Cabinet - Future Delivery Model for Bereavement Services 15th October 201318/11/2013
CHESHIRE EAST COUNCIL
Date of Meeting: 15th October 2013
Report of: Head of Environmental Protection and Enhancement
Subject/Title: Future Delivery Model for Bereavement Services
(Forward Plan Ref: 13/14-32)
Portfolio Holder: Cllr David Topping, Environment
1.0 Report Summary
1.1 The report seeks Cabinet’s approval to progress with the registration of a
Wholly Owned Company (WOC) limited by shares to act as the Council’s agent
in managing the provision of Bereavement Services for the Council whilst work
continues to develop the Business Case for future implementation.
1.2 The catalyst for change is driven by the need to invest in our buildings and
services and to improve the quality of this service for local residents. This
exciting opportunity will ensure that our services remain sustainable and able to
provide high quality services in a dignified and sensitive manner for our local
It is recommended that
2.1 Cabinet approve the formation of a new wholly owned company that is limited
by shares, benefiting from the Teckal exemption principles as the future
management model for delivery of Bereavement Services.
2.2 Cabinet give delegated authority to the Head of Environmental Protection and
Enhancement, the Borough Solicitor and the Section 151 Officer (and officers
that are devolved those powers) to commence the detailed implementation of
the WOC, (including, but not limited to, identifying the optimum procurement
route) in consultation with the Portfolio Holder for Environment and is subject to
the corporate project quality assurance process governed by the Executive
Monitoring Board (EMB) to ensure that the project is reviewed prior to any
2.3 Following the outcome of the actions contained within 2.2 above, Cabinet agree
to the establishment of a Board of Directors for the company and the Portfolio
Holder for Environment work with the Leader of the Council and Chief
Executive to define the appointments of the Non Executive Directors,
Agenda Item 14
nominating three Board Members to act as the Chairman, Vice Chairman and
Director on the new Company Board of Directors.
3.0 Reasons for Recommendations
3.1 The Council has realised the need to change the way future services are
provided in order to create opportunities for innovation and provide service
efficiencies. As a result, the Council has determined to take a more
3.2 The aspirations to deliver services and redefine our role in core place-based
services are set out in the Three Year Plan. The development of a new
delivery model for Bereavement Services forms part of that major Change
4.0 Scope of Services for the New Delivery Model
4.1 Bereavement Services offer burial, cremation, memorial and bereavement
support and currently provide a high quality, professional, caring and sensitive
service. The service is responsible for two crematoria sited at Macclesfield
and Crewe, and eleven cemeteries located within the boundaries of Cheshire
East and the maintenance of the closed churchyards.
4.2 The Policy Development Group (PDG) considered various different options for
the future delivery of this service. These included
Continued In House Delivery
Outsourcing to a Private Contractor
Joint Venture Agreement
Wholly Owned Company
4.3 PDG concluded that a WOC would offer one of the quickest means of
delivering change, promoting cost efficiencies and effectiveness whilst retaining
control of a sensitive service area and managing the reputational risks
associated with service delivery. It would also improve the speed of decision
making and allow staff to develop and implement their entrepreneurial skills.
4.4 Whilst the Council would remain in control of the Company, the service would
be able to operate with greater autonomy and pursue other innovative and
creative opportunities that would otherwise be difficult for the service to secure
in its current form.
4.5 The preferred legal solution for this WOC is a company that is limited by shares
and this model is also being adopted for other new delivery vehicles within the
Major Change Programme.
4.6 The Project is being presented to EMB on the 31
October and will be
Governed in accordance with the corporate project quality assurance process.
5.0 Business Case - Why the project is needed?
5.1 The operating model has historically proved effective although the changing
operating environment and customer expectations mean that constraints do
exist which can hamper performance and innovation. In recent years the
service has also suffered from a lack of investment whilst facilities in
neighbouring authorities have benefited from improvements in
facilities/services. A private new facility will shortly be built in Northwich
providing new and modern facilities and a broader range of services.
5.2 In reviewing the options, the focus remains on identifying a means of providing
the service in a way which creates greater flexibility, is more commercially
focused and yet retains and enhances existing relationships with local
communities and community/voluntary and charitable groups.
5.3 There is a need to achieve best value for the services that the Council directly
provides and reduce net operating costs wherever possible, whilst at the same
time maintaining the best possible service for its residents in line with the
Council’s three year plan.
5.4 It is envisaged that there will be significant business development opportunities
arising from having a trading arm and the income from the Company could
either be reinvested in the company (with shareholder agreement) or shared
with employees as part of a profit sharing agreement).
5.5 It is also anticipated that a variety of further benefits such as local employment
opportunities and investment within local communities will be generated by the
creation of a WOC.
5.6 Without direct intervention, we anticipate service standards and service users
will decline as the continuing financial and operating constraints impact on the
service over the coming years.
5.7 On 4
February 2013, the Council announced its three year plan, which
consists of 29 Major Change Programmes covering 8 key priorities. The three
year plan identifies the core purpose of the Council, reflects the changing role
of local government, responds positively to the challenge of major funding
reductions, and is in line with policy changes at both national and local levels.
The Change Programme is a significant undertaking by the Council reflecting
the need to ensure that we provide the right service that is value for money.
This project is in line with the Council’s three year plan: Priority six: Redefining
the Council role in core place-based services and also the Major Change
Programme 6.2“Developing new delivery model for Streetscape and
Moving to a wholly owned company model with Teckal exemption offers the
The continued provision of a sensitive and dignified service
which is designed to help meet the needs of the individual.
Aligns with the Council’s objective and ambition to invest in
innovative ways to deliver services and to be a commissioning
Ability to operate under commercial terms and greater autonomy
for the services
Retention of jobs within the local economy.
Benefits of improvements in service delivery are retained by the
service, Council or WOC not shared with private sector.
Core Council work can legitimately be devolved without a
lengthy procurement exercise being required – benefit from
Opportunities for co-ownership with other Councils and a Teckal
exempt model will provide opportunities for shared delivery
Ability to generate surpluses to reinvest in the growth of the
business or pass back to the Council as dividends
Implementation of different terms and conditions for staff thus
potential reduction in costs to the Council.
Ability to influence and drive the direction of the service and
Incentivisation of the team to drive the business forward.
Opportunity to develop a new culture/brand
Opportunities to reduce the core cost of the service
5.9 Benefits realisation
Anticipated net benefits will start to be realised in 2014/15 increasing
by approximately £5k - £10k a year until year 5. This project is
anticipated to deliver net benefits of £261k, spread over the initial 5
year period, enabling the Council to continue to deliver Bereavement
Services, while delivering best value to its residents.
This includes incremental savings on corporate costs of 5% each year
for years 2 - 4.
6.0 Wards Affected
6.1 All Wards are affected.
7.0 Local Ward Members
7.1 All local Ward Members.
8.0 Policy Implications
8.1 The project is identified in the Council’s Three Year Plan as part of the major
Change Programme to re-define the Council’s role in core place-based
9.0 Financial Implications
9.1 The creation of the new legal entity should produce benefits, spread over the
initial 5 year period, as shown in the table below.
Net benefits / (Costs) 261
Payback 2.89 years
9.2 This assumes that capital expenditure is incurred by Cheshire East Council
(CEC) to ensure the cremators are replaced during 2013-14 and that the Crewe
crematorium refurbishment scheme is taken forward.
9.3 The new company will provide Bereavement Services on behalf of CEC but all
“existing” income streams will go directly to CEC.
10.0 Legal Implications
10.1 The services provided by the bereavement service are Part B services for the
purposes of the Public Contracts Regulations 2006. A contract to provide such
services does not have to comply with the full public procurement regime
required by those regulations. However, case law has established that the
Council would still be liable to ensure that the so-called treaty obligations (e.g.
transparency and non-discrimination) are complied with. It is generally felt that
the best way of ensuring that those duties are discharged is to carry out a full
public procurement exercise. Were the Council to carry out a full public
procurement exercise, then unless the Company was able to take advantage of
the Teckal exemption, the Council could only award a contract to the Company
if the Company was the successful tenderer.
10.2 However, the treaty obligations only apply if the service concerned was one,
the procurement of which would be likely to attract interest from undertakings
based in other member states. In practice, most people like to be buried close
to where they or other family members live which suggests that cremation and
cemetery services are not services that would be likely to attract interest from
undertakings in other member states. If this is the case, the question of
whether or not the Company qualifies for the Teckal exemption is irrelevant.
10.3 To qualify for the Teckal exemption, the Company must have no private sector
ownership and provide at least 90% of its services to the public sector.
10.4 If the Council were to transfer the provision of the service to the Company this
would result in the Company providing services to funeral directors and
members of the public; thereby losing the Teckal exemption. Of course, such a
transfer would not require the Teckal exemption in the circumstances set out in
10.5 Were the Council to award the Company a contract to manage/operate the
facilities on behalf of the Council (such that, for example, fees were payable to
the Council and not to the Company) such a contract could be structured to be
10.6 The award of such a contract would trigger a TUPE transfer and both the
Council and the Company would need to be mindful of the need to inform and
consult those engaged in providing the service as to the manner in which they
would be affected by the transfer.
10.7 The Council has power to award such a contract under statute including Part 1
Chapter 1 the Localism Act 2011 and s111 Local Government Act 1972.
11.0 Risk Management
11.1 The risks associated with this Project are captured in the Risk Log and will be
reviewed and challenged at EMB.
11.2 There is one major risk to the Council that needs to be noted at this stage and it
relates to the construction of a new private crematorium in Northwich, which,
will be managed by Westerleigh Group LTD. It will principally serve the old
Vale Royal area and may impact on funerals from Winsford and Middlewich.
11.3 To help mitigate a wider impact, the Council should undertake further works to
the Crematoriums to ensure they can provide a similar standard of customer
service and reduce leakage from a wider catchment area. An allowance for this
should be included in the Asset Management Programme.
11.4 This risk would occur whether the service is transferred or remained in-house.
12.0 Access to Information
The background papers relating to this report can be inspected by contacting
the report writer:
Name: Kevin Melling
Designation: Head of Environmental Protection and Enhancement
Tel No: 86336