Contact: Terry Rath, 01962 846457, [email protected]

1 Summary

1.1 The Working Party set up to examine the future of the residential study centres examined detailed evidence from several sources including other similar study centres and has concluded that by building on their strengths the two residential study centres will be able to continue to provide an enjoyable and worthwhile experience for Hampshire children despite having to increase their fees to schools.

2 Recommendation

2.1 The following decision is sought:

That the following recommendations of the Working Party on Environmental Study Centres are agreed:

i) The Management Committees of the two residential study centres, Stubbington and Minstead, raise their charges to meet their running costs.

ii) Minstead Management Committee increases its charges over the next financial year using its reserves to offset the rate of increase and also considers introducing seasonal variations to its charges.

iii) Both centres continue to develop more active promotional and marketing approaches and seek to recruit from a wider catchment area.

3 Background

3.1 As part of the Children's Services budget for 2007/08 and 2008/09 the Executive Member for Children's Services took the decision to withdraw a third of the financial support for the residential study centres at Minstead and Stubbington in the 2007/08 financial year and to remove all support in 2008/9. Subsequently, the Cabinet agreed to provide the Children's Services budget with funding equivalent to that agreed to be withdrawn from the study centre budget for 2007/08 from the Leader of the County Council's grant budget. This was to provide time for the department to plan the future of the study centres. No additional funding was provided for 2008/09 and the Children's Services budget for 2008/09 contains no funding to support the residential study centres. This funding has been used to moderate the fees charged to schools for a child's attendance at the study centres.

3.2 A working party was established to assist in developing proposals about the future of the residential study centres. Membership of the working party, which met on four occasions, is attached as Appendix I.

3.3 At its first meeting on 16 May 2007 the working party agreed its terms of reference:

a. to examine the current funding and activities of the Hampshire residential study centres and establish an understanding of their current income and expenditure. To compare costs, income and activities with other residential study centres including those outside Hampshire.

b. to consider all possible sources of funding including undertaking risk analyses, as the assumption is that all direct income from the County Council is withdrawn from March 2008. This may require a change in current operating principles.

c. to make recommendations on the future funding opportunities for the residential study centres.

4 Working Practices

4.1 The Working Party was assisted in undertaking analyses and in carrying out research with ten other centres and three local authorities by Lynn Mead from Treasurers' Consultancy. Attached as Appendix II of this report is the summary produced.

The summary identifies the principle features of the other centres. The Working Party agreed the list of centres to be approached and the questions to be asked.

4.2 Lynn Mead also undertook financial analyses and projections on behalf of the Working Party to examine and test the impact of various ways forward.

5 Minstead and Stubbington

5.1 Minstead and Stubbington are the two residential study centres, maintained through the Children's Services Department by the County Council. Minstead accommodates 32 children and Stubbington 104. They both focus on primary age children. The centres operate as residential centres term time only, although both centres are used at other times. For example, Stubbington is used in the summer holiday period for youth sporting activities and Minstead runs many INSET courses, school day visits and a programme of community use. Both centres are used by schools from Hampshire, Southampton and Portsmouth. They have both traditionally run to full capacity. Inevitably, only a minority of schools in the three local authorities have been able to send children to the centres as the as the overall annual residential capacity at Stubbington is 4056 and 1248 at Minstead per school year. A further 1182 pupils visited Minstead as day pupils. During the last three years they have been open Stubbington has been used by 72 of the 302 primary/junior schools in Hampshire and Minstead by 38 for residential and 47 for day visits. Demand has exceeded capacity and some schools have not applied to come to the centres because they cannot be guaranteed an annual booking.

5.2 Both centres are run as business units under County Council regulations. This means that they are able to carry forward surpluses and deficits over a financial year against an agreed business plan. The centres have Management Committees to assist in their running.

5.3 In 2007/08 the Minstead centre received funding of £102,000 and Stubbington £146,000 from the County Council to assist in meeting running costs. Additional funding of £9,000 is provided by Portsmouth Local Authority to Minstead and £25,000 to Stubbington. Similar arrangements were in place up to the 2005/06 financial year with Southampton Local Authority. The impact of this change is discussed more fully later in their report. The majority of income raised by the centres is from charges to schools. The current charge to Hampshire and Portsmouth schools for a week at Stubbington is £125.00 and for Southampton schools £180.00. The charges at Minstead are calculated as a weekly charge for the use of the centre by a school party and are currently £4,300 per week for Hampshire and Portsmouth schools and £6,700 for Southampton schools (based on 32 children this equates to £134.00 and £210.75 per week respectively).

5.4 Portsmouth's local authority has stabilised its support for the study centres by transferring its funding, used to moderate the fees charged to Portsmouth children, to its dedicated schools budget. The Portsmouth Schools Forum have agreed that this funding should then be used to support the study centres.

5.5 The table below sets out in summary the financial results for the two centres over the last three years and the forecast for 2007/08.

During the period above the centres were faced with the gradual withdrawal of direct funding by Southampton City Council. In 2005/06 Southampton reduced their subsidy by one third and withdrew it completely in 2007/08. Although the effect has been to reduce the number of schools from Southampton attending the centres, Stubbington has been able to manage the change and continue to generate significant budget surpluses.

5.6 Fewer Southampton schools have booked the centre but there has been no drop off in the number of pupils coming from the schools which have booked. The situation at Minstead has been much more complex. It has retained the same number of Southampton schools that have traditionally attended the centre. In addition, Minstead's operations were disrupted significantly during the 2005/06 and 2006/07 financial years by the major building programme to remodel the centre's accommodation building and provide a new dormitory at an overall cost of some £1.3 million. The 2005/06 accounts reflects the centre's contribution to this programme which was also assisted by a substantial lottery grant. The centre has a remarkable new facility which will add to it's appeal in the future years. Over this turbulent period it is noteworthy that the centre's finances have virtually remained on track. In 2007/08 some of the balances of most Children's Services business units have been used to contribute to savings required by the County Council but in view of the more difficult situation being faced by Minstead and Stubbington this has not happened in their cases.

6 How the other centres operate: some broad conclusions

6.1 The ten centres contacted to gather experience of the issues involved in moving towards self funding were a mix of local authority, private and charitable centres. One of the centres had moved between these categories. The responses of the centres, therefore, were individual and idiosyncratic reflecting both where they were when the move to self funding took place and the nature of the facilities, expertise offered and the range of local competition they faced to establish their position in the market. There are, nevertheless, more general points which emerge and need to be tested against the position that Stubbington and Minstead will find themselves in following the County Council's decision to withdraw direct funding from April 2008.

6.2 Throughout any changes, the research identified a clear need to ensure that the quality and reputation of the services provided by the centres were maintained. Some suggested a short survey to determine what users truly value. It has been very helpful to the work of this Working Party to receive this information from headteachers on the Working Party, on their own and colleagues behalf. A more commercial outlook to the operation of the centres, with a sharper focus on costs and their recovery, and the attraction of new customers and activities were seen to be important. An example given was the opportunities presented by the Learning Outside the Classroom Manifesto. But change in attitude and culture was important to make this work.

6.3 Four of the centres had experienced significant price increases which were followed by a loss in bookings. However, this was recovered over time and the centres developed. Centres had looked to expand their times of operation. Expanded use in Easter and Summer school holidays had proved very difficult to achieve. A more successful approach had been the use of the centres during weekends which had been popular and allowed more children to use the centres. Seasonal pricing was used by many of the centres to ensure that they were occupied as much as possible, particularly outside of term time use.

6.4 Inevitably, other centres have focussed closely on reducing costs and expanding the use of the centres. Staff have been moved from teachers' contracts and conditions of service to enable the centres to be open for longer periods. Residential accommodation, on-site, for staff has been removed and used to increase the facilities available for hire. Evening provision and supervision has been made the responsibility of school staff with centre staff on call with robust hand over processes to cover health and safety. No one had experienced any significant difficulties. Expanded use has been staffed by support staff being on casual or call-off contracts.

6.5 Some centres have made special arrangements to help with the charges made to children from disadvantaged backgrounds. Friends associations and charitable trusts have been set up to raise money for this purpose.

6.6 When the centres were faced with increasing their charges and countering the effect of a reduction in bookings, marketing and promotion became important when previously there had been little need with a high level of repeat business. The following approaches were thought to be successful:

· informative, effective and interactive websites with downloadable information

· face to face found to be beneficial, such as getting in for INSET days and conferences. Providing brochures/leaflets to those who attended

· word of mouth and reputation the best form of marketing, dependent on monitoring quality and doing those things most valued by users.

6.7 The centres adopted very different approaches to pricing which has made comparisons difficult once you move from the outer limits of the process charged. The highest charge levied by these other centres was £227.50 per week and the lowest £49.00 per week to a particular group of users. Only two of the centres had a completely inclusive price i.e. the same as Minstead and Stubbington; a further four did have mainly inclusive charges with additional charges for specific activities, while the other two centres had completely piecemeal pricing of activities. Eight of the centres had adopted seasonal pricing.

7 Asset Values

7.1 Prior to 2006/07 capital charges included depreciation and a capital financing charge. The capital financing charge was determined by applying a specified notional rate of interest to the net amount at which the asset was included in the balance sheet - in other words how much it costs to finance the money required to purchase the asset in the first place.

7.2 Since 2006/07, as a result of rule changes in the Best Value Accounting Code of Practice 2006 (affecting all public sector organisations), only the depreciation aspect is charged to accounts, but there is still an overall cost to the authority for financing capital projects. Corporate Finance have advised that this should have no impact for a business unit as they should continue to budget for the notional interest element and use this to generate a planned contribution to reserves for future capital investment. If no contribution were to be expected towards capital works in the future then the notional interest aspect cannot be retained as this would effectively be generating a surplus. The County Council could still expect a contribution from balances towards future capital works.

7.3 Generally within the County Council capital charges are "below the line", but as business units these represent real costs for Minstead and Stubbington. This change results in an apparent reduction to the cost base of Minstead of approximately £11,000 and Stubbington £36,000 (using estimated 2007/08 depreciation charges from Corporate Finance dated July 2007).

7.4 In exploring the capital charges for the two centres it has become apparent that some current asset values are incorrect, resulting in further potential reductions in capital charges.

7.5 Asset values, which drive the level of capital charges, are revalued on a five year cycle. The next valuation for Minstead is due in April 2011, and Stubbington April 2010. Dependent on the outcome of the revaluation it can be anticipated that asset values will increase, resulting in a higher future capital charge. On this basis, and as the two study centres will be self financing, there will be a need to plan over the forthcoming years to be able to meet any respective change in capital charges.

8 Future of the Residential Study Centres

8.1 The Working Party has considered closely the evidence from the research undertaken with the other study centres, the strengths in different ways of Stubbington and Minstead and the possibilities/practicalities of reducing costs and expanding their use. These issues are interlinked e.g. the expansion of the use of the centres is restricted by the employment of staff on teachers' contracts. The movement to local government conditions of service would expand the length of time the centre staff could be expected to be running the centres, thereby increasing the opportunity to raise income to cover overhead costs. If similar salary levels were offered as are paid to staff in the Recreation and Heritage residential outdoor centres, then the overall salary costs would either be lower or not increase as much as they would otherwise.

8.2 Attached as Appendix III is an analysis based upon operating the centres for 52 weeks of the year (variable costs having been increased on a pro-rata basis) and all staff on the local government scales used by the Recreation and Heritage Department. The impact on Minstead is much greater than at Stubbington with pay costs reducing from £186,700 per annum to £167,995 per annum. In contrast, pay costs at Stubbington increase from £340,000 to £360,007. The differential effect is due to Minstead having a proportionately higher amount of staff costs determined by teacher pay. Although removing staff from teacher pay does potentially reduce the costs of the centres, other factors highlighted in part by the research conducted with the other centres do need to be taken into account. The other centres had found it difficult to obtain residential bookings for the Easter and summer holiday period. Day visits could be increased but this is an area where many other centres compete and even with the cost reductions, the Minstead and Stubbington centres would be carrying higher overheads because of their residential provisions than many competitors. It is likely that the Hampshire centres could find themselves in a position where an opportunity has been created which cannot be exploited.

8.3 Another clear message from the research was to build upon those aspects of the service that were really valued by users. It is clear that the current users of Minstead and Stubbington (although because of capacity only a minority of the local schools) value the different approaches offered by the two centres. At both centres the school and centre staff work together to ensure that the children get the most out of their stay following safe and well structured l programmes which develop their skills and self-confidence. These views of users are supported by the regular inspections of the two centres by members of the Hampshire Inspection and Advisory Service (HIAS) and the Health & Safety Team.

8.4 A change in the staffing arrangements could generate additional redundancy and re-deployment costs at a time when the financial analyses and the experience of Minstead and Stubbington in responding to the reduction in direct funding from Southampton suggest that it will be possible to maintain the centres broadly as they currently operate without the potentially damaging upheaval of what would be a major reorganisation and the possibility of diverting the focus of every member of staff.

8.5 It is anticipated that both centres will enter the 2008/9 financial year with balances. In the case of Stubbington it is expected that there will amount to some £467,000 and Minstead some £40,000. Analyses indicates that Stubbington could continue to generate significant financial surpluses if weekly fees for Hampshire pupils were raised in 2008/9 to £160.00, an increase of some 28%. This level of change would be well within the range found in the groups of study centres and certainly below that charged by commercial operators and currently to schools in Southampton. It is estimated that this level of charge will continue to generate a surplus at Stubbington. If demand for places at the centre reduced, the budget surplus could be used to cushion the impact until demand could be stimulated by marketing and promotional activity.

8.6 Minstead has fewer reserves to draw on but a remarkable new building to use to promote the centre and excite users. As a smaller centre Minstead is less able to spread its overhead costs across the numbers using the centre, i.e. each school's fees has to include a higher proportion of staffing and other fixed costs. It is anticipated that Minstead's charge per pupil to schools (even if not expressed in that way) will need to be higher than Stubbington's. Moving quickly to a charge to schools of some £195.00 per week per child is likely to cause a drop in demand, which could quickly impact on the centre's income and generate deficits and leave the facilities at the centre unused. It is proposed, therefore, to use the centres' accumulated balances in 2008/9 to cushion the impact of the rise in charges to enable schools to grow accustomed to higher charges. Minstead could also introduce a seasonal differential in its charges, with lower rates being charged in the winter. In this way the centre will take the `market' with it and avoid potentially having to increase fees more significantly in later years to reduce accumulated deficits. The centre would need to develop promotional marketing activities to support this approach, coupled with rigorously containing costs, particularly running costs and continue to undertake activities generating funding from other sources including community activities, currently generating an income of some £19,000 per annum at full cost recovery.

8.7 It is recognised that increasing charges to schools could affect disproportionately children from lower income families but who do not qualify for financial support from the school because they are not entitled to free school meals. One of the interesting ideas to emerge from the comparative research with other centres has been the establishment of "friends associations" or "charitable trusts" to raise money for the centres to enable them to work with schools to waive or ameliorate costs for the less well off.

8.8 One further area of cost reduction will also need to pursued. Currently the heads of the centres are accommodated rent free as are the two deputies at Stubbington. Council tax and utility bills are charged to the centres. This is a very significant financial benefit which the Human Resources department wish to examine in the light of the County Council's Pay and Benefits scheme. The County Council normally expects tenants to pay a rent for the property they are occupying even if this is fixed at less than market value. There will be further negotiations about this but its effect will be to reduce the cost profiles of the centres if council tax and utility charges were met by the occupiers of the properties. Rent charges would benefit the general Children's Services budget.

8.9 Other opportunities for cost reduction should be taken when opportunities arise. At Stubbington this is possible because of the continuing success of the `ranger scheme' at the centre, under which two sandwich course students spend a year at the centre as part of their degree.

8.10 As well as reducing costs, opportunities should be taken to promote and market the centres by:

· Developing publicity and marketing material including an interactive website

· Expanding the promotion of the centres to schools in neighbouring local authorities and independent schools

· Increase use of the centres by local voluntary, youth and community groups

· In the case of Minstead, in particular, increase the promotion of the centre by working jointly with local R and H centres to offer a wider package of opportunities for schools.

8.11 It is recognised that although this report proposes building on current arrangements to secure the future of the two residential study centres, there are risks involved. It is the Working Party's view that alternative approaches would involve a higher level of risk to the sustainability of the centres. Nevertheless if the current proposals do not create a secure financial and guaranteed future for the centres it is recognised that more fundamental remodelling of their operation may be required in future.

9 Corporate Aims and the Every Child Matters agenda

9.1 This decision supports the following Hampshire County Council priority:

Making Hampshire safer and more secure for all by continuing to provide a residential experience for young people that emphasises positive contribution to their communities.

Maximising well-being for young people that impacts on their self confidence and self worth.

Enhancing our quality of place through teaching young people about their environment and sustainability.

9.2 The decision supports the following Aims of the Children Act:

Being healthy; Staying safe; Enjoying and achieving; Making a positive contribution;

10 Consultation

10.1 The outcomes of this report have been discussed with the Management Committees of the two study centres and considered by the Schools Forum at its meeting on 7 November 2007. All supported the recommendations.

11 Legal implications

11.1 Schools cannot charge for education provided during school hours. A parent can be charged for board and lodging on a school trip.

12 Personnel implications

12.1 Further work is under way with the Human Resources Department concerning the issues highlighted in paragraph 8.8 of this report about housing.

13 Impact assessment

13.1 The impact of the increase in charges has been a matter given careful consideration by the Working Party, particularly on those from a less well off background. The Working Party was aware that many schools already support in part or in full the costs of attendance at the study centres by children from less well off backgrounds. The Working Party were also aware that many residential centres, used by Hampshire schools, already charge more than the likely charges that Minstead and Stubbington will introduce. In order to provide additional support both study centres will create "Friends' Associations" which will be able to raise funds to enable the centres to help schools to mitigate charges for individual pupils.

14 Crime prevention issues

14.1 The Working party was conscious of the potential for criminal opportunities if the centres were left unstaffed and unsupervised over significant lengths of time. This was a factor in reaching their final decision.

15 Views of the Local County Councillor

15.1 Councillor Tim Knight, the local County Councillor for Stubbington has commented:

"I fully support the activities of the Stubbington Study Centre. It is well run and does a wonderful job. In particular it provides a life changing experience for all children who attend the residential courses".

The report has also been discussed with Councillor Mel Kendal who supports its recommendations.

Section 100 D - Local Government Act 1972 - background documents

The following documents discuss facts or matters on which this report, or an important part of it, is based and have been relied upon to a material extent in the preparation of this report.

NB: the list excludes

1. Published works

2. Documents which disclose exempt or confidential information as defined in the Act.

List documents here or type `none'.