This report provides Scrutiny Management Board with a presentation which sets out the arrangements between Herefordshire Council and Hoople Ltd.

The board received a presentation from the Chief Executive Officer of Hoople Ltd (link to the presentation) which included the slides: Contents; A brief history of Hoople; Teckal Status; Services to Herefordshire Council; and Governance and value for money.

The Chief Executive Officer responded to questions from board members, the principal points included:

a.           Hoople Ltd acted as a recruitment agency, would work with other agencies to identify candidates for specific roles if requested to do so, and operated a bank of temporary workers, including care professionals. 

b.           There was a building maintenance team but the company did not undertake road repairs.

c.           It was clarified that no profit was made on the income from the shareholders but the full running costs were allocated across all service areas.

d.           It was noted that the Board of Directors comprised representatives from the shareholders, Herefordshire Council (2), Wye Valley NHS Trust (1) and Lincolnshire County Council (1).

e.           It was reported that the annual turnover for the current year was expected to be circa £24m; turnover in 2011 had been circa £12m.

f.             With attention drawn to the Corporate Services Savings detailed in 2024/25 Budget Setting (link to the agenda for Council, 9 February 2024) which identified a saving of £2.142m in relation to ‘Reduction in Hoople SLA contract value and workforce service reviews’, it was reported that: part of the savings was predicated on revised figures for inflation; invest to save opportunities were being explored to develop other income streams; the company was looking to streamline services and, where services could be automated, reallocate posts of other areas of activity; and redundancies were not expected at this stage, although there may be reductions through natural wastage during the course of the year.

The Director of Resources and Assurance commented on the intention of Hoople Ltd to do things differently and provided the example of the digital transformation of elements of the revenues and benefits service; this would provide users with the option to manage interactions online and would free up staff to focus on other matters, such as administering schemes to support people experiencing financial hardship.  It was noted that progress on the delivery of savings and impacts on performance would be reported to Cabinet.

g.           It was confirmed that Hoople Ltd met minimum wage requirements but not the recommended ‘Real’ Living Wage. 

A board member commented that the Employment Panel had discussed support for the Real Living Wage by the council as a whole and suggested that this should be considered by Hoople Ltd.

The Chief Executive Officer said that pay issues were discussed on a regular basis but the company was also mindful of the need to keep costs down; it was noted that Hoople Ltd employees received a modest bonus. 

h.           It was confirmed that gender pay gap reports were produced for the company (link to the gender pay gap reports for Hoople Ltd).

i.             The Director of Resources and Assurance said that there had been series of decisions over time about the transfer of services to and from the company, adding that TUPE (Transfer of Undertakings (Protection of Employment)) maintained the terms and conditions of employees.  The Director commented on factors considered during the transfer of transactional processing services and in the establishment of Hoople Care.  It was noted that the expertise within Hoople IT Services, including experience with the Business World resource planning system, was attractive to other local authorities.

j.             With reference made to the first slide, A brief history of Hoople, it was noted that the Primary Care Trust had been replaced by the Clinical Commissioning Group and then by the Integrated Care Board.  In response to questions about Hoople Care, the Chief Executive Officer: commented on the positive feedback received from patients and their relatives at the Hillside Care Centre about their experiences of the health and social care system; confirmed that staff recruitment had been a challenge and provided an overview of ongoing recruitment campaigns; and said that raising the quality of care across Herefordshire was a primary concern.

k.           The Director of Resources and Assurance commented on the recent establishment of the Cabinet Shareholder Committee which would have a role in the governance arrangements for the council’s subsidiaries and could influence aspirations in the future; it was noted that, as a Teckal company, 80% of Hoople’s income must come from the shareholders, where no profit was made, but the other 20% could be from commercial activities, where profit could be made.

A committee member questioned the potential to generate more income from commercial activities in order to reduce the costs of services provided to the council, subject to capacity and not undermining existing provision.  The Leader of the Council said that the Shareholder Committee would provide greater transparency about the direction of travel and would welcome recommendations from this board.

The Chairperson noted that Full Council had approved amendments to the constitution, at its meeting on 8 March 2024 (minute 56 of 2024/24 refers), to enable the Audit and Governance Committee ‘to oversee the council’s arrangements in relation to the shareholder governance and function for the companies that the Council has either ownership or membership’ (paragraph 3.5.12) and said that it would be helpful for further clarification about the scrutiny remit of the Scrutiny Management Board.

l.             The Director of Resources and Assurance confirmed that key performance indicators and measures were in place, these were being reviewed as part of renegotiations, and there would be greater clarity in future quarterly performance monitoring reports to Cabinet.  It was noted that the board may wish to return to this matter in due course.

m.         As an example of identifying opportunities for growth, it was reported that an offer was being developed for health and safety visits for schools, whilst exploring the potential to expand this into a fire risk assessment service for the public sector and the commercial market.

n.           The background to Lincolnshire County Council’s involvement was outlined.

o.           It was confirmed that employment practices were similar to those of the council, including the operation of a sickness absence policy.  An overview of the company pension arrangements was also provided.

p.           Further details were provided about training and apprenticeships, and the foundation learning programme.

A committee member suggested that opportunities in education and training for looked after children and care leavers should be explored further given the council’s responsibilities in relation to the corporate parenting principles and its relationship with Hoople Ltd.  Clarification was sought on the involvement of Hoople Ltd in the management of the Spirit of Herefordshire website.

q.           Pest control services could be considered by the company, although it was understood that there were tight margins for this work.

r.            In the assessment of potential services to transfer, consideration was given to moving a whole service across or to moving staff members but with the management arrangements retained by the council; for example, the council’s engineering team commissioned work on Public Rights of Way to be delivered by two Hoople Ltd operatives.  The Chairperson commented that this arrangement could provide flexibility, particularly in instances where the council was not able to recruit as fast as may be needed to undertake the work required.

s.           It was reported that Hoople Ltd would open new premises at Auxilium House, Legion Way, Hereford in April 2024; this had been paid for from profits accumulated since 2011 and would bring teams together in a single, energy efficient building.

t.             The board was advised that around 60% of Hoople Ltd’s income came from Herefordshire Council and that a full breakdown would be prepared for the Shareholder Committee.

u.           With attention drawn again to the Corporate Services Savings detailed in 2024/25 Budget Setting which identified a saving of £100k in relation to ‘Resources & Assurance: automation of Council Tax and Business Rate processes using GovTech solution’, it was confirmed that this saving was a net position and would be a recurring saving.

v.           It was noted the ‘Hoople’ name was selected from suggestions made by staff members and represented ‘Herefordshire’ and ‘people’.

The Chairperson thanked participants for their contributions and noted the value of raising the public profile of Hoople Ltd, particularly the extent to which the company successfully delivered for and with the council.  The Leader of the Council acknowledged the hard work of the employees of both Herefordshire Council and Hoople Ltd in providing key services.

At the conclusion of the debate, the Statutory Scrutiny Officer summarised potential recommendations to the executive, as identified by board members during the meeting. Amendments and additions were discussed, and the following resolution was agreed.

Resolved:

1.           That Herefordshire Council’s shareholder committee consider a pathway to paying the Real Living Wage.

2.           That Herefordshire Council’s shareholder committee explore with Hoople the potential to increase its commercial revenue, with a view to reducing the charges it makes to Herefordshire Council.

3.           Hoople’s future gender pay gap reports should include a) comparison with previous years’ performance, b) comparison with relevant comparator organisations, c) information on what action they are taking to address the gender pay gap, and d) information on the impact of past actions.

4.           That Herefordshire Council’s shareholder committee seeks to maximise opportunities for looked after children and care leavers through its relationship with Hoople.