Social work provider considers selling franchise to councils

A community interest company that runs children’s services in two London boroughs is considering setting up a franchise scheme to sell its model to other local authorities.

The move is one of five expansion options drawn up by Achieving for Children, which currently runs children’s services in Richmond and Kingston and is co-owned by the two councils.

Franchising would see Achieving for Children charge local authorities a start-up fee in return for using the company’s brand and business and operating models. Kingston and Richmond would take an annual percentage of each franchise’s turnover.

The other growth proposals are:

• Adding another council as a co-owner of Achieving for Children. This could improve purchasing power but dilute the founding councils’ control, a risks/benefits analysis found.
• Taking on contracts to run services in other areas. This could build Achieving for Children’s reputation but risks the company increasing staffing or pension liabilities.
• Selling consultancy to other areas facing quality issues. This could boost reputation but risks staff losing focus on Kingston and Richmond services.
• Setting up an Achieving for Children subsidiary company with another council. This could increase trading potential but poses questions over who would pay for set up costs.

The options give Achieving for Children ways to either boost income or increase the company’s potential to deliver efficiency savings through economies of scale.

The company needs to grow to balance its books as it currently carries a loss of £1.4m, largely due to set up costs, and is expected to deliver £2m a year in efficiency savings. A report filed last September said the company’s total deficit is predicted to rise to £8.2m by the end of 2018-19.

Kingston, Richmond and Achieving for Children have sought legal advice on the growth options. They will score each proposal against an ‘expansion test’ rating their value for money, possible risks and potential to enhance the reputation of the three parties.

A spokesman for Richmond and Kingston councils said: “Following the identification of a business opportunity with another party the initial scoring matrix will be used to streamline the options available. The more highly the third party scores, the more options that will be available to Achieving for Children and the other party to explore.”

The Achieving for Children board will recommend the best options to pursue. If the proposal requires a decision from Kingston and Richmond councils it will be presented to a committee including leaders of both councils and, if necessary, ratified at cabinet and full council meetings, the spokesman said.

“When assessing the viability of each growth option, the potential for financial efficiencies will be a key consideration,” he added.

Achieving for Children is one of the Department for Education’s eight ‘partners in practice’ – a select group of children’s services ministers feel are the “best performing” in England. Both Richmond and Kingston’s children’s services are rated “good” by Ofsted. Inspectors acknowledged Kingston’s services had “transformed” in the period since Achieving for Children took over, having previously been rated “inadequate”.

The company is also the only example of councils voluntarily using powers to outsource almost all children’s services, including child protection, that were introduced in 2014.

Third party provision has been forced on other councils. The government handed control of Doncaster and Slough children’s services to newly-created independent trusts after finding persistent failings in local authority performance. Birmingham and Sunderland are considering setting up trusts. Both councils are under government intervention.

News of Achieving for Children’s expansion plans comes weeks after market experts predicted that existing third party providers could look to grow by contracting with other authorities outside of their original areas.