Agenda item

A.25/16          

The Committee considered a report that provided it with an overview of the current position for the Local Authority Controlled Company (LACC) project in respect of risk and governance.

In discussion, reference was made to:-

(a)   the considerations of the LACC Joint Steering Group (JSG).  The Committee noted that the JSG would be making its final recommendations on whether or not a LACC should be set up by the Council and West Devon Borough Council at its meeting on Monday, 16 January 2017.

The Committee proceeded to ask that its concerns in relation to the following matters be taken into account during the JSG deliberations on 16 January 2017:

-       pension implications.  In stressing the importance of not under estimating the pension implications, Members raised a number of related concerns including:

o  the potential recruitment difficulties arising from new employees being on a different scheme;

o  a different scheme also being a disincentive to university graduates.  In expanding upon the point, a Member cited a recent study that had concluded that current pension schemes were a major factor in graduates deciding to take up employment opportunities in the public sector; and

o  the inability for the Council, in the event that a LACC was unsuccessful, to be able to bring its services back in-house due to the increased pension costs;

-       Reserved Matters.  A Member felt that there was an omission in the current Reserved Matters whereby, as currently drafted, there would be a lack of ability or control for the Council to hold the LACC to account over a poor performing service.  As a consequence, the Leader gave an undertaking to the Committee that this matter and the proposed extent of the powers delegated to a Joint Shareholder Committee would be carefully considered before the JSG made its final recommendations;

-       the lack of a detailed Business Plan.  The Committee was strong in its views that the JSG was not in a position to make any recommendations to approve the establishment of a LACC without the production (and consideration) of a detailed Business Plan that included evidence based financial projections;

-       the impact of any potential additional partners joining the LACC at a later date and any future changes to the local government structure in the county; and

-       the inclusion on the Risk Register of a clear and defined exit strategy;

(b)   state aid implications.  In the event of an unforeseen cost pressure arising from a service area, Members were advised that the relationship between the Council and the LACC would be very similar to the current arrangements with external contractors;

(c)    theTeckal exemption arrangements.  Officers confirmed that the exact details relating to the Teckal exemption proposals would be included in the report presented to the JSG;

(d)   the timing of this meeting.  Some Members felt it to be regrettable that this Committee meeting was taking place prior to the JSG making its final recommendations;

(e)   the role of the Internal Audit service.  In the event of a recommendation being made for a LACC to be established, the Committee requested that further consideration be given to whether or not Internal Audit officers should be employed by the LACC or the Council;

(f)     the degree of risk.  Some Members were of the view that the extent of the risks involved in establishing a LACC were so great that they were unwilling to support the concept.

It was then:

RESOLVED

That the progress of the Joint Steering Group in respect of Risk and Governance matters (as identified in the presented agenda report) be noted.