Business Services: Supporting Every Region by BSA

apprenticeships

key

commercial

efficiency community customer service airports

challenges

defence facilities

digital services

estate management

transparency

local government

development

data economy

expertise

devolution

cleaning

communities business processes

competition environmental flexibility economy

benefitting

sustainability

transformation

safety trust crosssector

government

jobs

maintain

schools

work

commission

transport

procurement

companies engaging

housing innovation communications

security

ICT

supply chain energy and utilities public services

effectiveness

equipment support

businesses

provide

roads

collaboration

strategic

construction

repair

people

facilities management employment

involving

invest

skills

regional planning

services

costeffective

best practice business

diversity

local enterprise partnerships

policy

infrastructure hospitals

employers

customers industry councils productivity

growth

service providers

choice

social value

advice

funding

health

performance

responsible

stakeholders

delivery

education

partners

training

every region in the UK

leading

power stations

invest

BUSINESS SERVICES: SUPPORTING EVERY REGION

CONTENTS Foreword 1 Executive Summary

1 ECONOMIC CONTRIBUTION OF THE SECTOR

Business services across the nation

Services that support UK business

Public service delivery

Encouraging UK trade and foreign investment

2 LOCAL AND REGIONAL IMPACT

Providing professional expertise to local authorities and enabling devolution 14

The Business Services Association 2nd Floor 130 Fleet Street London EC4A 2BH 020 7822 7420 www.bsa-org.com The Business Services Association Limited is registered in England No. 2834529 Registered office as above. Image credits Page 15: © GlobalStock / iStock Page 22: © Vinci Facilities and Peabody page 24: © Philip Bird LRPS CPAGB / Shutterstock.com Designed and typeset by Soapbox www.soapbox.co.uk

Creating social value in local areas

Building competitive business centres across the UK

Supporting regional industries

BSA full members

ABOUT THE BSA The BSA – the Business Services Association – is a policy and research organisation. It brings together all those who are interested in delivering efficient, flexible and cost‑effective service and infrastructure projects across the private and public sectors.

FOREWORD Suzanne Baxter BSA Chairman November 2015

This review, the eighth in the series by the BSA, aims to highlight the important work of BSA members across the private and public sectors and to illustrate the value the sector brings to the UK economy and wider society. As devolution tops the agenda for politicians and the public, this review focuses on both the national and the regional impact of the business services sector. It demonstrates how this sector contributes a significant amount to the UK economy, spread across regions to benefit all corners of the UK. It shows the social value brought by BSA members, on a national level and to the local communities they serve. Finally, this review reveals for the first time the role business service providers play in supporting competitive business hubs across the UK, enabling growth and boosting specialised regional industries. Perhaps more importantly, this year’s review also includes a wide variety of case studies from BSA members which tell the stories behind the statistics. These case studies show real people achieving tangible change and bringing true value to communities as a result. We, as an industry, are proud of what we do and the difference we make. We hope this review demonstrates why. I would like to thank all BSA members for their contributions to this report. I am also grateful to the team at the BSA for their work and support over the past year.

EXECUTIVE SUMMARY This year, the Business Services Association presents the Annual Review which goes beyond the facts and figures of the sector and looks to the regional and local impact of business services providers as they work with communities across the UK.

The sector accounts for

9.3 per cent

of gross value added to the economy

The sector employs

3.3 million people

The business services sector provides valuable services that support UK business, bringing expertise and efficiencies to areas such as facilities management, business process outsourcing and ICT. By working with external providers who supply supporting services, businesses can focus on their core functions, boosting productivity and enabling growth. This is true across the whole nation, with the business service providers working for businesses in every sector and in every region, consistently contributing between 6.7% and 12.4% of regional Gross Value Added (GVA).1 From supplying ICT support to financial services in Leeds to managing the estate of Durham University, handling baggage at Heathrow to cleaning business headquarters in Edinburgh, business services providers boost regional economies through their work and create the infrastructure and business support network which makes the UK attractive to inward investment.2 The sector also plays a key role in the delivery of public services, supporting central government and local authorities by running daily functions and by bringing innovation and expertise to frontline services. This work is particularly invaluable as the devolution agenda progresses, handing local governments more responsibilities and powers. Business services providers are able to share knowledge and competence across regions when delivering local contracts and work in partnership with authorities to ensure smooth operations as they evolve.3

70 per cent

of outsourced activity is for the private sector and

30 per cent

for the public sector

BSA full members work with

250,000 SMEs

through their supply chains

The work of the business services sector therefore touches every community and region, through business and public services, economically and socially. By providing services with experience and adapting them to local needs, the industry enables devolution and helps build competitive business centres across the country that support flourishing regional industries. Providers then create social value by generating local jobs, offering skills and training for employees, and giving back to the communities they serve through charitable projects, local investment, and by reducing environmental impact.

PART 1:

ECONOMIC CONTRIBUTION OF THE SECTOR BUSINESS SERVICES ACROSS THE NATION The outsourced and business services sector provides jobs, supports industries, and drives economic growth across the UK. More than 1 in 10 workers across the UK are employed by the sector and every region benefits from the jobs and wages generated.4

As the UK returns to economic growth, the business services sector plays a major role in supporting UK businesses, delivering public services efficiently and excellently, and encouraging UK trade and foreign investment. From Edinburgh to Exeter, Belfast to Bangor, the sector underpins local economies and enables regional growth and success. Potential for growth in the sector also remains high. In 2014, 55.5% of the £6.65 billion worth of outsourcing contracts agreed were first-time outsourcing deals, rising from 33.5% in 2013. In the local government sector, contract values have increased 15% year-on-year; energy and utilities contracts grew 187%; and the already significant IT outsourcing sector sustained 15% year-on-year growth.5 The whole of the UK benefits from business services growth. Unlike the financial services or manufacturing sectors which cluster by region, business services employment is dispersed evenly across the UK, meaning economic success and the benefits of a strong business services sector reach every region.6 1 Oxford Economics – The UK market for business services, The national, regional and constituency picture in 2013 – January 2015 2 UK Trade & Investment – UK trade performance across markets and sectors – February 2012 3 arvato UK – Local Government outsourcing hits five quarter high – April 2015 4 Oxford Economics – The UK market for business services, The national, regional and constituency picture in 2013 – January 2015 5 arvato UK – UK Quarterly Outsourcing Index – 2014 full year review – February 2015 6 Office of National Statistics – Annual estimates of employees from the Business Register and Employment Survey – September 2014

The business services sector includes a diverse range of services including facilities management, construction and infrastructure, business process outsourcing, ICT and digital services and managed public services. By outsourcing non-core functions, businesses are able to focus on their core activities and reduce business costs. For public sector organisations, the private sector offers opportunities to introduce competition to service delivery, to share innovations and new technology, and to drive efficiency and savings.

SERVICES THAT SUPPORT UK BUSINESS Business Process Outsourcing • Involves the outsourcing of a specific business function, such as payroll, finance, human resources, contact centres, and customer support services. • Contributes £7.7 billion in GVA to the economy annually.7 • Research has found that two-thirds of BPO clients outsource as a means to enable expansion in other areas, such as workforce, development of new products or to target overseas markets or new customer groups.8 • Outsourcing back office functions relieves pressure on existing staff so they can focus on their core activities, particularly in a time of growth. • Providers of BPO services are specialised in their field, can tailor delivery to the needs of the client organisation, and benefit from economies of scale as they serve multiple organisations. • Technological innovations are also more easily adopted by providers, increasing productivity and creating efficiency benefits which are passed on to the client organisation.9

Facilities Management • Services related to the day to day function or operation of a building, including estates and asset management, security, repairs and maintenance, grounds maintenance, cleaning and catering. • Contributes £18.3 billion in GVA to the economy annually. • Contracts may be for a specific service, or a multiservice contract for a range of related work. • Enables organisations to focus on their core purpose while tailoring offerings to best support their business and maintaining oversight of how services are run. • Specialised companies are able to bring expertise to each service and invest in staff for a more skilled and efficient workforce, creating a more productive environment and delivering savings. • Effective facilities management ensures the surroundings of a business align with their branding and purpose and can even offer new revenue streams, for example through catering outlets.

CASE STUDY: Transforming NS&I through a business‑led change programme Atos and National Savings and Investments When National Savings and Investments found itself losing customers and struggling to compete in the late 1990s, it turned to the private sector to lead a business-wide change. Outsourcing operations to Siemens IT Solutions and Services, now Atos, and working closely with them at a senior management and strategic level laid the foundations for an ongoing successful partnership. Through transformation of the back office processes and systems, productivity has been increased by 400%, customer service indicators have been dramatically improved, and the company has become more flexible and agile enabling it to launch new products and become competitive in a crowded marketplace. Overall, Atos achieved over 99% of its key performance indicators in timeliness and accuracy in 2012/13; developed new channels for service which brought in over £7.4bn in sales in 2011/12; and has delivered over £530 million in cost savings.

CASE STUDY: Pursuing high standards and quality in hospital cleaning Berendsen and Chesterfield Royal Hospital Serving a population of almost 420,000 people, Chesterfield Royal Hospital is one of the busiest hospitals in England. With national infection control guidelines and healthcare cleaning policies to comply with, the hospital upholds the highest standards of hygiene. To help achieve and maintain these standards, Berendsen provides the hospital with a complete, cost-effective microfibre mop solution including rental and laundering. Moving away from disposable mops for floor cleaning to Berendsen’s solution renting microfibre mop heads and equipment has delivered significant cost-savings and reduced environmental impact. Berendsen works closely with the hospital’s domestic, contract management and infection control teams to provide customer support tailored to their needs. This includes decontaminating mop heads to achieve high levels of infection control, and meeting agreed collection and delivery targets.

The business services sector plays a key role in the success of UK businesses as it creates productive and safe work environments, enables smooth and efficient operations, leads innovation and technological transformations, and builds the infrastructure keeping the UK connected.

CASE STUDY: Publishing UK census data for public use BT and the Office of National Statistics Following the 2011 census, the Office of National Statistics (ONS), set itself a goal to ensure the information it collected and published was open to the public and accessible for users, app developers and analysts. To help lead this data transformation, ONS worked with BT who created an innovative and scalable data management system to import, capture and link census data for back office users. They also developed an application programming interface to allow customers to import ONS data directly into apps that in turn provide innovative outputs and insights. With over 1.6TB of data made up of eight billion separate pieces of information recorded, BT and the ONS were able to launch the census data online in October 2013 where it has since been used by infrastructure planners, civil servants, local government offices, academics and more.

CASE STUDY: Bringing innovation and flexibility to highway services AECOM and the Midlands Highway Alliance Formed in 2007, the Midlands Highway Alliance was the first partnership of its kind in the UK, creating opportunities for 20 local councils to collaborate to reduce costs, generate efficiency improvements, and share best practice in the delivery of highway services. AECOM has worked with the Alliance since 2011, delivering infrastructure and environmental improvements across the region. Programmes have included a scheme with Leicestershire County Council to encourage residents to make sustainable travel choices which reduced car use by 22% and cut annual CO2 emissions by 475 tonnes and a project to transform the eastern approach to Loughborough in 2012 which successfully diverted 10,000 vehicles from residential streets and improved environmental conditions for residents. Through flexible and responsive working, AECOM and its supply partner Waterman have developed a programme of continuous improvement and delivered a total of £3.5 million in savings over the past four years.

ICT and Digital Services • ICT support includes traditional services such as network and communications maintenance, data centre services, and user support while digital services can encompass enabling digital transformation, taking services online, and hosting systems on the cloud. • Contributes £40.3 billion in GVA to the economy annually. • Enables organisations to become more efficient by adopting new technologies such as remote access and CRM systems support. These in turn facilitate improved quality, innovation, and flexible working. • Provides specialist maintenance and expertise, giving businesses confidence to incorporate ICT in strategic planning and take advantage of new advances. • Outsourced providers are better able to invest in skills and new developments to stay agile and offer clients the most beneficial products.

Construction and Infrastructure • Construction contracting includes the building and maintenance of buildings, roads, railways, utilities and specialised construction activities. • Contributes £46.6 billion in GVA to the economy annually. • Provides the infrastructure needed for UK transport, communications and utilities as well as homes, hospitals and schools, and workplaces, making the whole UK a connected and desirable place to do business. • Investment in infrastructure drives economic growth with research showing that every £1 invested in construction generates £2.84 in total economic activity due to the industry’s long and varied supply chain.10 • Sector expertise enables high quality construction and efficient supply chains, creating lasting national infrastructure and boosting business to small and medium enterprises (SMEs).11

PUBLIC SERVICE DELIVERY 30% of business services are delivered to public sector organisations and these offer the public sector opportunities for transformation and efficiency savings in a time of increasing budget pressure.12 For local authorities, who have experienced acute funding cuts, spending on outsourcing contracts has risen 8% year-on-year with the average contract length increasing concurrently from 58 months to 99 months.13 Growth in the local government sector is evidence of how contracting out business services plays a key role in strategies to maintain public services while reducing the UK deficit. Alongside facilities management, construction and infrastructure, business process outsourcing, and ICT and digital services contracts with the public sector, business services providers also deliver managed public services. These range from defence equipment support and maintenance to delivery of the Work Programme to get the long-term unemployed into work, to probation and rehabilitation services. Often, new service providers are able to bring expertise and innovation to their contracts. For example, Aramark have created a training coffee shop facility for youths in custody at Oakhill secure training centre which offers young offenders opportunities to learn practical skills and earn useful qualifications, aiding rehabilitation and reducing reoffending. By opening up competition to enable a mixed economy of public, private and voluntary sector providers to deliver frontline public services, central government, local authorities and other public bodies are able to meet rising demand and balance budgetary restrictions whilst providing sustainable quality services to citizens.

7 Oxford Economics – The UK market for business services, The national, regional and constituency picture in 2013 – January 2015 8 arvato UK – Open Outsourcing: Enabling Growth – June 2013 9 PwC – The hidden reality of payroll & HR administration costs – January 2011 10 UK Contractors Group – Construction in the UK Economy – October 2009 11 Institute for Government – Growth Commission – September 2013 12 Oxford Economics – The UK market for business services, The national, regional and constituency picture in 2013 – January 2015 13 arvato UK – Local Government outsourcing hits five quarter high – April 2015

CASE STUDY: OFFERING INNOVATIVE LEARNING OPPORTUNITIES TO YOUTH OFFENDERS ARAMARK AND OAKHILL SECURE TRAINING CENTRE

In eight months, 35 NVQ’s have been achieved by young offenders on the scheme

A new coffee shop initiative at Oakhill Secure Training Centre allows young offenders to gain genuine work experience and achieve recognised qualifications in hospitality and catering. Since Aramark launched the barista training in February, 35 NVQs have been achieved by young offenders on the scheme and the facility has begun operating waiting lists for the popular course. The coffee shop acts as a training centre for young people and also opens to customers and visitors at weekends and at certain times in the week with profits raised from the sale of goods split between Victim Support and local charities. Following the success of the scheme in improving education offerings and aiding rehabilitation, Aramark aims to expand the initiative to an additional three centres. They will also seek to offer more external work experience placements for participating youths to help smooth their journey back into work upon their release.

As this market matures, the private sector is better able to offer targeted, intelligent services which maximises its knowledge, innovation and skills. At the same time, the public sector is able to benefit from increased experience and confidence, with developments such as G-Cloud and the Crown Commercial Service’s standardised framework agreements enabling clear and informed procurement. A significant increase in demand for shared outsourced services since the 2010 Spending Review has shown that central and local government are adapting to internal pressures by embracing new and more efficient practices.14 By sharing a contract so numerous departments or agencies pool back office functions to an outsource provider, the public sector is able to bring in the necessary expertise for large scale transformation, standardise processes, and implement new technology platforms without increasing costs. Strategic partnerships, public service mutuals and joint ventures offer further opportunities for public service delivery. Strategic partnerships are longer-term more flexible working arrangements between closely aligned private and public sector partners that allow risk to be shared and contracts to evolve according to changing needs. Mutuals are businesses where employee ownership or engagement has a significant impact on the governance of the organisation. In the public sector, mutuals benefit from the expertise of those delivering the service and can also work in commercial arrangements such as joint ventures. Joint ventures between the private and public sector can bring additional flexibilities and investment into a service by aligning goals and creating genuine collaboration between partners. One such example is a Kier joint venture with Oldham Council which has enabled close collaborative working on key council services from highways and engineering to ICT and customer services while delivering savings and supporting the local community.

14 arvato UK – Major growth in public sector shared services since 2010 spending review – July 2015

CASE STUDY: BUILDING A JOINT VENTURE THAT DELIVERS FOR THE COMMUNITY UNITY PARTNERSHIP – KIER AND OLDHAM COUNCIL

100 jobs and apprenticeships, 250 mentoring opportunities, 2,500 hours of volunteering, and over £14,000 raised for local charities

Unity Partnership, a joint venture between Kier and Oldham Council, is working to bring about improvements in a wide range of local public services in Oldham. Employing more than 375 people, the partnership is successfully delivering key services including highways and engineering, property, ICT, and a range of business and customer services. Major achievements of the partnership include becoming a pathfinder authority for the implementation of Universal Credit, reducing road casualties, supporting regeneration and bringing the Metrolink to Oldham. The partnership has so far reduced the cost of the services delivered by more than £40m, and has committed to deliver a further £25m of savings by 2022. The joint venture also supports the local community by creating employment and training opportunities, sponsoring key community events and employee volunteering. Since 2007 the Unity Partnership has created over 100 jobs and apprenticeships, 250 mentoring opportunities and more than 150 work experience placements; given more than 2,500 hours of employee volunteering, raised over £14,000 for local charities and gained a number of awards and external quality accreditations for its community support.

The public and private sectors are also able to share risks and rewards of a service through payment by results contracts. This model for outsourcing incentivises shared goals by tying financial rewards to proven outcomes. For example, companies may only receive the full value of a contract if they meet agreed targets, effectively sharing the savings commissioners make when demand is reduced or when programmes are more successful. A leading example of this is the Work Programme which is a government programme to help long-term unemployed people into work. Service providers work with those referred to the programme to give support, work experience and training and helps people find and stay in work. Payments on the contracts are based on participants finding and continuing in sustained work meaning suppliers earn only when the government itself saves money through participants moving off-benefit. MAXIMUS delivers Work Programme contracts in London, the South East, and North East Yorkshire and the Humber, working closely with individuals to turn around their career prospects. As the business services industry works closely with the public sector, the BSA has been at the forefront of work promoting principles such as open book accounting, publishing contracts online, access for the National Audit Office and access to information to uphold accountability and public trust in the sector.

CASE STUDY: PROVIDING SUPPORT AND ADVICE FOR THE LONG‑TERM UNEMPLOYED MAXIMUS AND THE WORK PROGRAMME

Employment services are tailored to needs and individual circumstances, providing relevant and effective support

MAXIMUS receives a range of cases as a prime provider of the Work Programme in London, the South East, and North East Yorkshire and the Humber. They tailor their services to the needs and individual circumstances of each person, providing the more relevant and effective support possible. Simon was referred to MAXIMUS in October 2014. Formerly a lorry driver, Simon had longstanding alcohol dependency issues and was referred to MAXIMUS when he was discharged from a rehabilitation facility. MAXIMUS worked with Simon by offering guidance on preparing his CV and then secured him a placement with a social care company that allowed Simon to embrace a working environment and routine. Following this, Simon was able to find employment with a care provider as the day carer for a disabled young person. His employment for an organisation with an ethos of giving others a better life has given him a sense of purpose. MAXIMUS has supported Simon as he comes off Employment and Support Allowance and as the terms of his housing tenancy have changed, offering him advice and addressing his concerns as he settles into employment.

ENCOURAGING UK TRADE AND FOREIGN INVESTMENT The business services sector not only supports UK businesses and public services, it also plays a key role in UK exports and in attracting foreign investment. In trade, the services sector as a whole is vital to UK exports. 60% of exporting companies working with UKTI are in the services sectors with business services clients accounting for 27%.15 The UK has a services trade surplus of £7.6 billion which has grown steadily over the last decade, balancing an increasing goods trade deficit which in June 2015 topped £9.2 billion.16 Business services are a successful export as skilled management and delivery in the UK proves the sectors’ worth overseas. BSA members operate in over 100 countries globally, boosting the UK’s economy through contributions to the Exchequer and by expanding UK plc.17 BSA members have also worked with the public sector to bring their expertise in creating commercial value and expanding overseas trade. Capita has partnered with the Cabinet Office in a joint venture to market and export globally the government’s intellectual property in IT service management and project management methodologies to generate revenue for the public sector. 15 UK Trade & Investment – UK trade performance across markets and sectors – February 2012 16 Office for National Statistics – Summary: UK Trade – June 2015 17 G4S – Where we operate – July 2015

CASE STUDY: REALISING THE GLOBAL COMMERCIAL VALUE OF GOVERNMENT IP AXELOS – CAPITA AND THE CABINET OFFICE

Cabinet Office and the government received over £10.4m as a result of the company’s global success

AXELOS was launched in January 2014 to promote and grow the government’s Best Management Practice portfolio, realising wider commercial value from their intellectual property on IT service management and project management. The best practice methodologies involved are used globally by organisations ranging from NASA and Disney to the Australian Government and were used to successfully deliver the London 2012 Olympic and Paralympic Games. Capita used its global markets expertise to work with the Cabinet Office to commercialise this asset and gain additional revenue for government by expanding the portfolio. In 2014 AXELOS worked to raise brand awareness by attending conferences internationally and holding roundtables with key stakeholders, listening to their views and encouraging them to play an active role in how AXELOS should develop the business and the portfolio of Global Best Practice. As a result of the company’s success the Cabinet Office received a £9.4m payment and the government received a further net £1m dividend in the first year of operation.

Foreign Direct Investment (FDI) in the UK for 2014-2015 hit record highs, resulting in over 100,000 jobs and bringing the value of accumulated FDI to over £1 trillion.18 In a 2014 survey of perceived attractiveness to FDI, the UK was ranked second in Europe and gained 6% compared to 2013 figures.19

18 UK Trade & Investment – UK wins a record number of investment projects – June 2015 19 EY – Attractiveness survey: Europe 2014

11 Overall, more companies choose to locate their businesses in the UK than anywhere else in Europe as they seek opportunities to find new suppliers and partners and enjoy the availability of a wide range of business services.20 The UK leads Europe in attracting corporate headquarters, software companies, financial services, and the manufacturing sector, all of which rely on the availability of state-of-the-art offices and commercial outlets as well as services such as facilities management, business process outsourcing, and ICT outsourcing to support their core work.21 A strong business services sector helps the UK remain one of the easiest places to do business in the world. Having a strong infrastructure is also important to provide an attractive business environment and BSA members are helping the government deliver key developments from the Roads Investment Strategy to High Speed 2, Canary Wharf estate to the superfast broadband rollout. They are also involved in contracts supporting key infrastructure hubs, for example Mitie has a strong relationship with Heathrow, delivering services from cleaning terminals to maintaining car parks and screening luggage on aircraft.

CASE STUDY: SUPPLYING SERVICES THAT SUPPORT BRITAIN’S INFRASTRUCTURE NETWORK MITIE AND HEATHROW AIRPORT

Mitie grit car parks at 4am, screen luggage in the hold, carry out maintenance for air traffic control, and provide other services that keep Heathrow moving

20 UK Trade & Investment – Why overseas companies should set up in the UK – April 2014 21 EY – The UK Attractiveness Survey 2015

Heathrow is the second busiest international airport in the world providing the UK with vital connections to global economic centres, markets and societies. Its success and smooth operation play a key role in the infrastructure network of London and the South East which attracts international companies looking to invest in the UK. Mitie has worked with Heathrow since 2007 providing core facilities management services to the terminal and non-terminal buildings which make up the bustling hub. Building a strong relationship based on quality and efficient service delivery, Mitie has developed and grown its contracts to include additional sites and services. Working alongside the Heathrow team, Mitie has focused on adding value for the airport by introducing innovative technology, creating sustainability initiatives and advancing service quality. Today, from gritting car parks at 4am, to screening luggage in the hold, to maintenance within the air traffic control tower, Mitie operates across Heathrow providing the services which enable the smooth operation of the terminus.

SIZE AND VALUE OF THE OUTSOURCED SERVICES SECTOR ACROSS THE UK

21.1 bn 9.5% 10.5%

23.2 bn 9.3% 10.7%

7.4 bn 9.7% 10.0%

16 bn 7.6% 8.5%

12.7 bn 8.2% 9.8%

23 bn 9.4% 10.3%

60.3 bn 9.3% 9.7%

50.8 bn 12.4% 11.7%

3.9 bn 6.7% 8.2%

6.6 bn 7.1% 9.3%

20.2 bn 9.2% 10.3%

17.7 bn 9% 10.5%

Outsourced turnover, £ billion Outsourced turnover as % total regional output Associated employment as % total regional workforce jobs

Source: Oxford Economics – The UK market for business services, The national, regional and constituency picture in 2013 January 2015

PART 2:

LOCAL AND REGIONAL IMPACT Devolution to Scotland and Wales and the Chancellor’s emphasis on creating a Northern Powerhouse and stronger city regions has brought into focus the UK’s national, local and regional economies outside London. Evenly distributed economic growth is vital if the country is to return to financial stability and to address the widening gap between London and the rest of the UK.22 Currently, London has a 22.2% share of the UK’s total GVA with only one other region, the South East, reaching double figures.23

Business services play an important role across the UK as the sector contributes to every regional economy, ranging from 6.7% of GVA in Northern Ireland, to 12.4% in the South East. In terms of job share, the sector employs 10.2% of all UK workers, only falling to 8.2% of the workforce in Northern Ireland and contributing a total of 11.7% of jobs in the South East.24 However, the business services sector is also vital to regional growth in other ways. It brings professional expertise in service delivery to local authorities, supporting the devolution of powers to cities and regions. It offers social value through contracts, creating local jobs, working with local suppliers, and reinvesting profits into local communities. It helps create competitive business centres outside London by offering services that support and enhance companies’ growth. Finally, it adapts to regional industries, with business services providing security for nuclear power stations on the West coast, digital services to tech start-ups in Bristol and Newcastle, and estate management for military bases from Stirling to Salisbury.

22 Oxford Journals – Spatially unbalanced growth in the British economy – February 2013 23 Office of National Statistics – Regional Gross Value Added (Income Approach) – December 2014 24 Oxford Economics – The UK market for business services, The national, regional and constituency picture in 2013 – January 2015

PROVIDING PROFESSIONAL EXPERTISE TO LOCAL AUTHORITIES AND ENABLING DEVOLUTION Local authorities have seen the most significant funding cuts from central government since the 2010 election. Between 2011 and 2016, councils were scheduled to deliver £20 billion of savings amounting to a 40% reduction in funding.25 To meet this challenge, local authorities have increasingly turned to business service providers to help control budgets, to lead organisational change, and to provide service expertise.26 By creating partnerships with the private sector to provide functions such as customer services, revenues and benefits, payrolls, pensions, HR and ICT, councils benefit from the technological advances providers can offer and the efficiency savings they make as a result. Additionally, specialist providers can share expertise in areas such as ICT and customer service, pooling knowledge from contracts elsewhere in both the private and public sector. Business and digital change led by private providers offers opportunities to reform processes for long-term efficiency without large upfront investment by local authorities. The Department of Communities and Local Government (DCLG) has led the way in encouraging digital transformation in local authorities. In 2015, they formed a joint venture with TerraQuest to operate and enhance the Planning Portal, an online planning and building regulations resource which now processes 85% of all planning applications throughout England and Wales.

CASE STUDY: CREATING DIGITAL TRANSFORMATION IN LOCAL PUBLIC SERVICES PORTALPLANQUEST – TERRAQUEST AND THE DEPARTMENT OF COMMUNITIES AND LOCAL GOVERNMENT

85% of all planning applications for developments in England and Wales go through the Planning Portal run by TerraQuest

25 Local Government Association – Under pressure: How councils are planning for future cuts – April 2014 26 arvato UK – Local Government outsourcing hits five quarter high – April 2015

The Planning Portal is a key online resource which acts as the first port of call for anyone wanting to make planning applications in England and Wales. The website receives approximately 1 million hits a month and processes 400,000 or 85% of all planning applications for developments in the areas it covers. When TerraQuest was appointed by DCLG to take over the day to day running of the site it created a joint venture company with the department, PortalPlanQuest, which aims to drive economic growth, provide smarter planning and generate revenue through the delivery of the service. The new venture is working with users and local authorities to provide wider accessibility and greater penetration, increase the efficiency of the planning application processes, increase the services offered by the Portal, and support and improve interactions with local authorities.

Service delivery can also benefit from partnerships with the private sector which present an alternative to cutting or reducing offerings to citizens. Local authorities have long outsourced activities such as waste collection and street cleaning, and resident satisfaction surveys show that these two areas consistently gain the highest satisfaction ratings compared to other council services.27 Central government have led the way in outsourcing frontline services such as the Work Programme and prison management where private providers have been praised for change management and implementation on difficult time scales. By continuing to provide expertise in outsourced back-office functions and by offering local authorities more options for service delivery, the private sector is enabling councils to become more streamlined and flexible. This efficiency and adaptability will be key as cities and regions anticipate the devolution of greater powers over infrastructure, transport and skills.

27 Local Government Association – Polling on resident satisfaction with councils – October 2014 28 Reform – The case for private prisons – February 2013 29 Core Cities – Declaration for Devolution – May 2015

The Chancellor’s proposals for devolution including new metro mayors with greater responsibilities, as in Greater Manchester, will mean that local authorities can better coordinate local funding and services and will give them greater strategic oversight over evolving challenges such as the need to integrate health and social care.29 Business service providers can aid the smooth transition of powers by continuing to deliver high quality contracted services, allowing local authorities to focus on strategy and management, and by drawing on their experience to deliver new services where needed. An example of this can be seen in West Yorkshire, where Kirklees Council have worked with a consortium including Pinnacle Group to design, build, maintain and manage extra care housing as part of a new streamlined approach to social care.

CASE STUDY: JOINING UP LOCAL SERVICE PROVISION IN SOCIAL CARE PINNACLE GROUP AND KIRKLEES COUNCIL

In four years, 466 new homes have been built including 140 extra care flats in three extra care homes

Kirklees Council has partnered with Regenter Excellent Homes for Life, a consortium of Regenter, Wates Living Space and Pinnacle Group, to design, build, manage and maintain properties that will be made available to new and existing council tenants when complete. Over the last four years, 466 new homes have been built across 27 separate sites within Kirklees. This includes 140 extra care flats in three extra care homes, 10 of which are specifically designed for people with dementia. The extra care housing is designed for people over the age of 50 who want to retain their independence, but need some care and support in order to do so. Extra care staff work closely with the local health partners, including district nursing and community care teams, to provide a holistic and streamlined approach to care provision with a focus on continuity and excellence. Pinnacle Group have supported and enabled this shift by collaborating and designing their services with the council as they provide the housing management, repairs and maintenance and estate services to the new care accommodation.

The evolution of facilities management contracts, from separate deals for each service to multi-service contracts which can involve everything from cleaning to energy services, catering and more, demonstrate how service providers have responded to commissioners’ needs for a single, tailored solution that puts the customer at its core. This experience can be applied to local councils where the challenge of integrating a variety of services requires a strategic and user-centred approach. When Interserve’s contract with Southwark Council was expanded in 2013 from cleaning services to delivering total facilities management they worked closely with the council to ensure the wide range of services provided supported the council’s key activities and met their varied needs.

CASE STUDY: WORKING WITH LOCAL AUTHORITIES ACROSS A RANGE OF SERVICES INTERSERVE AND SOUTHWARK COUNCIL

Interserve has committed to securing the best possible employment support for local residents and especially for those furthest from getting a job

Providing cleaning services across 75 properties since 2005, Interserve was awarded a £6 million total facilities management contract in February 2013 to expand its scope of services throughout the borough. Working alongside the council’s core functions, Interserve deliver mechanical and electrical, vending, security, external mail and pest control services, as well as specialist window cleaning, washroom services and confidential waste removal. Building upon this strong relationship, in 2014 Interserve entered into a strategic partnership with Southwark Council to support its economic wellbeing strategy. The strategy includes a commitment to secure the best possible employment support for its residents and especially for those furthest from getting a job. Interserve invested in employing a programme manager to work with the council’s existing team to support key activity and by the end of 2014 had started working with 122 unemployed adult residents, offering employability and sectorspecific skills training. The project and partnership has been so successful, Interserve are now working with a number of London boroughs to establish similar projects.

Private providers are also leading on the use of analytics and insight to assess user needs and to engage with customers. By championing the co-production of services and transferring expertise on data and analytics from other sectors, providers providers can facilitate the involvement of local communities and ensure informed, intelligent decisions are made in collaboration with all interested stakeholders. For example, measuring and incorporating customer insights when working with the National Exhibition Centre enabled OCS to create customer excellence behaviours that spanned their soft FM service delivery, raising standards and incentivising staff to be outstanding.

CASE STUDY: DEVELOPING AND MEASURING EXCELLENCE IN CUSTOMER SERVICE OCS AND THE NATIONAL EXHIBITION CENTRE

Customer feedback has been integrated into service delivery and customer excellence behaviours created and introduced

As one of the busiest events venues in the UK the National Exhibition Centre (NEC) welcomes over four million visitors every year. Key to its success are its values which put customers first. When OCS began working with the NEC to provide soft FM services in 2012 they took these values on board and proposed a focus on customer excellence throughout their services. This included appointing a Head of Customer Excellence who has worked closely with the NEC management team to improve, develop and measure customer service. Customer feedback has been integrated into service delivery with customer excellence behaviours created and introduced in all service lines across the venues. Beyond this, OCS has also worked to increase their own employee engagement by introducing staff forums, having management supporting the front line at the venue, and by recognising and rewarding customer excellence.

CREATING SOCIAL VALUE IN LOCAL AREAS Investing in business services provides social value as well as direct benefits to the contracting authority. Social value is value added through improving economic, social and environmental wellbeing in the local area, for example by ensuring employees for a contract are recruited locally, or by pledging to reduce carbon emissions in a certain area. Private sector service providers offer social value initiatives across a variety of contracts, from construction to employment services, recognising the importance of giving back to the local communities they work with. Through these measures, providers are able to boost the regional economy, provide skills and training opportunities for local people, and ensure environmental impact is minimised. The BSA has also welcomed positive developments such as the introduction of the National Living Wage, which provides clarity and consistency for low wage workers and employers, and moves towards greater transparency and accountability by both the private and public sector. Contractors are able to support local businesses and authorities in their efforts to offer social value measures, for instance, by offering all clients the option of a Living Wage bid, as ISS have committed to do as a Living Wage Service Provider.

CASE STUDY: SUPPORTING DIFFERENT WAGE OPTIONS IN CONTRACTS ISS AND THE LIVING WAGE

ISS has made a commitment to include a Living Wage submission in every tender, offering contractors the freedom to choose the best option for them

As a recognised Living Wage Service Provider, ISS UK promotes the Living Wage to its current and prospective customers and across the Facilities Management sector. The company has made a commitment to include a Living Wage submission in every tender and it encourages clients to choose to pay the Living Wage to all staff working on its estates. ISS supports clients who wish to move towards the Living Wage by working alongside them to agree timescales that reflect the needs and challenges in their business. By offering contracting businesses and authorities different wage options, ISS presents flexible choices which can be tailored to best suit each contract and circumstance. In contracts involving a large workforce, suppliers often commit to recruiting from local areas and communities. This reduces unemployment by creating opportunities and ensures that money paid in salaries is spent locally, contributing to local growth. It also ensures community engagement with projects or services which can be key to their success.

Skills training, work experience placements and apprenticeships provide further opportunities for young people, unemployed workers or those from disadvantaged backgrounds. Business service providers often have large organisational structures which enable them to provide expert training and apprenticeships, but targeted in local areas where their contracts ensure the skills will be most employable. A 2014 survey found that BSA full members employ over 11,500 apprentices and provide approximately 845,000 days of training each year, much of which is targeted locally so earnings and skills having a positive impact on the area.30

30 BSA – Apprenticeships in the Business and Outsourced Services Industry – June 2014

An example of this is Carillion who, when working on the construction of the Royal Liverpool University Hospital, employed and sourced materials locally, provided an on-site Job Shop for local job-seekers, and opened the Edwards Building Learning Centre which trains site workers for NVQs and Construction Skills Certification.

CASE STUDY: INVESTING IN THE COMMUNITY TO PROVIDE LOCAL SOCIAL VALUE CARILLION AND ROYAL LIVERPOOL UNIVERSITY HOSPITAL

60% of the workforce were employed locally and 60% of materials were sourced from near the site

Carillion is creating a lasting and sustainable legacy through the construction of the Royal Liverpool University Hospital, employing at least 60% of its labour and sourcing the same amount of materials, from the local area. In partnership with Liverpool in Work, Carillion has also opened a site-based Job Shop, which allows local people to drop in from the street access point and register their details for potential opportunities on the site and nearby Carillion projects. The project aims to create at least 100 apprenticeships and opened the Edwards Building Learning Centre in 2015. Working in partnership with UCATT, the Learning Centre offers site workers opportunities to gain NVQs and prepare for Health & Safety testing. The Learning Centre also supports the local community by providing job search advice to long-term unemployed residents and guidance on how to gain a Construction Skills Certification Scheme card.

20 Service providers can also keep their supply chain local by ensuring, for example, that on large infrastructure projects supplies are sourced close to the site to build local partnerships and stimulate the economy. Up to 95 pence in every pound spent on construction in each region of the UK is retained in the local area.31 Working with SMEs to deliver services also supports local businesses, for instance a company providing security services may choose to have its fleet serviced at a local garage, creating further jobs and value for the community. BSA members work with approximately 250,000 SMEs throughout their supply chain and run ‘meet the supplier’ days with local SMEs in an area where they have a contract to ensure regional development plays a key role in delivery. Bouygues Energies & Services has taken this one step further, launching SME workshops for their supply chain partners to raise awareness and share best practice around cyber security.

CASE STUDY: SHARING BEST PRACTICE IN CYBERSECURITY THROUGH SME WORKSHOPS BOUYGUES ENERGIES & SERVICES AND SUPPLY CHAIN PARTNERS

70% of Bouygues supply chain are SMEs and Bouygues hosts regular workshops to support their local partners

Following a string of high profile cyber attacks, cyber security has become a top priority for both the government and businesses. In 2014, the UK government launched Cyber Essentials; an accreditation that provides businesses with a foundation of how to defend themselves against the increasing threat of cyber threats. As part of an ongoing commitment to assist and support its supply chain partners, Bouygues organised and ran a workshop to raise awareness and highlight the benefits of the required cyber accreditation. The workshop included information on the basic measures to defend against cyber attacks including security configuration, boundary firewalls, access control, patch management and malware protection. SMEs form 70% of Bouygues supply chain and Bouygues hosts regular workshops on topics from digital marketing to finance and HR. By building long-term partnerships and sharing best practice Bouygues are able to create valued long-term relationships with local companies.

Larger companies also benefit from working with SMEs, as Serco found when working with innovative pest control partner, Vermtek, a small business run by two entrepreneurs with a fresh approach to pest management.

31 UK Contractors Group – Construction in the UK Economy – October 2009

21 Environmental innovations can also stimulate efficiency savings and reduce waste.

CASE STUDY: INTRODUCING INNOVATION BY ENGAGING WITH SMALL SUPPLIERS SERCO AND VERMTEK

Actively targeting SMEs as suppliers has encouraged innovation and brought additional value

Serco is working to engage SMEs creatively in their supply chain by actively targeting SMEs as suppliers and working with them closely to encourage innovation and realise value. As part of this initiative, Serco appointed Vermtek, an SME run by two young entrepreneurs in Oxfordshire, to deliver pest control services. Serco contracts work out to Vermtek who have created a centrally-managed network of specialist local suppliers qualified to operate in highly regulated environments. Working in prisons, hospitals and MoD bases, Vermtek are driving innovative pest-prevention solutions across Serco-run sites, focusing on environmental management to prevent pest entry, rather than depending totally on pesticides. Working with Vermtek has achieved over 10% cost reductions for Serco and reduced the environmental impact of their work.

Service providers can also aid contracting authorities n minimising the environmental impact of service delivery. For instance, construction projects benefit from off-site construction that reduces the strain on the core site and services involving transport, for example waste removal, can be planned to maximise efficiency or to avoid travelling through protected environments. Working for Central Manchester NHS Foundation Trust, Sodexo introduced a separate food waste stream which helped identify ways to cut down wastage dramatically and meant that general domestic waste could be sent for recycling and energy recovery.

CASE STUDY: REDUCING FOOD WASTE FOR AN EFFICIENT, SUSTAINABLE SERVICE SODEXO AND CENTRAL MANCHESTER NHS FOUNDATION TRUST

By understanding the source and transforming processes, food waste was reduced by over 40%

In 2015 the Trust and Sodexo won the Waste Management Award at the NHS Sustainability Awards, for a food waste project which achieved significant savings in waste volume and costs and a substantial uplift in recycling rates. Sodexo created a separate food waste stream by arranging caddies for food collection in all ward kitchens and training all staff on the new process. A process was also put in place to measure and monitor the weight and volume of food waste collected which identified that an average of 12.5 tonnes of food waste was being produced per month. Through reducing serving sizes where appropriate, changing cooking methods and profiling portion sizes to patient groups, the monthly food waste volume was reduced to 7.4 tonnes a month. The separation of food waste from general domestic waste has meant there is no longer the need to use a dirty materials recovery facility. General domestic waste can be sent instead for recycling and energy recovery, reducing the environmental impact of the trust even further.

22 Finally, investing in local projects, such as sponsoring sports teams, renovating schools or parks, and working alongside local charities, brings further value to an area and is seen by providers as an important way to engage with communities and become involved in the local community. A recent partnership between Vinci Facilities, Dolly Parton Imagination Library and Peabody estate, has seen Vinci fund a children’s education initiative which provides free books to young children from low income families and has created spaces for family activities, reading and crafts.

CASE STUDY: LEADING SOCIAL INITIATIVES TO SUPPORT LOW INCOME FAMILIES VINCI FACILITIES AND READING FROM THE START

Vinci has helped over 100 children gain literacy and language skills and worked with over 45 parents to help them support their children learn

Vinci has invested in an award-winning social value initiative that aims to tackle educational under-achievement due to poverty in deprived communities in Hackney and Tower Hamlets. In partnership with the Dolly Parton Imagination Library and Peabody estate, Vinci has funded “Reading from the Start” which offers reading opportunities and support for children from low income backgrounds. As well as providing free book deliveries each month, Vinci has also created two local reading corners, which offer fun family activities including storytelling sessions and nursery rhyme sing-alongs to bring books to life, as well as arts, crafts and games. Each reading corner session is staffed by volunteers who read one-to-one with children and support parents with ideas and reading activities they can use at home. In its first twelve months, the project has helped over 100 children gain skills in literacy, language, communication and social interaction and worked with more than 45 parents to help them support and contribute to their child’s development. It has also connected families with employment and parenting skills services and improved awareness of other activities and facilities available to them.

BUILDING COMPETITIVE BUSINESS CENTRES ACROSS THE UK Business services providers have embraced the government initiative to invest in and develop regions across the UK and have worked with local authorities to create Local Enterprise Partnerships (LEPs) that work to drive growth in local economies. Led by the private sector, LEPs create strategies for growth and identify priority areas for their locality. They are also able to bid to host Enterprise Zones which offer incentives to businesses to set up or expand in geographically defined regions within the LEP. As part of the LEPs initiative, BSA members have worked alongside SMEs, voluntary organisations and public bodies to stimulate growth outside of London and create competitive centres of business across the UK. Working with LEPs has also enabled service providers to connect with the areas they serve, offering valuable opportunities to engage with local communities and their needs. Prospects have been working alongside LEPs across the country as they deliver services around skills and employment to vulnerable citizens.

CASE STUDY: ENGAGING WITH LEPS TO PROVIDE LOCALLY TAILORED CAREERS ADVICE PROSPECTS AND THE NATIONAL CAREERS SERVICE

The Skills London event attracts more than 32,000 visitors each year, offering job opportunities and inspiring careers

32 Department of Business, Innovation & Skills – Mapping Local Comparative Advantages in Innovation – July 2015

Providing education, employment and skills services, Prospects works closely with Local Enterprise Partnerships across the country to support and enhance their work. When Prospects was awarded the prime contract for the National Careers Service in London, South West and West Midlands, it created advisory groups made up of local organisations and LEPs to help steer and support the delivery of services. The advisory groups have helped Prospects build links between employers and potential employees and support from LEPs has ensured that the National Careers Service delivery is tailored and right for each area. Prospects also works with LEPs through the management of careers and skills events across the country. For example the London LEP supports Skills London, the Capital’s biggest jobs and careers event which attracts more than 32,000 visitors each year. Through the flagship event, Prospects and the London LEP are able to inspire young people towards a future career and offer thousands of job opportunities including apprenticeships.

In addition to working with LEPs, BSA members provide valuable services which enable regional economic growth. Research mapping the impact of LEPs found that a region’s degree of innovation and competitiveness is significantly influenced by a range of factors including availability of business support facilities, skill levels, sectoral mix and quality of infrastructure.32 By providing these necessary conditions and supporting centres of commerce at a strategic and practical level, business services providers are playing their part in generating regional economic growth.

SUPPORTING REGIONAL INDUSTRIES The UK’s economy benefits from a diverse and flourishing range of industries. From hop growers in Kent to film and television producers in South Wales, car manufacturers in Liverpool to game developers in Dundee, concentrated clusters of industry exist across the nation shaped by economic history, business conditions, and competitive forces. This array of businesses is vital to UK trade, economic stability, and regional development. Each pocket of industry requires specific conditions and support to grow, from unique infrastructure needs to particular service support. For example, during economic change in the 1990s, Leeds’ strong transport links to London and flourishing business centres led to its growth to be the UK’s 2nd largest financial and legal centre. As reputation and connectivity remain vital in the professional services, facilities management and ICT support are key to the sectors’ enduring success.33 Meanwhile on the west coast, where a high number of the UK’s nuclear power stations are situated, key services provided range from high level security to secure waste disposal, ensuring that the core functions of the plants can be carried out effectively and safely. In this way, the unique characteristics of each region are supported by the expertise and skills of the business services sector. As an industry flexible and responsive to local needs, this sector, more than any other, plays a key role in every growth story across the UK.

33 Office of National Statistics – Regional Gross Value Added (Income Approach) – December 2014

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