Agenda item

STRATEGIC BUSINESS CASE - COMMERCIALISATION INITIATIVES

Anthony Payne (Strategic Director for Place) will submit a report on the strategic business case for implementing a co-ordinated commercialisation project across the Council.

 

The report will seek delegated authority for the Strategic Director for Place to approve the Commercial Strategy, in consultation with the Cabinet Member for Finance.

 

Background papers to this report can be accessed at the Council’s website Council and Democracy/Councillors and Committees/Library/Cabinet background papers or using the following hyperlink –

http://tinyurl.com/q3d6bmh

 

The outcome of the consideration by members of the Working and Your Plymouth Scrutiny Panels on 28 August 2014 will also be submitted. Please see the recommendations attached to item 7 above.

Minutes:

Anthony Payne (Strategic Director for Place) submitted a report on the strategic business case, including an options appraisal, for implementing a co-ordinated commercialisation project across the Council.

 

The report indicated that a specific breakdown of exactly how and from where the net additional income target would be achieved, would be developed from the detailed work which would follow across a diverse range of activities as part of the project.

 

Cabinet Members were advised that the proposed project would enable the Council to operate more commercially by - 

 

(a)

developing a commercial strategy with principles, guidelines, controls and protocols including how benefits would be captured and used;

(b)

increasing the commercial capability of the Council;

(c)

increasing commercial awareness throughout the Council thereby increasing opportunities;

(d) 

instilling commercial principles in management;

(e) 

considering and deciding the optimum method of delivery, for example an alternative service delivery vehicle and/or delivery within a service area;

(f)

ensuring services were able to compete commercially by considering and understanding the market and costs;

(g)

identifying commercial opportunities through the use of consultants and staff;

(h)

implementing the commercial opportunities at a strategic, tactical or operational level.

 

The report indicated that the project aimed to increase financial benefit by £3.744m in 2016/17, and £6.666m in total over the three year period with an initial investment of £180k to £200k for additional specialist staff to be funded from the transformation budget, prior to these costs subsequently being funded from the commercialisation income generated.

 

Councillor Lowry (Cabinet Member for Finance) introduced the proposals and Simon Dale (Interim Assistant Director for Street Services) attended the meeting for this item.    

 

Councillor Evans (Council Leader) referred to the draft minute following the joint scrutiny review that had been held by the Working and Your Plymouth Panels on 28 August 2014 which supported the recommendations within the proposed business case subject to Cabinet reconsidering the delegation of decisions to officers and asking Cabinet to consider the commercialisation strategy at Cabinet, in the interests of openness and transparency.     

 

Alternative options considered and reasons for the decision –

 

As set out in the report.

 

Agreed -

 

(1)

the strategic business case for commercialisation with the option 3 coordinated commercialisation project as the preferred option to be taken forward for implementation, subject to the amendment agreed in (2) below);

 

(2)

that the Council’s Commercial Strategy is developed and approved in accordance with the Leader’s scheme of delegation;

 

(3)

the initial work streams and areas for commercialisation investigation as set out in the Commercialisation Work Stream Summary at section 9.3 of the strategic business case;

 

(4)

that the project will aim to develop further work streams throughout the period of transformation in order to bridge the budget deficit;

 

(5) 

the key principles for capturing financial benefits from commercialisation and the scope of their coverage as set out in the Financial Commercialisation Paper at section 9.1 of the strategic business case, these being in summary that:

 

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commercialisation covers both expenditure (for example contract renewals and demand management) and income (for example increased net surplus/profit from existing or new income streams) and may arise as a result of Council working alone or with partners;

 

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areas of activity include advertising, sales of goods and services, sponsorship and rentals (from existing assets or capital acquisitions);

 

?

commercialisation excludes contributions, grants, donations, ring-fenced income and social care income from service users;

 

?

unplanned and unforeseen ‘windfalls’ or ‘one offs’ relating to increased income or cost reductions, irrespective of whether they come about from commercial activity or business as usual must be declared in the monitoring for the Corporate Management Team (CMT) to discuss;

 

?

CMT and the Transformation Programme Board will agree and own these corporate commercial principles;

 

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commercialisation may include cost reductions or increased income in commercial activities or a combination of both in order to improve net position; 

 

?

net commercialisation gains, over and above existing approved budgets and agreed budget actions will be captured, including new activities and expansion of and charging for existing activities;

 

?

commercialisation may occur as an ongoing benefit or a one off event;

 

?

any existing and agreed budget action plans to reduce cost or increase net income contained in current budget delivery plans will not be captured;

 

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commercialisation will apply to revenue, capital and external accounts where applicable;

 

?

any exceptions to the capturing of commercialisation benefits within Municipal Enterprise in the Growth, Assets and Municipal Enterprise programme must be agreed by CMT with a clear rationale.

 

Supporting documents: