Friday, 27 June 2014

More Mutual News

With final bids having to be in by Monday, the following email gives a bit more of the background to the collapse of the bid involving the Cumbria, Lancashire and Merseyside mutual :-

Transforming Rehabilitation bid update

Date: Thursday, 26 June, 2014

With great disappointment, The Manchester College (TMC) and Innovo CLM have now reached a point where we are unable to pursue our bid in the Transforming Rehabilitation competition any further.

Over the last ten days we have brought together the key final elements of the bid and overlaid the legal warrants and guarantees required. The outcome of this activity brought us to a ‘go/no go’ decision on the final bid this week.

Back in October we agreed a Memorandum of Understanding (MOU) with Innovo CLM to jointly bid for the Transforming Rehabilitation work in Merseyside, Lancashire and Cumbria. There were a number of key principles set out in our ways of working. These were, that we wanted (after repayment of the working capital from TMC), to have a joint venture company split 51%/49% (TMC/Innovo CLM). We were also clear that we wanted the joint venture to operate along the lines of a staff mutual and the profits in time could be used to re-invest into the communities we serve. This meant a very high quality offer that allowed staff and stakeholder engagement in many areas.

The requirements at the time were that TMC would fund circa £4m of investment and needed to offer a deed of guarantee of circa £16m. Innovo CLM would bring their experience and development of the service, coupled with TMC’s experience of working with offenders in custody. Our working assumption was that we would not run the contract very aggressively like many private providers do, but that there would be at least sufficient profit opportunity to offset any possible risks.

In recent weeks it has become clear that changes to legal clauses could mean unlimited costs on the joint venture and its backers. In addition, the maximum cap for penalties developed to a point where that could be as high as £36m. What became very clear last week was that TMC would need to guarantee £36m of annual risk. Our board and our banks felt that the balance of risk and reward had shifted very considerably in recent weeks and that TMC would be shouldering far more risk as part of the joint venture than the original MOU had suggested.

To try to move the bid forward we considered a number of options, including, finally, a route which would alter the level of risk and control on the contract and on the joint venture in a way that could satisfy our financial backers. As a result, TMC put to Innovo CLM an ownership and profit share proposal at 80%/20% and outlined that our Board would also require us to have been able to negotiate on the legal points during due diligence.

Innovo CLM have advised that they have shared this proposal with their staff and stakeholders who understandably, felt that for them, this would be a significant departure from the original MOU and was a move away from the principles of a staff mutual.

As a result, on Tuesday this week, we realised that we could not find a way to move forward with a bid that our respective boards could approve or that our banks would warrant in case of loss. We have today announced the decision to the Ministry of Justice.

John Thornhill

Chairman, Innovo Rehabilitation
CEO, The Manchester College

Meanwhile, I notice that the following information on the London mutual RISE written by Dean Rogers, Napo Assistant General Secretary, has been circulated to staff:- 

What is a Mutual?
RISE is proposed as a mutual. Not all mutuals are the same or work in the same way, although most mutuals would aim to follow the Rochdale Co-Operative principles in some form – critically meaning input into important decision making from all members and potentially wider stakeholders (e.g. client groups); profit sharing between members (although many mutuals will consider themselves to be non-profit making bodies); and a high focus on ethical practice and values.

In RISE all transferring staff would have an opportunity (but could not be forced to) become members. Membership would be free, with the opportunity to join and participate in the decision making processes coming as part of working for RISE. Future employees would automatically be enrolled. Should RISE expand beyond London any new employees would also have the opportunity to join and participate. The leadership of RISE would propose its initial Constitution, setting out how it would be run and be accountable to members, with rules for how the Constitution could be changed by members in future; what should happen to profits; how salaries would be negotiated and structures for member engagement and consultation. Members would have to approve the initial Constitution. All terms and conditions at the point of transfer would be the same under TUPE but some softer aspects (like union recognition) could change by member agreement almost immediately in a mutual. However, RISE have indicated they want to recognise and work closely with Napo, as well as honouring key terms agreed as part of the National Transfer Agreement.

In Reality.....
In practice RISE will be a small player with relatively little spare capital for speculative adventures around pay or conditions. Nor will it have any great HR capacity. We anticipate this is part of why it is being positive and open about recognising Napo and is indicating it would want members of RISE to join the union.

RISE would also be further bound by the terms of the contract with NOMS via the prime provider, both in relation to terms and conditions of employment for members and to a degree frontline practice in that key performance priorities will need to be met for RISE to get paid and meet the terms of the contract. Whilst contractors may expect RISE to deliver work cheaply (to maximise the Prime’s scope for profit) RISE will need to retain staff and perform to high standards to meet NOMS requirements and triggers for payment by results (PbR) targets. The PbR is most likely to be where any potential RISE profit and scope for RISE to expand rests.

This is most likely to mean that little collectively changes in terms of pay, pensions, and wider terms and conditions at least initially. Concerns identified about individual flexibility or support for training and development will partly be met by TUPE. Afterwards it can be met by a combination of individual negotiations and/or collective assertion via members proactively taking a collective position to the Board, potentially supported and advised by Napo.

What is TUPE / COSOP? How does it protect transferring staff? 
Many questions have been asked around the nature of any transfer into RISE and what protections are genuinely (as opposed to theoretically) afforded staff in scope if RISE comes into existence. As ever in any privatisation the strength of TUPE is directly linked to the collective strength and unity of staff transferring to defend terms and protect them for new starters, as well as the economic reality around the contract. Any prime will seek to drive down costs, especially when letting work through 2nd tier providers. We can expect pressure to be exerted on RISE to either cut terms (for new starters if not existing staff) or posts. However, within a mutual staff members have a stronger say in how RISE respond , supported further by recognition for Napo.

It could also be argued that potentially, especially in a market where recruiting and retaining good quality staff is difficult RISE may even be able to get a bigger share of the cake and improve terms and conditions. This is what’s happened in the rail industry where Aslef and the RMT have exploited a shortage in trained staff and the public’s reliance on their service to drive up wages, etc. Equally, members could vote to simplify pay structures and increase transparency. However, with very tight budgets and Government under-investment likely to continue the starting point is likely to be more difficult times ahead regardless of how the share sale rolls forward. RISE can’t lose money or members risk not getting paid or losing their jobs and will be directly engaged in making these decisions to some extent.

What about future employees joining RISE? 
Future employees will almost certainly be automatically enrolled as RISE members upon joining, as a contractual expectation, although it is plausible that any additional benefits (e.g. voting rights, loyalty payments, etc ) maybe linked into service. Generally, it is more difficult to force a two-tier workforce into a mutual as everyone has equal voting rights. However, if management win the argument this can still happen on key policies – e.g. in John Lewis they have a two tier redundancy and pension scheme.

It is possible that RISE will seek to offer different terms and conditions for members in London if it expands outside of Capital to recognise higher costs of living and recruitment difficulties in London. It would need to do so in a clear, accountable, fair and transparent way or be left vulnerable to equal pay challenges. E.g. it couldn’t justify higher wages for staff in London doing essentially similar work based upon grade differences.

If regional bids emerge, as we think is probable, this area becomes even more complicated as the cost of living around London is also disproportionately high if not as high as the rest of the UK.

How could RISE fail?
RISE can fail in numerous ways. It can fail even before coming into existence if it is not part of a winning consortia for a CRC contract. It is feasible that RISE could be named as a potential partner in a winning bid for an area outside London but not in London itself. In this instance London staff would not transfer to RISE.

Moving forward RISE could fail by making a consistent loss that funding partners become unwilling to sustain. If RISE were to lose it’s capacity to borrow to fund paying staff, etc then it could dissolve and staff would then transfer again, either to the prime bidder or to another provider if the work was sublet. In this circumstance TUPE should remain in place again, although again the strength of the guaranteed rights will be directly linked to collective organisation and unity.

One particular worry for charities and small organisations in the contract is the likelihood that primes will pay RISE out of the PbR money, based upon result. This is hugely problematic as the PbR money isn’t guaranteed and only comes on stream after 3 years into the contract being operational. RISE maybe better placed to sustain this as a mutual being set up with funders understanding this reality, as opposed to charities competing for similar work but having to use reserves.

If RISE went bust members will not be individually liable, unless they choose to be so by adapting the RISE constitution. Nor do you lose or change any other employment rights by being a member of a mutual.

What happens to me if RISE isn’t successful?
If RISE don’t win in London you will either be transferred into the prime or whoever they let the work to instead of RISE. The National Agreement Napo has won protects you in the first instance in either scenario but the risks (e.g. job cuts and pressure to accept cuts; rise of a second tier workforce, etc) are also the same.

What choices do I have?
If the work you are doing is transferred to RISE or another company you have a false choice – resign or accept a transfer with TUPE protecting terms and conditions at the point of transfer, supported further by the terms of the national Agreement covering pensions, continuity of service and initial redundancy terms. You will not have a right to transfer into another CRC job unless this can be negotiated between RISE and the prime bidder in a situation where RISE needed to make staff cuts.


  1. It is a bigger mess we now face as the remaining bidders are still playing at different levels . Still posturing for the least risk and bigger profits with no regards to any moral or ethical base.

    Members of NAPO reading this blog and the mine-field unfolding in TUPE transfer adjusted terms and conditions limitations on protection agreements and the open indication looming on Jobs at risk !

    Can it get any worse ?

    The complexities of what is happening while NAPO still blighted by continued Chair consequences the elections looming all add to anxieties.

    Members I have spoken to are more focused on what they need in leadership and direction after the experiences we have had .

    Reading the information on RISE should be enough to ensure people appreciate the continued worsening risks to all staffs futures and terms.

    It has been said the destruction of probation is just ideology ! However, the Tory aggression to chase money in returns will eventually reward them in the disintegration of the public service.

    Pensions over the long haul 20-30 years will see less people in the Scheme and continued reductions. Dividends for government will come back in the lost jobs worse terms reduced leave and fast changeover of staff on low rates and temporary contracts. I remember when our union focused properly on the real issues when jobs existed they were to be argued as permanent posts securing employment .

    The unions have a lot more to worry about than that but not letting on in my view. Anyone who had ever hoped of going early on making 60 holding out for the 85 year rule or just optimistic in the belief that that strain cost on early retirement could be met after long service will not be there for the rest of us. That's all over under private control !

    Worse, it was not a mentioned, the risks prior to strike action ! Yet this information should have been used to galvanise all unions to come out in protest on mass.

    Some credit where it is due ! The joint Unions have now awakened to the re-unification argument and the tools to help deliver what has to be the Workloads & employee care and H&S issues. Lets hope this announcement today takes us forward and helps drive out the bidders who I hope have all put in low ball offers just damage this already discredited shower !


  2. Clear as ... mud! I am glad I am retired and pity folk who need to decide whether to commit to such complicated sounding arrangements.

    The Probation job is hard enough to justify being offered straightforward terms and conditions rather than need to join an organisation and then negotiate to get or keep a constitution whose terms enable employees to retain or improve their original terms and conditions - including pension rights.

  3. That's what I should have said exactly right Andrew ! It is incredible to believe the extent to which they blown money yet half or less a quarter of that across probation just think what we could and would have achieved ! Being retired under this lot will become a fantasy not a reality in time keep up the support. Share sale what is that really going to become then ?


  4. so when do we find out who's got the bids - is it August?

    1. Early September MoJ are due to announce preferred bidders.

    2. I have no preferred bidders, I wish they would all piss off and take Grayling with them.

    3. I see Debbie Ryan has put a cartoon-type post up with the quote 'ding dong the bids are done' the woman obviously has no clue but as on the payroll of a private company she is just interested in seeing if they win the bid - hope they don't and i'll be sending her a ding dong message right back. I don't follow DR btw somebody retweeted it.

    4. Who is Debbie Ryan?

    5. Ah well, she once worked for the prison service but more recently has swapped jobs several times from one privateer to another - once a very enthusiastic Tweeter - naively seeming to believe she could convince me and others that she really does know best about probation and is driven only by concern to minimise crime - ultimately like several other Grayling flag wavers she blocked me on Twitter. She is VERY persistent & probably talented organisationally and VERY confident - I have no desire to have anything to do with her kind!

      To discover more check her out via Twitter @DebbieRyan1969

    6. Current assignment : Director of Transforming Rehabilitation, Interserve Justice

    7. I think she used to work for G4S and left them and now works for Prosper4Group who do something with ex-offenders. Whilst they're not a bidder they must be connected to one of the bigger boys and have a promise of work off the back of them winning or else why would she say 'ding dong the bids are done'?

    8. Trust me you dont want to know. One of the biggest jokers (Debbie Ryan) from the private sector.

    9. Thank you guys.Sounds a must to avoid,

    10. Her site's a good hoot. Went to school for four years and knows some buzzwords....this is what it's come to. People like this taking over public services...

  5. It is clear that the banks pulled the plug.
    Governments can carry such liabilities, to some extent large multi national companies can and bankers will support them, but no mutual ever could.
    One of the biggest liabilities is the property leases which MOJ seek to off-load (amortise) onto the CRCs, when they come into the frame it really is game over for the smaller bidders.

    1. whilst I am strongly against Probation being sold off, I take no pleasure in mutual such as the Manchester college and Innovo being forced to pull-out. To some degree they have been scammed by Grayling just as we all have and, being close to some of the working party, I know they have been working extremely hard for months and all for nothing. They must have lost a small fortune to have come this far as I assume putting the bid together would not have come cheap. We're all losers

    2. Not "we are all losers", the front line staff are losers. Your managers are the winners regardless.

  6. Probation as we know it is finished. Sooner or later, interventions will be reduced or simplified to such an extent that any "responsible officer" can undertake. The plan is for the probation service to be completely outsourced to the private sector, by deskilling the workforce and making it more punitive. Public protection will be transferred to the police when it comes to probation cases. Courts will sentence without having to have any input from probation or pre sentence reports for that matter. The sentencers will have a list of probation sanctions they can impose, tick box exercise depending on how culpability is scored. By dumbing down the probation service, the government believes that it will realise huge savings. Instead, the police and CRI type services will be given the lions share of the work involving offenders. I believe this is the scenario that will befall the probation service.

  7. I work within the geographical area covered by Innovo CLM. Contrary to what Mr Thornhill says no-one asked me about the TMC amendments to the proposed MoU. So which staff were consulted? Not me or anyone in my team. And who are these so-called other stakeholders? We were told Innovo CLM was essentially a group of staff bankrolled by TMC giving it a go. How particular individuals were 'selected' was a mystery, but they emerged from under the duvet with grand titles and authority to do stuff. It was always going to be a shared experience - but this recent news has come out of the blue, without warning, without consultation and without any word from Innovo CLM themselves.

  8. Lets hope its lights out for Grayling!!

    1. Apologies, link to story would help:

    2. For David Cameron and his cabinet colleagues who grew up with the rigours of a boarding school education it was a normal fact of daily life.

      Dormitory “lights out” meant exactly that – and woe betide anyone who infringed the rules. Now, in a clear case of “what worked for us might work for you”, ministers are planning to extend the discipline of fixed bed times to teenage criminals in young offender institutions.

      From August, governors have been told that they must strictly enforce a 10.30pm cell lights-out policy and remove privileges from anyone breaking the new rules.

      After that time televisions – or reading under the covers – will be strictly banned and staff will be expected to carry out patrols to make sure the new edict is enforced.

      At the same time – perhaps to make them more ready for bed – the Government plans to more than double the number of hours of education and training that the 827 under-18s currently in custody receive each week.

      At the moment, teenagers in custody receive an average of just two hours of education a day – but this will rise to four under the new plans.

      The Justice Secretary Chris Grayling, who didn’t himself attend boarding school, said the move was less about punishment and more about discipline.

      “The public expects that serious offenders face prison,” he said.

      “But it is also crucial that young people, most of whom have had chaotic and troubled lives, finally get the discipline so badly needed to help turn their lives around.

      “In some prisons young people are allowed to go to bed when they please.

      “I don’t think that is right. Stopping this inconsistency and introducing a strict lights-out policy is all part of our approach to addressing youth offending. Those who fail to comply will face tough sanctions.”

      But the shadow Justice Secretary Sadiq Khan described the move as a “gimmick”.

      “Routine is crucial for those with chaotic lives, but to think that turning the lights off at the same time in every youth prison is all that’s needed to turn them all into law-abiding citizens is a joke,” he said. “This looks like a gimmick to cover the cracks caused by Grayling’s cuts.”

      Juliet Lyon, director of the Prison Reform Trust, said they felt the move was entirely inappropriate.

      “A new lights-out policy will only exacerbate the problem of overuse of physical restraint in the youth secure estate, which indicates a lack of trained, experienced staff with enough time to supervise and support the challenging children and young people in their charge,” she said.

      “As most parents of teenagers know, common-sense discussion, constructive activity, setting reasonable boundaries and encouraging personal responsibility all work better than new hard-and-fast rules backed by petty restrictions and harsh punishments.”

    3. I would like to think that, with the obvious unravelling of the UK's Criminal Justice System and his part in that farce, the Justice Secretary woulod have better things to occupy his mind than what time the prisoners in his charge went to bed.

    4. I'm beginning to think that ridiculous nonsense like this "Nanny says it's bedtime" policy is an indication that Grayling knows EXACTLY how much trouble he and his department are in, and he's desperately scrabbling around for something to distract attention from the real issues, since he has NO CLUE how to solve them.