Minutes of the Sixteenth Meeting of the Resources Committee held at 4.30pm on Tuesday 19 June 2012 in Room 614 at the Shiney Row Campus PRESENT:
Ms S Atkinson, Mr S Crake, Mr A Carter, Mr R Edmonds, Mrs A Lawson-McLean, Ms A O’Donoghue
Mr D Howells, Ms S Duncan, Mr N Harrett, Mrs J Ridley, Ms K Wade and Ms P Veitch (for item R/12/41)
Ms R Ferguson (Dickinson Dees)
APPOINTMENT OF CHAIR The Clerk invited the Committee to appoint a Chair in the absence of Ian Forster. Shirley Atkinson took the Chair and opened the meeting.
APOLOGIES FOR ABSENCE Apologies for absence were received from Mr I Forster.
MINUTES OF THE PREVIOUS MEETING OF 1 MAY 2012 The minutes were accepted as an accurate record.
MATTERS ARISING THEREFROM R/12/35 – Update on Change Strategy It was noted that the Principal’s letter to MPs had not yet been shared with Committee Members. This would be emailed everyone as soon as possible.
CONTRACT FOR SECURITY SERVICES The Vice Principal Finance explained that as the report was seeking approval of a contract for services, it was within the Committee’s authority to approve the awarding of the contract rather than making a recommendation to the Board as requested in the report. The Procurement Director explained that the existing contract for the provision of security services was due to expire in July 2012. A procurement exercise had been undertaken with 10 suppliers submitting a pre-qualification questionnaire, this was used to assess their suitability and the 3 top scoring suppliers were invited to submit a tender. The tender from Protector Group was considered to offer best value for money and also provides an annual cost reduction in the region of £7.5k.
In response to a question from Governors it was noted that a meeting had taken place with the current supplier to explain the position and give feedback on the tender application. The Committee: noted the contents of the report and gave approval for the contract for security services to be awarded to Protector Group Ltd in the sum of £105,932 per annum including VAT for a 3 year contract (with the option to extend for a further year). Ms K Wade and Ms P Veitch left the meeting at 4.45pm R/12/42
BUSINESS PLAN – PHASE 1 SHARED SERVICES REPORT The Principal set the context of the report explaining that this is the first time that a true shared services project of this kind has been developed and it was the objective of the North East Shared Services Partnership to produce a template for the Further Education sector. The Business Plan has been significantly scaled back from the intial proposals in order to minimise the risk to the College. There would be two phases in delivering the business plan. Phase 1 would see the transfer of the Procurement Director into the Shared Services Company. This will enable the College to model the TUPE process. Phase 2 would see the transfer of the payroll team to the Shared Services Company and to offer a payroll service to one of the partner colleges initially. The related costs of these two phases (including any costs associated with winding up the company if required) were covered within the project, therefore there would be no financial risk to the College. Governors had agreed to the establishment of a wholly owned not for profit subsidiary company which was currently dormant. In order to move forward it was necessary to make this company ‘live’. During discussion Governors asked a number of questions and the following points were noted: • Legal advice has been sought throughout the project and lawyers were drawing up entry and exit processes and were developing due diligence for any new partners who wanted to join • In the event that the project being disbanded the 4 payroll employees would be transferred back to the College • The payroll service would be offered to two colleges initially as the other partners were tied into outsourced contracts. Savings will be increased as those partners join the shared service in due course. • It was intended to evaluate the impact and savings before moving forward with any other processes. • Clear boundaries would need to be set to protect data security when developing new service areas such as MIS in future • The Business Plan would be shared with all four partners
As it will be employing staff the Company would need to establish a full suite of HR policies and procedures The College Principals were the Directors during the implementation stage, but it was envisaged that Senior Managers would take over the Director roles going forward.
There was some discussion about the liabilities and risks of the director’s role for Senior Managers. Legal advice was to be provided on whether the College should have governor representation on the Company Board. The Committee: i. reviewed and commented on the report as set out above; ii. recommended the Annual Business Plan for North East Shared Services Ltd to the Board for approval iii. recommended that the Board approve the activation of the Shared Services Company. R/12/43
BUDGETARY CONTROL STATEMENTS The Vice Principal Finance presented a report setting out the budgetary control statements for the seven months ended 30 April 2012. It was noted that the income and expenditure account was showing an operating surplus of £764k after providing £270k for potential contingencies. In summary, overall income and expenditure were below the set budget and overall pay expenditure was in line with the set budget. The significant variances were outlined in full in the commentary attached as Annex A to the submitted report. The Vice Principal gave an update on the current enrolment figures, in summary it was noted that: • 16-18 learner responsive enrolments had caught up thus reflecting the efforts made by the College to close the learner number gap compared with 2010/11 • management have a delivery plan in place to achieve the target for 19+ provision and were monitoring the situation closely • the College remained on course deliver £1.2m of 16-18 apprenticeships against a funded target of £640k. Governors asked a number of questions and the following points were noted: • The current problems within the euro zone would have little impact this year however, in the longer term it was expected that changes in funding regimes would result in cuts to all funding streams. In terms of 16-18 funding it was expected that the College would need to deliver to larger numbers for less income. International recruitment has been affected and position surrounding HE was still uncertain.
There was some ESF and Work Programme funding to be accessed however expenditure outweighed the income in delivering these programmes as payments were based on outputs. The College has a strategic target of achieving an underlying surplus which is 5% of income and management are confident that this will be achieved.
The Committee received the budgetary control statements noting that the College was doing all that it could to address the reduction in student numbers. R/12/44
THREEE YEAR FINANCIAL FORECAST AND ANNUAL BUDGET 2012/2013 The Vice Principal Finance presented the report explaining that there were two aspects to the report. The 2012/13 annual budget was essentially year one of the three year financial forecast. The only difference being that Learner Support Funds (LSF) were included in the annual budget for reporting purposes, but excluded from the three year financial forecast. The Vice Principal then took the Committee through the key movements between the 2012/13 budget compared with the most recent 2011/12 budget forecast. He outlined the key implications contained within the three year financial forecast detailed in Annexes A and B respectively. It was noted that the College was taking a cautious approach to the budget with prudent assumptions which would put it in a strong position to withstand the financial hardships affecting the sector and generate operating surpluses over the course of the next three years. In response to questions from Governors it was noted that: • the capital expenditure of £30.8m was based on the investment in Bede and Hylton. However, if investment in a City Centre property was financially beneficial then a revision would need be made • the College’s financial health is expected to be outstanding at 31 July 2012 and to remain in at least good financial health throughout the forecast period as capital spending will affect the rating however, it would be expected to return to outstanding following completion of the Estates Strategy The Committee: i.
agreed to recommend the three year financial forecast and the 2012/13 annual budget to the Board for approval ii. requested that commentary be provided on the underlying operating surplus position over the course of the forecast period Mrs A Lawson-McLean declared an interest in the next item 4
PARTNERSHIP ARRANGEMENTS TERMLY REPORT Confidential The Committee deemed the report confidential from public scrutiny as it contains commercially sensitive information.
ESTATES UPDATE The Vice Principal Finance gave a verbal update advising that, in relation to Newcastle Road, the College was working towards a completion date of 31 July. In relation to the proposed development of Bede, it was noted that a planning application will be submitted in early July and there will be a public consultation as part of this process. The Principal advised that a press release would be sent out to show what was being planned. Work at Hylton is expected to begin in July. It was noted that the development of Bede and Hylton has been factored into the financial plan, and alongside this the College was continuing to investigate the option of leasing a City Centre premises from a developer. Discussions would continue up until the point that the Bede and Hylton option becomes irreversible. However, this option as it currently stands at present is neither affordable or deliverable. The Committee: i. ii.
received the update requested that a progress report together with a timeline be brought to the Board.
ANY OTHER BUSINESS BANK COVENANTS Confidential The Committee deemed the report confidential from public scrutiny as it contains sensitive financial information.
Mr A Carter (Staff Governor) withdrew from the meeting at 6.10pm
UPDATE ON CHANGE STRATEGY
CONFIDENTIAL It was agreed to deem the minute confidential from public scrutiny as it contains sensitive information. R/12/49
DATE, TIME AND VENUE OF NEXT MEETING The next meeting will take place on Tuesday 2 October 2012 at 4.30pm in Room 614, Shiney Row Centre.
The meeting closed at 6.25pm