Agenda item

Supplementary Paper on Implementation Costs for the LACC

CM 27

A report was considered that set out and commented on the findings of a detailed business case that had been prepared by PriceWaterhouseCoopers (PWC) at the request of Members.

The report confirmed that the findings of the detailed business case were that there was a credible case for the establishment of a Local Authority Controlled Company (LACC), based on HM Treasury’s five case model, that reviewed the strategic, economic, commercial, financial and management cases.

                        The PWC report recommended that the Council and South Hams District Council proceeded with establishing the LACC subject to positive resolutions of questions relating to corporation tax, pension arrangements, governance and state aid.

In introducing this agenda item, the Leader advised that it was his intention to propose a revised set of recommendations in light of a number of discussions that had taken place since the agenda report had been published.  It was hoped that these revised recommendations would satisfy a number of Member concerns that had been recently raised.  For absolute clarity, it was confirmed that the revised recommendations were not seeking a final decision to be made at this meeting.  Instead, the revised recommendations were asking for the creation of a Joint Steering Group (JSG), who would be tasked with progressing this project and giving particular focus to the outstanding pension, taxation and governance issues.

At this point, a number of Members wished to discuss the exempt appendices and it was therefore PROPOSED and SECONDED and on being put to the vote declared to be CARRIED and “RESOLVED that under Section 100(A)(4) of the Local Government Act 1972, the public be excluded from the meeting on the grounds that exempt information is likely to be disclosed as defined in Paragraph 3 of Schedule 12(A) to the Act”.

In discussion on the exempt appendices, Members made a number of specific points on the future of the waste service.

Once all Members were content that they had no further issues to raise on the exempt appendices, it was then PROPOSED and SECONDED and on being put to the vote declared to be CARRIED and “RESOLVED that the press and public be re-admitted to the meeting.”

In the ensuing debate, the following points were raised:-

(a)  Some Members commented that the establishment of a LACC had been identified as a means of trying to ensure that the Council placed itself in a firm financial position for the future;

(b)  In respect of the likelihood of the Council obtaining central government grant funding towards the set up costs of a LACC, it was felt that this would be unlikely in light of the number of other local authorities who were similarly investigating such an option;

(c)  Some Members emphasised the importance of Member representation on the JSG being based upon an individual’s skills sets and time availability rather than their political group membership;

(d)  Disappointment was expressed over the business case that had been produced by PWC and a Member was of the view that the JSG was being tasked with undertaking the work that had been initially assigned to PWC.  In particular, the lack of evidenced market testing in the business case was felt to be regrettable and it was requested that market intelligence be specifically included in the terms of reference for the JSG;

(e)  Some Members advised of their opposition to these proposals with the following reasons cited:

o    the proposed implementation costs were felt to be questionable;

o   the need at this time for focus to be on continuing to embed the Transformation Programme and the consequent service improvements;

o  there being other alternative options to this particular LACC model that had not been sufficiently explored;

o  a further delay would prove to be unsettling for staff, who were already under immense pressure;

(f)   A couple of Members emphasised the importance of a fully tested business plan being worked upon prior to a final decision being taken and therefore sought agreement for part 1 of the recommendation to include reference to:

‘…..subject to there being a satisfactory outcome to the outstanding pension, tax and governance questions and actions as set out in paragraph 5.4 of the presented agenda report and the production of a fully tested Business Plan;

Since the proposer and seconder of the original motion were content to include this wording, it was therefore included in the substantive motion.

An addition to part 2 of the recommendation was also deemed acceptable by the proposer and seconder that read as follows:

‘….Such terms of reference to be finalised by the Executive Director (Strategy and Commissioning), in consultation with the Leader of the Council and the Leader of the Independent Group, with the JSG reporting its recommendations to the first Council meetings of both local authorities in 2017.’

(g)  A number of Members confirmed their support for the revised recommendations and felt that a delay in making a decision was appropriate in this instance to ensure that a number of outstanding issues were resolved and that the final decision would be a more informed (and evidence based) one.

Having been moved by Cllr P R Sanders and seconded by Cllr R E Baldwin, it was then submitted to the Meeting and declared to be CARRIED and “RESOLVED:

1.      That the Council proceed with the work which enables a more considered decision to be made with regard to the implementation of a Local Authority Controlled Company (LACC) jointly owned with South Hams District Council, subject to there being a satisfactory outcome to the outstanding pension, tax and governance questions and actions as set out in paragraph 5.4 of the presented agenda report and the production of a fully tested Business Plan;

2.      That a Joint Steering Group (JSG) with South Hams District Council be established to deal with matters concerning the implementation of the LACC as detailed in paragraph 5.5 of the presented agenda report and the draft terms of reference at Appendix B of the report.  Such terms of reference to be finalised by the Executive Director (Strategy and Commissioning), in consultation with the Leader of the Council and the Leader of the Independent Group, with the JSG reporting its recommendations to the first Council meetings of both local authorities in 2017;

3.      That the Audit Committee be tasked to consider the Joint Steering Group's recommendations regarding governance;

4.      That the date of transfer of staff to the Company and the Commencement of the contract between the Council and LACC be decided by the Council on the recommendation of the Joint Steering Group;

5.      That the Council approves the use of up to £126,750 of the 2016/17 Budget Surplus Contingency earmarked Reserve for the set-up costs of the LACC as detailed in paragraph 5.8 of the presented agenda report specifically drawn down with the agreement of the Joint Steering Group;

6.      Subject to approval of recommendation 1 (above), that the Council enters into an external Waste Management arrangement; this arrangement will be subject to full affordability assessment, risk analysis and in compliance with Public Contract Regulations 2015, for a 2 year period with a view to waste services transferring to the LACC at the end of the 2 year period; and

7.      That the Council proceeds to acquire the fleet required to satisfy the West Devon Waste specification as set out in Appendix D of the presented agenda report.  If purchased, as opposed to leased, the cost of the fleet is to be financed through borrowing.”