat Library 0 Petersburn Library 0 Moodiesburn Library 0 Craigneuk Library 0 Abronhill Library 0 Airdrie Library 0 Cumbernauld Library 0 Stepps Library

Community Facilities

0 Abronhill Community Facility Larch Road Cumbernauld Glasgow G67 3AZ

0 Allanton Senior Citizens Centre Allanton Road Shotts ML7 5AX

0 Andrew Hamilton Senior Citizens Centre Leven Terrace Motherwell ML1 4DR

0 Auchinloch Hall 145 Langmuirhead Road Kirkintilloch Glasgow G66 5DL

0 Bargeddie Hall 612 Coatbridge Road Bargeddie Glasgow G69 7PJ

0 Beechbank Community Centre 77 Westermavisbank Avenue Airdrie ML6 OHE

0 Braehead Community Room Braehead Road Cumbernauld Glasgow

0 Burngreen Community Centre 13 Burngreen Kilsyth Glasgow G65 OHT

0 Burnhead Community Centre Burnhead Street Uddingston Glasgow G71 5AT

0 Colzium House Colzium Kilsyth Glasgow G65 OPY

0 Coshneuk Public Hall Coshneuk Road Millerston Glasgow G33 6JL

0 Cumbernauld New Town Hall Bron Way Cumbernauld

0 Calder Community Centre 35 Paddock Street Coatbridge ML5 4PG

0 Calderbank Community Hall 118 Main Street Calderbank Airdrie ML5 3LF

0 Caldercruix Hall 30 Progress Drive Caldercruix Airdrie ML6 7PU

0 Chapelhall Senior Citizens Day Centre 58 Lauchope Street Chapelhall Airdrie ML6 8SW

0 Chapelside Centre Waddell Street Airdrie ML6 6LH

0 Charlotte Toal Centre 8 Henderson Street Coatbridge ML5 1DB

0 Cleland Senior Citizens Centre 75 Main Street Cleland Motherwell ML1 5QR

0 Fallside Community Centre McCulloch Avenue, Fallside

0 Forgewood Community Centre Dinmont Cr, Motherwell, ML1 3TT

0 Four Isles Community Centre & Petersburn Library 1 Varnsdorf Way Airdrie ML6 8BS

0 Frank Ferguson Senior Citizens Centre 187 Motherwell Road Bellshill ML4 2JG

0 Garrell Vale Communi& Education Centre Hauah Road Kilsvth Glasaow G65 9PT

19/09/2012 1 Cultural NPDO Appendix 1

Corn mu n i ty Facili ties cont/d Gartcosh Hall Lochend Road Gartcosh Glasgow G69 8AB Gartlea Community Centre 48 Target Road Airdrie Community Centre 110 Main Street Glenboig Coatbridge ML5 3LF Glenmavis Community Hall 107 Coatbridge Road Glenmavis Airdrie ML6 ONJ Gowkthrapple Community Centre, Birkshaw Place, Wishaw ML2 OLG Greenfaulds Meeting Hall Lochinvar Road Cumbernauld Glasgow G67 4AR Harthill Community Facility Victoria Street Harthill Shotts ML7 5QE Harthill Senior Citizens Centre West Main Street Harthill Shotts ML7 5PU Hattonrigg Senior Citizens Centre Hattonrigg Road Bellshill ML4 1LG Holytown Community Facility Centre 22 Stevenston Street Motherwell ML1 4RG

0 Isa Money Community Centre Shields Drive Motherwell ML1 2LT

0 Janet Hamilton Community Centre Langloan St, Coatbridge, ML5 1HJ

0 Jerviston Community Centre Coalhall Avenue Motherwell ML1 4BU

0 Jim Foley Community Centre John St, Wishaw, ML2 7TG

0 Joe Mackay Community Centre Liberty Road Bellshill ML4 2EL 0 John McCormack Community Centre Motherwell Road Carfin Motherwell MLI 4EB 0 McAulay Centre 14 Rannoch Court Cumbernauld Glasgow G67 4LS 0 Michael Sherry Senior Citizens Centre, Main Street, Holytown, MLI 4TW 0 Mossend Senior Citizens Centre Hope Street Bellshill ML4 IQA 0 Mount Pleasant Community Centre 81 Main Street Chapelhall Airdrie ML6 8SB 0 Muirfield Community Facility Brown Road Cumbernauld Glasgow G67 1AA

0 Muirhead Public Hall 211 Cumbernauld Road Muirhead Glasgow G69 9ND

0 Netherton Community Centre Old Manse Road Wishaw ML2 OEN 0 New Stevenston Community Centre 76-82 Jerviston Street New Stevenston MoL ,erwell ML1 4JS 0 Newarthill Community Facility Centre High Street Newarthill Motherwell MLI 5JU 0 Old Monkland Community Centre & Library 23 Marshall Street Coatbridge ML5 5PG 0 Overtown Community Centre Main Street Overtown Wishaw ML2 OQU 0 Pat Cullinan Community Centre 200 Logans Road Motherwell ML1 3PB 0 Pather Community Centre Caledonian Road Wishaw ML2 OHZ 0 Pollock Hall 104A Maree Drive Cumbernauld Glasgow G67 4LP 0 Rochsoles Community Centre (Formerly Thrashbush Pavilion), Crowhill Cr, Airdrie ML6 6JL 0 Salsburgh Hall 52 Main Street Salsburgh Shotts ML7 4LW 0 Shawhead Community Centre 14 Berwick Street Coatbridge ML5 4NH 0 Shotts Community Facility Kirk Road Shotts ML7 5ET 0 Springfield Community Centre 95 Forrest Street Airdrie ML6 7BA 0 Springhill Senior Citizens Centre Springhill Road Shotts 0 Tannochside Senior Citizens Centre 2 Thorniewood Road Uddingston Glasgow G71 5QQ

0 The Forge Community Hall 3 Ben Lawers Drive Cumbernauld Glasgow G68 9ND 0 The Link Community Facility Bron Way Cumbernauld Glasgow G67 1EW 0 The Pivot Community Facility 1Glenmanor Road Moodiesburn Glasgow G69 ODL 0 Townhead Community Centre 41 Townhead Road Coatbridge ML5 2HD 0 Victoria Community Facility Queen Victoria Street Airdrie ML6 ODL 0 Viewpark Community Facility Old Edinburgh Road Uddingston Glasgow G71 6HL 0 Village Hall 45 The Wynd Cumbernauld Glasgow G67 2ST 0 Waterloo Memorial Hall 157 Wishaw Road Wishaw ML2 8EN 0 Watson Street O.A.P. Hut Watson Street Motherwell ML1 1YP 0 Welfare Hall 205 Main Street Plains Airdrie ML6 7SQ

0 Westfield Community Hall 2A Westfield Drive Cumbernauld Glasgow- G68 9HJ Westray Community Room 13 Westray Court Cumbernauld Glasgow G67 1NW

18/09/2012 2 Cultural NPDO Amendix 1

Corn mu nity Facilities cont/d Community Centre 35 Easton Place Coatbridge ML5 4EW Wishawhill Community Hall Low Main Street Wishaw Souterhouse Community Centre Croy Road Coatbridge ML5 5JG . Wallbrae Road Community Rooms 23A Wallbrae Road Cumbernauld Glasgow G67 2PD

18/09/2012 3 Cultural NPDO ApDendix 2

Draft Operating Framework r Events & Programming Learning Facilities Business Development Support Services

I I

Responsible for: Responsible for: Responsible for: Responsible for: Responsible for:

Event Management Museums Learning Country Parks Marketing ’HR Programme Technical Support Kilbowie Outdoor Centre Fundraising Finance Arts Development Programming Venues Sales/Income Generation Service Level Agreements Children’spou th Ii bra ry Outreach Events/Activities Services Community Facilities Digita I/We b/Socia I Media Policies & Procedures

Learning Through Technology Play Services Media Legal & Company Secretary Responsibilities Lending and Outside Services Maintenance Customer Services (Libraries) (Complaints/Comments) Service Improvement Caretaking and Cleaning Archives & Local Studies Operation Research/Market Analysis Administrative Systems

Local Studies Catering Operation ICT Petformance Management Training & Development

1 Version: 2 Date: 18thSeptember 2012 Cultural NPDO Appendix 3

North Lanarkshire Council

Transition Roadmap

Version: 1 Date: 6thJuly 2012

(Based on Heritage Change programme; New Ways of Working: Trust Implementation Guidance Ref 1.4) Cultural NPDO Appendix 3

Transition RoadmaD

Project Plan for Transfer of In Scope Services to a New NPDO

Agree services/funding agreement 3ctober 2012 HeadHead Ofof Fs/LS October 2012 Review responses to advert for board members; confirm open evening; I I HeadU--A of-c LsI r 9ctober 2012 establish selection panel I Confirm management structure/identify new posts if required and seek Head of CI&L/ Novembernvnmhnr 2012 committee approval Head of HR Confirm support service requirements Head of CI&L November 2012

Conduct building surveys Head of D&PS June 2012 Corn plete Programme of meetings for shadow board including briefing on duties Head of CI&L/ November 2012 and responsibilities Head of LS Project Prepare schedules for project documents August 2012 compiete Manager Provision of information to pension team to calculate employer‘s LLS Personnel September 2012 contribution for pension scheme Consider any ‘special funds‘, ’restricted funds’, permanent endowment Head of Fs September 2012 fund issues Incorporate company/company secretarial requirements Head of LS December 2012

Prepare business plan and services delivery plan ManagerProject OctoberSeptember/ 2012 Outline prepared Consider performance monitoring regime/KPIs Project November 2012 Manager Heads of October/ Approve project documents ‘FkEf! November 2012 Head of CI&L/ October/ Approve business plan and service delivery plan Head of LS November 2012

Prepare application to Charity Commission Head Of December 2012 Head ofclaL/ LS Cultural NPDO Aopendix 3

Approve admissions agreement Head of HR December 2012 Set up financial management systems Head of FS January 2013 Head of CI&L/ January/ Appoint new staff (if required) Head of HR February 2013 Appoint auditors Head of FS February 2013 Registration for VAT/Data Protection Head of FS February 2013 - Set up support services February 2013 HeadProject Of Mgr

Prepare financial procedures/adopt relevant operational policies Head Of Fs/ February 2013 Project Mgr - Confirm member final approval to project documentation and resolution Head of February 2013 of all outstanding issues Formal approval to transfer by Council CMT November 2012 Formal appointment of shadow board Head of LS November 2012 Formal approval to transfer by board Head of LS November 2012

Execution of documents by both parties Head of LS March 2013 Heads of Business transfer CI&L/LS/HR/ March 2013 FS Application for rate relief by NPDO Head of FS February 2013 Secure charitable status for NPDO Head of LS February 2013

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