Official Report 530KB pdf
Good morning and welcome to the 26th meeting in 2015 of the Local Government and Regeneration Committee. I ask everyone to switch off mobile phones and other electronic equipment, as they affect the broadcasting system. Members may consult tablets during the meeting, because we provide meeting papers in digital format. We have received apologies from Cara Hilton.
Under agenda item 1, we will take evidence as part of our inquiry into arm’s-length external organisations. I welcome Ian Murray, chief executive of High Life Highland, and Bill Alexander, director of care and learning at Highland Council, who will give evidence on High Life Highland, which provides cultural, sporting, leisure, learning and health initiatives and projects on behalf of Highland Council; Eric Adair, operations and finance director of the EDI Group, and Peter Watton, head of corporate property at the City of Edinburgh Council, who will give evidence on the EDI Group, which is a property development and investment business set up by the City of Edinburgh Council; Jillian Ferrie, chief executive of CultureNL, and Lisanne McMurrich, head of education skills and lifelong learning at North Lanarkshire Council, who will give evidence on CultureNL, North Lanarkshire Council’s cultural services ALEO; and Sandra Ross, managing director of Bon Accord Care, which delivers a range of social care services for Aberdeen City Council.
Before we hear from our witnesses, I will comment on the absence this morning of witnesses from Aberdeen City Council. Last week, the chief executive wrote to me indicating that the council was
“not currently in a position to attend this inquiry”
as officers with responsibilities relating to ALEOs had been asked to focus on other activity, and that the council did not think that it could
“give appropriate and useful input to an appearance at the committee.”
The committee clerk has had a series of conversations with Aberdeen City Council in that regard, reminding it of our powers to compel witnesses and urging it to reconsider. The clerk has also reminded the council of what I said on behalf of the committee last year in response to similar issues that we were then facing. On that occasion, I said:
“I would like to clarify the committee’s approach to who we ask to appear before us and the general criteria that we adopt. This is directed towards those from the public sector, including local authorities in particular, although for others our approach is similar.
When deciding who to invite, we look to achieve a balance from across the country that covers both rural and urban. We also have in mind coverage from affluent and less affluent areas. We aim to spread the coverage across the whole country, although we recognise that those in the larger urban areas might have more experience and knowledge of particular issues to share with us. We also recognise that staff in the larger urban areas can be more specialised and potentially handle a wider variety of issues, but we are always looking to the impacts on smaller areas, too.
We consider written submissions and other pertinent information before we select witnesses, and we are always interested to hear from those who provide an opinion that may differ from the status quo. If we receive submissions that provide similar opinions, we will try to avoid duplication on our panels, and we will strive to have contrary views available to test what we are told.
When we issue an invitation, we expect witnesses to attend. We will cancel an invitation only in exceptional circumstances. These invitations are not like invites to attend Government or other working groups, and we do not consider acceptance to be discretionary. We have powers to compel, but we do not want to use them, as we appreciate that it is far better all round that people attend willingly.
If witnesses feel that they are not the appropriate person to attend, they should contact the clerk immediately. That will allow an opportunity to discuss whether there might be a better alternative. If witnesses leave it to the last minute to contact the clerks, they will not be allowed to withdraw, and we will expect them to attend.”—[Official Report, Local Government and Regeneration Committee, 10 December 2014; c 2.]
I ask committee members for their views on whether they consider the reasons for Aberdeen City Council’s non-attendance today to be acceptable and invite comment on what action they would wish to take. I have a suggestion that we should summon from the council the original witness, the chief executive and the leader.
As there are no alternative views, do we agree to do that?
Members indicated agreement.
Thank you very much. That meeting is likely to take place on 2 December.
I invite opening statements from Highland Council and High Life Highland.
Good morning, committee. I will give an opening statement on behalf of Ian Murray and myself. High Life Highland was established as a council-owned company, with charitable status, in October 2011, so it is now four years old. It was set up with a board of 12 directors—eight of whom are independent and four of whom are councillors—to run adult learning, archives, arts, leisure facilities, libraries, museums, outdoor activity, sport and youth work.
Undoubtedly, the council’s initial driver was the capacity to achieve on-going savings and to protect services that might otherwise have had to be reduced. However, there were also aspirations that the new body could act more quickly, be more creative and, where appropriate, be more commercial, utilising the skills of independent directors while retaining a clear focus on public service, with strong links to council priorities.
How has it been for the council? We would say that it has been very good—there have been definite service improvements in a range of areas, including libraries, leisure facilities and museums. There has also been an on-going commitment to council priorities, such as the integration of adult health and social care and corporate parenting for children. In the past year, High Life Highland has joined the community planning partnership as a full member, and we are beginning to engage in partnership issues.
High Life Highland has achieved savings largely through increased income and efficiencies, and always with a focus on council priorities. It has also begun to develop partnerships with the private sector. Mr Murray will say more about that.
Why has it worked? In the end, that comes down largely to attitudes and relationships. The council’s positive challenge was that the High Life Highland board should have the responsibility and the freedom to improve services. From the start, the board has had a positive approach to improving and developing services. It has not been about sitting back and simply managing budget reductions; rather, it has been about achieving creativity with a particular focus on the services that it provides.
High Life Highland has wanted to be, and is regarded as, a trusted partner by the council and other public bodies. That approach has built confidence over the first few years, which has helped to build the strong and stable relationship that we now have. Fundamentally, High Life Highland is popular. It is popular with council members, its staff, the public and communities. It is seen to be working with the council, but it also has its own identity, which brings creativity and focus.
Do you have anything to add to that, Mr Murray?
Not at this stage.
Do the City of Edinburgh Council and the EDI Group wish to make an opening statement?
Yes. Good morning. I am joined this morning by Peter Watton, head of corporate property at the City of Edinburgh Council.
The EDI Group is a wholly owned subsidiary of the City of Edinburgh Council. It was established 25 years ago with the purpose of leading the development of Edinburgh Park, which it did successfully. Today, it has two objectives, the first of which is to carry out property development in specific areas of regeneration. Those areas are identified by Edinburgh Council and, at the moment, they are the Craigmillar and Granton areas of Edinburgh. The second objective is to take land and buildings that are surplus to the council’s operational needs and develop them for profit.
An example of our current work is that we are designing and building a hotel in a gap site in the old town of Edinburgh. We have designed the new town centre in Craigmillar and we are attracting retailers to that in order to improve the local shopping facilities. We are creating a master plan for the former industrial site at Fountainbridge. As part of that, with the support of a joint venture partner, we are developing a 300-home, £100 million private rented sector scheme.
I have been a director of EDI since 2006. Peter Watton has the privilege of being the council’s observer and attending all the EDI board meetings. He worked in EDI for a period, so he has been on both sides of the fence. The board structure has changed at various points while I have been involved in EDI. Currently, it consists of one executive director—me—and six non-executive directors. Of those, three are councillors appointed by the council and three are external independent directors appointed for their experience.
There is a shareholders agreement between the council and EDI, which was reviewed and updated in 2014. It sets out the practical arrangements of governance between the council and EDI.
I think that Jillian Ferrie will say something on behalf of North Lanarkshire Council and CultureNL.
Yes. I would like to give the committee some background information on CultureNL. On 1 April 2013, operational responsibility for North Lanarkshire Council’s cultural and associated services transferred to CultureNL, which is a specially created company, limited by guarantee, with charitable status agreed in accordance with approved charitable objectives and principal activities.
The transfer followed a full and transparent options appraisal, led by KPMG and utilising a toolkit devised by Museums Galleries Scotland. The council established CultureNL in order to provide a sustainable future for cultural services; to allow continuous service improvement in the years ahead; to reach new audiences and develop strong partnerships; to enable services to operate in a more responsive way; and to undertake new developments, besides making a financial saving on non-domestic rates.
CultureNL is responsible for the management and operation of performance venues; arts development and community arts activity; community facilities, including the letting of school halls and sports pitches; museums and heritage; libraries and information; and play services, along with the catering, cleaning and caretaking associated with those services.
Since its inception, CultureNL has embraced its responsibility for delivering services of major importance to the communities of North Lanarkshire. The organisation has flourished in its first two years of operation. It has placed culture at the centre of activity, provided a sustainable future for cultural services, and recognised the importance of arts and culture in day-to-day life and the positive health and wellbeing impact of participation in cultural activity.
What is the make-up of the board of CultureNL?
We have 13 directors on the board, seven of whom are independent and six of whom are partner directors appointed by North Lanarkshire Council.
Are they all councillors?
Six of them are; seven are not.
Six are councillors. I understand that Bon Accord Care does not wish to make an opening statement. I ask Ms Ross to indicate the make-up of the board of Bon Accord Care.
Certainly. I am the managing director and there is our finance director, our chairman and four non-executive directors. There are no elected members on the board.
There are no elected members. It is you, the chairman, a finance director and four others.
Also, each board meeting is attended by an officer from Aberdeen City Council.
So an officer without a vote attends on behalf of the council.
Yes.
10:15
How does Highland Council scrutinise High Life Highland?
There are biannual meetings of the adult and children’s—
Bill, will you please give the right name?
The education, children and adult services committee.
Twice a year, I report directly to that committee. In between, there are monthly informal meetings with the council’s leader, the chair of that committee, the convener, the chief executive and Bill Alexander.
In addition, there is quarterly input into the care and learning service performance report, which goes to the council’s chief executive. The director of care and learning has a standing invitation to the senior management team of High Life Highland. Similarly, I have a standing invitation to the management team of the care and learning service. That is on an as-and-when basis rather than a regular basis. There is a range, from the committee right through to informal meetings.
Are all your performance indicators available for scrutiny at council committee?
Yes. They are based on the single outcome agreements between the council and the Government. Our performance indicators are taken directly from those that affect and influence the nine areas of our work.
Are you questioned on those performance indicators by the relevant council bodies that attend?
Yes. I was at the committee just last week and there was a range of questions on almost everything, from youth work through to leisure facilities.
Is it easy for members of the public to scrutinise what you are up to as well?
As part of our integrated health and social care arrangements, we are increasingly developing local community planning forums. In future, we see those as the hub for community and public engagement. Mr Murray has recently been to those forums and engaged in discussion about High Life Highland’s range of activities. We expect the public, community councils and community organisations to be involved in that.
I would not say that that was scrutiny; it is discussion about local delivery. Scrutiny happens in the council committee, the officer processes and reporting in the performance framework. However, High Life Highland has a very high profile and there is very active community debate and discussion about the delivery of services. High Life Highland is very much part of that.
How is scrutiny of EDI by the City of Edinburgh Council carried out?
The shareholders agreement sets out a number of requirements. Broadly, that would include the submission of all board papers to the observer, including a number of specified finance reports. Those finance reports are also provided to the council’s head of finance on a monthly basis.
The shareholders agreement requires the preparation of an annual business plan looking three years ahead. In the first instance, that is submitted to council officers for their input and review. It is then submitted to the council’s economy committee for approval.
There are also ad hoc summons to other committees. Recently I attended the council’s housing committee to present what we are doing on housing delivery in our areas of development.
What about North Lanarkshire Council and CultureNL?
At present, quarterly reports are presented by me, as the contract manager, to North Lanarkshire Council’s learning and leisure services committee. In addition, there is an officers meeting between me, the head of financial services at North Lanarkshire Council and the chief executive and her team, at which we look at performance measures and the financial position of CultureNL. I also have ad hoc meetings with the chief executive on strategic matters.
Our contract states our finance arrangements, and we report monthly to the council on our finance. We also have in place service level agreements that stipulate our key performance indicators. Some of our KPIs are reported weekly and some are reported monthly. We have monthly operational management meetings, and I meet the integration joint board—it used to be the director of social work—monthly to discuss the KPIs and the outcomes.
We have to prepare an annual report and present it to the council. We also share our annual accounts, once they are audited. We present at the ALEO governance hub, which takes place throughout the year, where we report again on our KPIs and are asked about how our board is operating, about strategic areas that we are moving forward in and about a range of issues.
We have information on our website about freedom of information requests, and we have a robust complaints and comments procedure in place, which is well utilised by our service users and members of the public. We also use local committees such as sheltered housing committees to give people access and to allow us to gain a good understanding through direct contact with our sheltered housing service users.
Can I stop you there, please? From what you have said, it seems that the only opportunity for councillors to scrutinise Bon Accord Care is at the presentation of your annual report—is that correct?
No. The ALEO governance hub, which was the shareholder scrutiny group—
Can you tell us about the ALEO governance hub? Who is on that?
The ALEO governance hub is officers to whom all the ALEOs present.
How many councillors are on the ALEO governance hub? I am interested in the opportunity for councillors to scrutinise what is going on. The other organisations have said which committees they are responsible to.
I apologise.
How do Aberdeen City Council councillors scrutinise what you are doing?
The ALEO governance hub asks us specific questions that have been asked by the audit and risk committee. The report that we prepare goes to the audit and risk committee, and we attend that committee, as well, where we are open to direct questions from councillors.
How often does that happen? Others say that they have to go to such meetings quarterly, for example. How often do you have to attend the audit and risk committee of Aberdeen City Council?
I am sorry, but I cannot answer that question at the moment. I can get back to you on that. It is about three or four times, but I am not sure of the frequency.
Okay. Thanks.
Good morning. Mr Alexander, in your opening remarks, you said that the reasons for setting up High Life, which is a council-owned company, were savings, increased aspiration, partnership with the private sector and improved service delivery. Why could those things not happen under total control by the local authority? Why was it felt that the council had to use an arm’s-length external organisation to achieve those things?
I suppose that that is the $64 million question, and it is one that we ask ourselves quite a lot. The initial motivation was undoubtedly that the cost base of the arm’s-length external organisation would allow savings to be made with regard to non-domestic rates. It was also felt that an ALEO could give focus and bring creativity to services that might otherwise be threatened.
There was no scientific analysis of that and we did not necessarily know what would happen. We set a policy framework around the ALEO and some parameters within which it should operate. We then encouraged it to fly, and it has flown. Some magic dust is created, perhaps partly because the ALEO is not the council. It has a sense of identity and a focus on its business, and it fosters loyalty. It has a degree of creativity and there is passion from its independent directors, who bring a range of skills to the board. It also has passion from its staff, who enjoy its identity and would not want to come back to the council.
There are a range of issues—some that we can quantify and talk about and others that we are less able to articulate but which are about passion, creativity and focus. The ALEO brings more than a council, which delivers a whole range of services, could bring to the remit.
Will you expand on the savings? You mentioned savings on non-domestic rates, but surely it is not just about that. What other savings have been made? Have there been changes to staff terms and conditions?
No.
Have zero-hours contracts or other such things been introduced?
No.
I have heard that such things have been raised in other ALEOs. A number of ALEOs make the same argument that the savings outweigh the benefits of their remaining part of the council. Have the savings just been on non-domestic rates?
No. There have been many more savings. The intention was never to achieve savings through changes to staff terms and conditions. That is quite clear. The savings were to come from the business though income and efficiencies. Mr Murray can provide more details.
We have always been absolutely focused on not changing staff terms and conditions.
The non-domestic rates and VAT treatment that are available to a charity are different from what is available to a council, and therefore the council is making savings of approximately £1.1 million. Also, since the organisation left the council’s direct control, the ability to focus that Bill Alexander mentioned has produced some magic dust. The staff feel part of a manageable organisation, and that has led to a greater focus on generating income through our leisure centres, which is where most of our income comes from.
A small example would be donations at the Highland folk museum in Newtonmore, which has free entry. Attendances have gone up from 16,000 to 44,000 in the past couple of years and donations have gone up to nearly three times their level when we left the council. That is simply about staff having more of a feeling of oneness with the organisation and understanding that it is important to get donations up in order to protect services.
It is difficult to explain why that was not achieved in the council—and I was head of service in the council—but it seems that setting the ALEO free and staff identification allow the staff to focus on the business.
Mr Alexander, you are quoted as saying that High Life is a council wholly owned company.
That is correct.
If that is so, why do the staff who work for High Life feel that they are part of an entirely separate entity? Why do they seem more encouraged to work for that separate entity than they would be for the council? It is a wholly owned company, in your words, that is controlled and, bar the day-to-day running of the organisation, directed by the council.
I am not sure how aware the staff will be of the back-office joins. What they see is a standalone independent company of 600 to 700 people, many of whom they know personally, a chief executive whom they know personally and a company with its own branding and a high profile. High Life has ties and badges and you can get a jacket with the label on it. High Life has an identity and people talk about it. We have a membership scheme and the public and communities want to be part of that. It has a brand and identity that works and it is seen as separate from the council.
In governance terms, we do not rigidly pull every single string that makes High Life work. It has a degree of freedom and autonomy within the overall priorities, parameters and policies of the council. We have not yet come to an issue that would break that trusting relationship. With the budget challenge that is coming down the road, that might get more difficult, but to date it has worked.
10:30
Thank you, Mr Alexander.
I turn to North Lanarkshire Council, and I need to make a declaration at this point. I know the services fairly well as I rent some premises from the council for my surgeries and I am aware of what I might describe as the intricacies that exist in North Lanarkshire. Not only do we have representatives speaking on behalf of CultureNL here today, but we also have North Lanarkshire Leisure, which is another organisation that operates at arm’s length from the council that has leisure facilities and other premises.
I was interested in Ms Ferrie’s reference to CultureNL operating education services. An issue that constituents have raised with me is that, when they try to book a council hall—that is the local term—they can be sent to anything up to three different departments before they get an answer as to whether they can book it. Some of the facilities are owned by the education service and controlled by it up to 5 o’clock in the evening, some are owned and operated by NL Leisure and others are operated by CultureNL.
Given the conflict that exists there, why did North Lanarkshire Council not just decide to transfer some of the CultureNL services to NL Leisure instead of setting up an entirely different organisation?
CultureNL certainly lets community facilities in schools and the pitches associated with them after 5 o’clock. Mr Wilson is right to say that North Lanarkshire Leisure, as a sports trust, operates pitches as well. Within CultureNL, we have one booking system that allows people to see any facility that we operate, so people would come to us only once if they were trying to hire a facility such as a sports pitch from us. I believe that it is slightly different for North Lanarkshire Leisure, which focuses on specific areas such as Airdrie sports centre and Ravenscraig. It does not have the same booking system as us.
I cannot speak for the council on why it did not transfer the sports pitches at the time when it established CultureNL, but I note that CultureNL is much wider than sport. We will hire out a pitch for anything. It does not have to be for a sporting activity; it could be for a gala day or anything at all. We will hire out the pitch, but we are not responsible for what is on it, whereas North Lanarkshire Leisure is different because it has football clubs and other sporting clubs that use its pitches. I am not sure whether that answers your question.
Maybe Ms McMurrich can explain the council’s reasoning for that decision.
When the council was considering through an options appraisal process the establishment of a separate cultural trust, what was then called learning and leisure services—and previously the education service—had one process for booking community facilities and school facilities regardless of whether they were sports or cultural facilities. The council found it difficult to split school use under a compartmentalised approach whereby some things were about community learning activity and therefore had to be booked in a particular way and some things were about cultural activity or sports activity.
We wanted to take an holistic approach to making better use of the school estate, so we felt that it was not right to fragment the system in such a way that a third-generation sports pitch would be booked through a leisure trust. We felt that our approach should be about community use and community access to schools. That was the original rationale for keeping that approach and vesting it in one ALEO in particular.
However, we have done something, which has perhaps muddied the waters, in relation to a particularly large, enhanced facility—St Ambrose high school in Coatbridge, which has a lot of community facilities and particularly sports facilities. As a council that constantly looks at pushing the boundaries to try to find best practice and best value, we appreciated that there might be a sports element to that facility and we put in place a pilot to consider whether it would be more appropriate for it to be operated by a leisure trust whose thinking was very much about sport. That has perhaps led to some confusion in the community about how to book during the day for the community aspect and in the evening for the sports element.
We are still evolving our approach. When we established CultureNL, it was predominantly about cultural services. As regards the points that have been made about the importance of focus and what it brings to an arm’s-length external organisation, we have not said that we would never consider a merger between the two ALEOs. At a point in time, that might be a consideration for the council.
I will ask the same question that I asked before about the savings that have been made. I think that NL Leisure has been established since 2009 and CultureNL was established in 2013. Over that period, what savings has North Lanarkshire Council made from the establishment of the ALEOs and what changes have taken place to allow those savings to be made?
In CultureNL’s first year, the savings were mainly from non-domestic rates. In 2013-14, we saved £1.15 million because of that. In the second year, we had a further efficiency saving to make of nearly £700,000. By that time, we had had a year to bed in. We were a new organisation and we had increased our income generation. We have a lean management structure. There is me and there are 14 managers; there is no hierarchy.
I want to get my head around the non-domestic rates situation. It seemed clear to me that the transfer of properties to High Life would create a saving in non-domestic rates, but what you have just discussed in your exchanges with Mr Wilson is that you do bookings for nights in schools and various other things. Obviously, those schools have not transferred to CultureNL, so how can there be non-domestic rates savings? I take it that there are none.
We saved £1.15 million in non-domestic rates as a result of the establishment of CultureNL.
A lot of your activity seems to cross into educational establishments and the rest. Am I right in saying that there will be no non-domestic rates savings there?
We would make non-domestic rates savings in the museums, libraries and community facilities, but not in the schools.
I just wanted to clarify that. Sorry, John.
That is okay, convener.
In our second year, we had to save £695,000 and, as I was saying, a lot of that was through increased income. By that time, we had managed to bed in and we knew what we were trying to do.
Following the set-up of the trust, we benefited greatly from venues and catering merging. Previously, catering sat within environmental services, the venues—the concert halls and the theatres—sat within learning and leisure and there was no joined-up working at all. When CultureNL came into being, the leisure catering transferred. We have benefited greatly from those two services merging, particularly as regards income generation and customer development. The two services are located in the same building and they work as one team. That helped towards our savings.
As I said, we have a lean management structure and we have careful vacancy management. We secured the second year saving out of that.
My follow-up question is on terms and conditions for staff who transferred under the Transfer of Undertakings (Protection of Employment) Regulations 1981 and for other staff who were taken on. Do you employ staff on zero-hours contracts? Ms McMurrich will have heard that question asked a number of times in the council chamber. Do your staff have the same terms and conditions and rates of pay that they would have enjoyed if they were employed—or had continued to be employed—by the council?
Yes. We have not changed the terms and conditions and we work with the council’s job evaluation scheme so everyone is on the same rates of pay that they were on.
When I go to my surgeries on a Monday morning, I see a notice on the noticeboard from CultureNL advertising vacancies and saying that there is flexible working. I am positive that, some time ago, there was a poster that talked about zero-hours contracts. Flexible working is certainly mentioned in the notice that I see regularly at my surgeries. Have there been savings from staff going on to more flexible contracts?
We have not changed the contracts. People have applied to work flexibly, as they are able to, and we have a number of people who undertake flexible working within CultureNL. We have no one on a zero-hours contract and we have never advertised a zero-hours contract.
We do have casual staff. For example, the front-of-house staff who work at the concert hall and the theatre are casual staff. They cannot be given contracts because they work as and when required and they know that. That has always been the case. Nothing has changed since we became CultureNL.
Will you define the difference between a casual contract and a zero-hours contract?
I know that we do not issue anyone with a zero-hours contract and that casual staff apply as casual staff. For example, the pantomime is just about to start and we will employ more front-of-house staff in order for that to take place. We would advertise for short periods of working and people know that they will be put on a rota. We do not say that they are zero-hours contracts.
You just say that they are casual staff.
They are casual staff.
Before we move off that topic, I want to make sure that we get details about terms and conditions from all the witnesses. Mr Adair, can you tell us the EDI position on terms and conditions? Are the folks who work for you on the same terms and conditions that they would have been on when they were working for the council?
No. EDI employs people on separate terms and conditions from the council. I do not think that there are any employees now who transferred from the council. There were some 25 years ago, but TUPE probably did not apply then, so I do not know what terms and conditions they transferred over on. All current employees of EDI were recruited privately into EDI.
Mr Watton, do you have any comment on that from a council point of view?
No. We have transferred staff under TUPE from EDI into the council and we have respected the terms and conditions of their contracts in that process. It is well known that EDI, when it advertises on the wider market, offers different terms and conditions from those that the council can offer. That is one reason why it was set up—the ability to attract better commercial talent.
Do you have any zero-hours contracts?
No.
Ms Ross, what about terms and conditions at Bon Accord Care? Are they the same as staff had previously?
Yes.
Does that include new recruits?
Yes.
Do you have any zero-hours contracts?
No.
Mr Murray, does High Life have any zero-hours contracts? You have already explained the position on terms and conditions.
Zero-hours contracts were being discussed as we were leaving the council. There are a limited number of zero-hours contracts for people such as coaches who are employed for three or four hours a week, where there needs to be a mutual agreement that there is a requirement to turn up. If we had a completely casual relationship with a member of staff such as a fitness coach, they could decide that they were not going to bother to turn up next Tuesday, which would make it difficult for us to maintain a public face. In a limited number of cases, a zero-hours contract ensures that there is mutuality. If we are giving the person those three hours a week, they have to turn up.
Do you think that your staff who are on zero-hours contracts are happy with those arrangements?
I am not aware of any complaints. There is no suggestion that they cannot work for anybody else. It fits into their lifestyle to do a few hours of coaching.
So there is no exclusivity. Folk can do what they want as regards other jobs and all the rest of it.
Absolutely. It is simply to make sure that we know that they are going to turn up at the times that we have arranged with them.
10:45
I was going to ask about zero-hours contracts, but as my question has been answered, I will ask about employee involvement in general. I should say that this question is for all of the witnesses and that I expect an answer from each of them, if possible.
Do any of the witnesses have employee representation on their boards? What is the situation with trade union involvement? Many of the witnesses have said that their staff are happy. It is good to hear that, but do they do any staff surveys? How do they test that happiness? How are staff involved in the operation of the companies, and what is the relationship with trade unions?
I meet our union representatives every month and have done so since we went live. We share many of our key operational figures with them, and we discuss points and move forward. There is a good working relationship.
We have a quarterly staff forum that has an open agenda, and there is representation from every one of our services and all our staff. Staff attend one session in the morning and one in the afternoon. Because it is an open forum, they can address and raise any questions that they choose; indeed, everything from solar panels to uniforms has been raised.
We take the points from the staff forum and put them into action points, which are presented in “You asked” and “What we did” terms. They then go into our quarterly staff newsletter, and we ensure that each of our staff members gets their own copy of that newsletter. Previously, the newsletters went up on noticeboards, but we found that some of our staff who, because they are community based, do not have a lot of access were not seeing them, so we now ensure that everyone has a hard copy or electronic copy.
Every quarter, we carry out staff surveys that we encourage staff to complete and which we then use. All our services must have staff engagement meetings every month, and we have recently encouraged an increase in trade union stewards within our organisation. We also have health and safety meetings for our ground-based staff.
We have one trade union director and one employee director on the board, and each month I and our human resources manager meet jointly with the three trade unions. That is our union negotiation and liaison.
Since we came into being, we have undertaken one employee survey. About 700 staff work for CultureNL; 41 per cent of them responded to that first survey, which we thought was encouraging, and 82 per cent of those respondents said that they were proud to work for CultureNL. We are taking that as the basis on which to work.
We have a number of staff working groups that focus particularly on matters such as health and safety. Those groups are chaired by members of staff and include members of staff from each of the groups within CultureNL. We also have regular one-to-one meetings and monthly team meetings.
We also do an annual review for all staff. It is a kind of highlight report that is emailed out or put on noticeboards so that everyone has a copy of it. I also engage all the staff in anything of importance if they need to be engaged. For example, savings have just come out and we have had to tell everyone about them.
Finally, there is also quite a lot of email contact.
There are no employee representatives on the EDI board. We are a small company—we have only 16 employees—so the engagement between the board, the executive and the staff is open and informal. I believe that two members of staff are members of trade unions.
All staff have personal development plan meetings twice a year and any trends that emerge from them are reported to the senior management team. We meet quarterly with the three unions that are involved in our business, and those meetings involve staff representations. There are also staff on the health and safety committee.
Every second year, we run a company-wide staff survey. The results of that are reported directly to the board with any action plan that comes out of them. In common with others, I am sure, we have a staff award ceremony at which we reward excellence.
The Scottish living wage has just gone up to £8.25 an hour. Many councils have declared themselves to be—and have become accredited as—living wage employers. Many arm’s-length external organisations that rely on council funding find it difficult to get that accreditation, because they do not have certainty about continuity of funding. Are your councils living wage employers and are your ALEOs able to be living wage employers, or are there funding issues that prevent that from being the case?
I will ask the councils first and then the ALEOs. Obviously, you are in a tricky position, Ms Ross, so we will ask your council later.
Mr Alexander, is Highland Council a living wage employer?
Yes, it is.
Is High Life a living wage employer, too, Mr Murray?
Yes.
The City of Edinburgh Council?
Yes.
EDI Group?
We follow that and apply the living wage.
North Lanarkshire Council?
Yes.
CultureNL?
Yes.
Is Bon Accord Care a living wage employer, Ms Ross?
We are. We are currently applying.
I am interested in your non-executive directorships. Do all the ALEOs have non-executive members? How are they recruited—internally or externally?
Out of the 12 on the board, four are councillors, so we look for eight independent non-executive directors. Those positions are advertised openly in newspapers as well as, for example, through community planning partnership websites; candidates come in for a general discussion, which gets us down to a short leet; our nominations committee makes its nomination; and the final recommendation goes to the council for sign-off.
Who is on that nominations committee?
That is just what I was going to ask.
The director of care and learning from the council and two directors from the existing board.
So there is a fair amount of council input into that committee. You also said that the nomination has to be signed off by the council, too.
Yes. The individual person needs to be signed off.
So, if somebody does not meet with the council’s approval, it could veto that non-executive director’s appointment.
It could.
We also use a skills matrix to consider the range of qualities that we want on the board. Indeed, that matrix is now being used more widely across other council services.
What about EDI and of the City of Edinburgh Council?
The situation is similar. Until two years ago, there were no non-execs on the board but with the revamping of the company and the rewriting of the shareholders agreement three non-execs were brought in. Those positions were advertised in the press, and there was an interview process. The panel comprised senior members of the administration, me and a senior HR representative, and we interviewed and then made recommendations to the council.
So the council could, again, veto any non-executive director that it did not like.
Technically, that is correct.
What about North Lanarkshire?
We have 13 directors on the board, seven of whom are independent. The trade union director was appointed by the trade unions, and the employee director was appointed after a ballot of all the staff group.
The other five independent directors were appointed after an open advert. Like the other authorities represented here, we have a skills matrix for what we require on the board. We know of gaps on the board that we would like to fill; we developed that matrix, went to open advert and ran a workshop for all the interested applicants. Then there was an interview, which was conducted by three members of the board, and the nomination was taken to the leisure and learning committee for ratification.
Again, the council could veto anyone that it did not want. Am I correct in saying that?
Yes, it could, but that has not happened.
Jillian Ferrie said that the applicants for CultureNL were interviewed by three members of the board. I assume that the three members of the board were elected members.
They were initially, when we appointed the first lot of independent directors. Initially, we had five vacancies, and we had only elected members on the shadow board. We have since had another vacancy on the board and that second panel consisted of two elected members and an independent director.
How does it work for Bon Accord Care?
The board had been advertised for and appointed when I came into post, and the board with which we started is still current. We have not had any vacancies. We have five non-execs.
Do you have any idea how they were appointed?
My understanding is that the positions were externally advertised and the candidates interviewed and appointed through the council.
Do you know who did the interviews?
The council.
Councillors or officers?
I am sorry, but I cannot answer that. I am not sure.
You referred to looking for people with particular skills. Does that include looking for people with commercial expertise and external skills generally in order to balance out the non-execs?
I see lots of nodding heads. Mr Alexander, do you want to comment?
Yes. That is something that we definitely look for. We might also look for people with interests in particular areas of activity. If we did not have anyone from a sports background or a third sector background, we would look for such people as well, and we would certainly want to make sure that we had people from a commercial background.
Ms Ross, you are in an unusual position in that there are no elected members on your board. I will not ask you to comment on that, because that is Aberdeen City Council’s bag and we will get the opportunity to speak to the council later. Before we move off this topic, though, I want to ask the other council representatives whether they could ever envisage a scenario in which there would be no councillors on their board.
An elected member chairs the board of CultureNL. If there was a development whereby independent directors were to be reappointed or new members were to be brought in, we might consider whether the chair should be an independent director.
That is not what I asked.
My apologies.
My question was: do you envisage a position whereby there would be no elected members on the board of CultureNL or any other North Lanarkshire ALEO?
It is difficult for me to say yes or no, because such a decision would be for the council and elected members.
I do not envisage that there would ever be an EDI board without councillors on it. As I have said, previously the board was predominantly made up of councillors; at one point, there were seven, along with three executives. The council acknowledged that that was the wrong mix and agreed to change the make-up to three councillors, three non-executives and one executive.
Perhaps a prequel to your question, convener, is: what is the role of the councillor on a board? We wrestle with that issue, which is about councillors on NHS boards as well as councillors on ALEOs. A councillor on the High Life board is a member of the High Life board; they are not the council on the board. It is quite difficult to work out what that is about. It is not about governance. The council does not operate governance through the councillor being on the board; that happens in council committees. What it is about is partnership and communications.
At the moment, High Life Highland is a council-owned company. If that were to change, members, not officers, would have to change it. I do not envisage that it would change, because the council likes having it as a council-owned company, and it wants that partnership to continue.
It is interesting that High Life Highland is developing into new areas beyond council activity by, for example, developing private partnerships with agencies that do not have relationships with the council. Although we are developing into new areas, the council would still want to have elected members on the board; it would still see the company as a council-owned company. However, that is not where the council exerts governance.
We will probably come back to that.
I have a couple of questions about income generation. One of the great hopes for ALEOs when they were conceived of was that they would open up new opportunities for funding streams that were not available to our councils. That was one of the clear reasons for establishing many ALEOs. By and large, have you explored that route and, if so, has it been successful for you?
The hopes are greater than the reality. Limited funds are available to non-council organisations, and we have gone looking for them. There is flexibility in being an ALEO. For example, we are just beginning to develop partnership with the private sector. To take a specific example—the Inverness botanic gardens—there was a three-way capital funding partnership between a private catering organisation, the Inverness common good fund and the council’s own capital funds to completely upgrade the visitor services, the cafe et cetera, and we were able to develop things by acting as the halfway-house broker. We do not have a great deal of experience in commercial catering, but the facility was crying out for a decent cafe. However, that was not at the top of the council’s list for capital funding. Our ability to bring in a third of the money that was needed from the private sector opened doors with the other two funders. The ability to get grants that are not available to councils is overstated in many people’s minds, but it exists, and the flexibility allows us to do other things.
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The common view is that EDI’s fundamental purpose is to create income and that by operating at arm’s length from the council, with a specific focus on property development, it should be able to realise greater property values than would be realised if the same activity were undertaken within the council. Certain major circumstances impacted on us in the period from 2009 to 2011, but over the previous 20 years we had paid approximately £60 million in dividends to the council. We are now returning to a profitable position and budgeting to pay dividends to the council in the coming years.
I agree with my colleague from Aberdeen. We secure a reasonable level of external funding; last year, for example, about £0.5 million of our income came that way. I do not think that many of the sources were new. We attract a lot of funding through Museums and Galleries Scotland and Creative Scotland. Our being a charity has allowed us to apply for more trust funding, which might not be applicable to a local authority. However, the applications are usually for small amounts of money, and I do not think that we have managed to make great inroads there yet.
We are currently exploring opportunities for getting different sources of funding.
Can you tell us what those are?
Certainly. The way that our contract is set up means that the funding that comes across is for commissioning services through the local authority. Any additional services that we provide have to be funded independently. We have a pilot looking at more traditional home help services, for example.
Thanks very much for that. On the leisure-related services that you provide, has your performance in relation to income improved as a result of putting prices up, or have you been able to generate new income streams and markets? I am not picking on you, Jillian, but you said that you had to save £695,000 and managed to do so. Did you have to cut that amount or did you make up the income from other sources through price increases or by developing new services?
We have developed a few new services. We increase prices every year—we always have. As part of the council, we increase prices by 3 per cent every year. It is quite a small amount of money to add on. It could mean, for example, 10p on a community let—it is not a massive amount.
We have found that the organisation is working together more closely. Instead of everyone doing different things, managers and teams are beginning to develop their working patterns together much more closely, which lets us focus on the culture. We have come together as one organisation, and that has let us develop activity.
For example, we have a cultural festival called encounters that takes place every October; it was established in the council, but we have managed to grow it, and we now have an Easter encounters and a summer encounters. Next week, we are holding an adult learning week, which is also branded “encounters”. We are beginning to roll out the brand with input from all the sections in the organisation. We have developed new working streams.
Earlier, I mentioned the link between catering and venues. That has been very successful and has let us bring in substantial income. As we build, the catering income also lets us slightly change our programming and allows us to take a bit more of a risk. Previously, we would be very careful to book activities that we knew we could get lots of people to attend, but as we develop, we are becoming a bit less risk averse, and that lets us spread the cultural activity and thereby develop new audiences. That is where we are aiming to go.
Could none of that have happened if your organisation had not been an ALEO? Would that improved performance and income generation not have been possible?
To be honest, I do not think that there would have been the same focus. Previously, I was a creative services manager, so I worked with the venue side of things and the council’s community arts activity. We now have libraries and museums and heritage on board, so we are bringing together a much more diverse group of people who all have culture at their heart. That allows us to play on and use one another’s strengths to widen the offer, and we hope that that will bring new audiences in time.
On the public’s perception of how happy they are, I am not picking on Bill Alexander either, but, Mr Alexander, you said that High Life Highland is popular with communities. How in general do you assess public perception? How do you measure performance, public acceptance and the support for the work that you do?
There are two particular issues. First, the pricing scheme has gone down well. Ian Murray describes the approach as “Stack ’em high—sell ’em cheap”. In our approach, we have introduced a mass volume membership scheme, which has been very popular, with high take-up. Footfall and usage are up in libraries, leisure centres and some of the museums that Mr Murray mentioned.
In Highland, we also have a citizens panel, which is a representative sample of just over 2,000 people that cuts across all Highland communities, and High Life services figure very prominently in its positive satisfaction rates.
How do the others measure public satisfaction?
EDI is somewhat different in that regard, is it not?
We do not actually provide a public service.
What about public satisfaction with Bon Accord Care, Ms Ross?
We carry out service user surveys and attend local meetings. Those are part of our recognised KPIs, which we report back on.
How does North Lanarkshire Council measure public satisfaction?
Through a variety of methods, including the resident surveys that are carried out by CultureNL. As part of the quarterly monitoring process, we also report to the committee on the number of comments and complaints that there have been and their nature.
How many folk in the general public see the difference between the leisure trust or the care trust and the council? On a recent visit to Inverclyde, we asked members of the public that, and they thought that the services were still council services. What do the general public think about High Life? Do they see the difference?
That is another pertinent question. I have been in this room before, when I have been asked about health and social work services. Sometimes I think that the public do not really know who provides things; they just want the service. I still get letters of complaint about services that the council does not provide.
The arm’s-length external organisations have a bit of a different identity, and I think that people understand that they are not the same services as those that pick up the bins and provide social work or schools. There is an awareness that they are different, but I do not know whether the public in general have a very sophisticated understanding of that.
I do not know whether Mr Murray wants to add to that.
I agree with that. The public look both ways. The organisations have a separate identity, but we occasionally get comments such as, “But you’re the council, aren’t you?” However, I am not sure that that matters.
What about Bon Accord Care?
I think that there is an understanding that there is a difference, but I echo what Mr Alexander and Mr Murray have said.
What about from the North Lanarkshire perspective?
From the council’s perspective, we are concerned about the quality of the service provided and that there is confidence in the brand that is CultureNL.
We have not specifically asked the question of the public as yet, but we are just about to undertake a reputation survey and we will see what comes back from that.
I used to be a member of Renfrewshire Leisure when I was a councillor on Renfrewshire Council. As far as everybody was concerned, the leisure services were still the council and if the cost of a swimming pool pass went up, it was the council that did it. I know that Mr Alexander said that his brand seemed to be going well, but Renfrewshire Leisure tried to create a brand and it did not go well, because it was still the council as far as everyone was concerned.
One of the issues that I have follows on from what Mr Coffey said. One of the public’s criticisms of ALEOs—this does not affect EDI so much—is that they are just an excuse to put up the cost of services, whether that is pitches or leisure services, because they are not subject to the full scrutiny of the council. The councillors end up getting told that they must represent the board and not the council, so the use of ALEOs seems like an easy way to generate more income by putting the price of services up. What is your opinion on that?
We have a pricing strategy but we have a number of criteria for pricing. For example, in community facilities there could be five different price ranges, depending on where you fit into the system, so the prices of services are heavily subsidised. Museums are free. We may apply small charges for activities, or a small charge to go on the tram at Summerlee, for example, but generally the activity is free. For community arts, we have a number of pricings as well. We have an over-25s and under-25s pricing range and a passport to leisure range. There is a variety of pricing for everything that we do.
Did you say that you did football pitches as well?
We hire out pitches, yes.
That is always a contentious issue with the public.
We hire out the school pitches. Our pitch hire price is exactly the same as that of North Lanarkshire Leisure, so there is no competition between the two.
That is an interesting scenario. There is no competition between CultureNL and North Lanarkshire Leisure. Is there a written agreement about that?
I do not know whether there is a written agreement, but we mirror each other’s pricings for pitches. We have agreed that. Previously, they were not the same, but for the past year they have mirrored each other—they are the same now.
Are there any councillors on the boards of both North Lanarkshire Leisure and CultureNL?
No.
I can speak only from the perspective of High Life Highland but, as Bill Alexander said, the stack-them-high-sell-them-cheap model was developed when we were still within the council and that has not changed and the prices have not gone up, except in line with inflation. That means, for example, that somebody who is in receipt of benefits can use any of our facilities at any time, including all the courses, classes and swimming lessons, for 50p a time. An all-inclusive family membership is only £28, and that includes absolutely everything. That has not changed, inflation aside, since we left the council.
That is a different operating model from many others. We took the view early on that we were not going to compete with the private sector. The private sector can do its thing and attract people at a higher level of cost. We were aiming for the family market and the mass-participation market and were focusing particularly on those people who would find family budgets stretched in pursuing a healthy lifestyle.
That is interesting, Mr Murray, because one of the other criticisms of ALEOs tends to be that they end up competing with the private sector—in the leisure industry, for example. We all know that, in certain areas, the minute someone jumps into a swimming pool it is massively subsidised, but some councils are offsetting that by moving into parts of the leisure industry that people would not traditionally think of as something that a local authority should be backing. Should a local authority have a spa and be competing with the private sector, when we know that there are kids whom we need to get involved in sporting activities such as some of the minority sports? You have raised an interesting point and I would be interested in hearing you develop it further. I would like to hear from others, too.
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It is an operating model that was looked at by and mentioned as part of Mr McLeish’s working group on sport. It is a different approach. The Western Isles adopted the same approach and pricing structure about three years ago. We have been running the model now for 13 years and the difference between then and now, if you take out inflation, is an increase in attendances at our leisure centres of 88 per cent and, importantly, an income increase of 89 per cent. It is the Lidl model versus the Marks and Spencer model; it is about getting more people through the door rather than putting up prices all the time.
Moray Council began using the same model during the current financial year and it is already seeing significant increases. The Western Isles has been doing it for three years and I understand that the increase, even in some of the more remote places where the facilities on an island might be open for only half a week, is more than 30 per cent in usage and more than 27 per cent in income, although I would need to check those figures. The model works and it seems to be being taken up elsewhere.
I feel that I should do the BBC thing and say that other supermarkets are available.
We are slightly different, being a cultural trust. Our competition is anyone else who provides cultural activity or a social event.
I think that we have established that you are a little bit more than a cultural trust if you are dealing with football pitches and so on.
Yes. The organisation’s focus is culture. The community letting is one aspect of what we do, but I would not say that we were in competition with hotels, for example. If somebody wanted to hire a community centre or a hotel, we would be the much less expensive option. We do not price ourselves in accordance with such things.
Somebody might want to hire a football pitch and their choice could be to go through you or North Lanarkshire Leisure, or they could go through a company such as Goals Soccer Centres, which operates in various parts of Scotland, does it not?
Yes, it does. As I say, we match North Lanarkshire Leisure’s prices and it matches ours. That is the only information that I have about the pitches.
Having been a councillor, I have seen the challenges and I know that you have to balance the two situations. How often have councillors declared an interest at a board meeting or a council meeting and withdrawn from a discussion that they believe will give them a conflict of interests?
Councillors routinely declare their interests. I am not aware that they have ever felt that there was a conflict in any particular discussion. I cannot recall a member leaving a council committee because of a particular discussion about High Life Highland.
Members do the standard test and decide at the time whether the conflict will be severe enough for them to have to leave the room.
I want to get this straight. You are saying that folk have declared an interest but not left the room.
Yes. Declaring an interest is normal, but there would have to be a particular conflict of interests for them to leave the room. It is unusual for councillors not to declare an interest at any meeting, because they are involved in all sorts of groups and boards and they have employee relationships with the council, but for there to be a conflict of interests that would compromise them in any particular discussion, a different level of the test would be involved.
Okay. Mr Watton and Mr Adair can talk about Edinburgh.
All directors have to declare their interest at every board meeting. I am aware that a number of councillors who were on the EDI board also sat on the council’s planning committee and, if our planning applications were being considered, they withdrew from that committee and were not party to any of the discussions.
Let us move away from planning. You report to the economy committee in the main—I think you said that earlier.
Yes.
Are any directors of EDI on the economy committee?
Yes, there are two.
Have they ever declared an interest at the economy committee and then left the room?
They have declared an interest, but they did not leave, if I remember correctly.
Okay—thank you. What about North Lanarkshire?
The members of the CultureNL board declare an interest against each relevant paper at the beginning of the learning and leisure services committee. They take no part in the discussion, but they do not leave the chamber.
Can I just clarify one point for the record? We have a new chair of the education, children and adult services committee. At the time he was elected, he was a board member of High Life Highland, and he chose to stand down from that role when he became the chair of the committee.
Right. I am going to put this on the record, because I think that it needs to be said. Previously, in another life as a councillor, the last lot of advice that I received was that if a councillor declared an interest on anything, they had to leave proceedings.
I know that the advice that is given in some places is different from the advice that is given in others, and I know that it is all down to the judgment of the individual anyway. However, I think that we as a committee need to get some clarification from the Standards Commission for Scotland and others on the matter, and I suggest that we write to them. Do members agree to do that?
Members indicated agreement.
Mr Adam raised the point about members excluding themselves from discussion on the issue. I would like to examine what happens when elected members sit on the board of an ALEO and a committee is making a funding decision regarding that ALEO. What do elected members tend to do in those circumstances?
There is a difference between being party to a discussion in a committee and making a funding decision in a committee. With all the organisations here, with the possible exception of EDI, local authorities make funding decisions that apply to the ALEOs that elected members may sit on the boards of. Do members exclude themselves when a committee is making a funding decision—or when a full council is making a funding decision—when it applies to the ALEO that they are on the board of?
It is difficult to recall specific examples. I can recall that that has happened, but we would probably have to organise a check of the council minutes.
It would be useful if you could do that and then write to the committee about that.
North Lanarkshire Council can write to the committee about that as well.
I want to go back to the establishment of ALEOs and terms and conditions. I have some questions on pension funds, because we have recently been taking a look at local authority pension funds. Is High Life a member of the Highland pension fund?
We are an admitted body in the council’s fund.
Do your employees have the same terms and conditions as Highland Council staff?
Yes.
Is there a pension fund deficit?
There is.
What is the value of it?
I would need to check the exact figure, but it is around a £5 million deficit for our share of the pension fund.
Is that a manageable figure for High Life or is that a burden that was transferred that is difficult to cope with?
As with all pension fund deficits, if it was called in tomorrow, it would be very difficult to deal with. However, as these things are longer term, it is manageable on a year-to-year basis.
Is that deficit going down or up?
It fluctuates. After the first year, it went down and then it went back up again last year.
Okay—what about EDI?
We are an admitted body to the Lothian Pension Fund and staff have the option of joining the Lothian Pension Fund or having a private arrangement. The majority of staff have taken the option to join the pension fund. All the staff who join have, in effect, the same terms and conditions as employees of the City of Edinburgh Council.
What is the deficit scenario?
I think that the deficit in the pension fund is running at about 94 per cent and that EDI’s share of that is about £500,000. It has increased recently, as bond rates have changed the overall deficit. The deficit is manageable within EDI’s resources.
What is the position with CultureNL?
We are an admitted body with Strathclyde Pension Fund and, as with the other organisations here, there is a deficit. Unfortunately, I do not have the figures with me. I would be happy to send them to you later.
I would be grateful for those figures. What about Bon Accord Care?
We are an admitted body and we, too, have a deficit. All our staff are on the same terms and conditions and our deficit is around £8 million.
Is that growing or decreasing?
This is our second year of operating and the deficit has increased in the past two years.
Is it manageable?
Our pension contributions have increased to help us manage the deficit.
Your pension contributions?
Our employer contributions have increased.
Your employer contributions have increased—okay.
I thank you all very much for your evidence today. We will be considering the evidence that we are going to get from Aberdeen City Council at a later date and then the committee will consider its draft report.
I suspend the meeting to allow for a changeover of witnesses.
11:25 Meeting suspended.Previous
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