Agenda item

Supplementary paper on Implementation Costs for the LACC

 

32/16  

           

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 on the merits of establishing a Local Authority Controlled Company (LACC).

 

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.

 

The Leader proceeded to make reference to the letter that Members had received from Unison.  As a consequence of its content, the Leader had asked the Executive Directors to discuss this matter with each of the unions and report back to Members in due course.

 

In discussion, reference was made to:-

 

(a)  the composition of the proposed Joint Steering Group (JSG).  The Leader gave an assurance that it was intended that the minority group would be represented on the JSG;

 

(b)  an amendment being tabled to the meeting.  The following amendment was PROPOSED and SECONDED:

 

‘That in view of the many financial risks to be considered on the possible establishment of a LACC, the financial risks should receive independent consideration by the Council’s Audit Committee for an opinion prior to further consideration by any other Council body or the full Council.”

 

The proposer expressed a number of concerns over the principle of establishing a LACC and felt it was therefore appropriate for the Audit Committee to undertake an independent detailed review before any further resources were invested in this proposal.

 

During the debate on this amendment, some Members expressed their sympathy with its intention.  However, these Members were also comforted that the Leader’s revised recommendations would ensure that the Audit Committee was sufficiently involved in this process.

 

When put to the vote, the amendment was declared LOST.

 

(c)  staff morale.  In light of concerns raised, a Member advised that he was intending to submit a Scrutiny Proposal Form which would ask that the Overview and Scrutiny Panel received, at a future Panel meeting, an update on staff morale;

 

(d)  general support for the revised recommendations.  A number of Members were of the view that the Leader’s revised recommendations would ensure that matters relating to key issues (including pension, legal and taxation advice) could be clarified before a final (and more informed) decision was then made by the Council.  As a general point, the Leader confirmed that, if it became apparent that any of these identified key issues could not be satisfactorily addressed, then the work on this project would be stopped immediately.

 

Furthermore, Members made the point that these recommendations would also enable the Senior Leadership Team to focus at this time on the current performance issues arising from the Transformation Programme;

 

(e)  a number of concerns expressed by Members.  In their respective addresses, some Members highlighted their concerns that could be summarised as follows:

 

-       Disappointment that the outstanding matters (e.g. pension advice) had not yet been addressed;

-       The loss of democratic process that would arise from a LACC;

-       There being no support amongst the electorate for establishing a LACC;

-       A fully tested business case was still awaited;

-       There was considered to be alternative methods of income generation (e.g. by investing in the Council’s own assets);

-       The PWC Business Case document was not of a sufficient quality or standard to enable Members to make a decision;

-       The proposal for the Council and West Devon Borough Council to be equal partners in a LACC;

-       Council services were currently not at a performance level whereby they could be sold to other parties; and

-       The outcome of the Leisure procurement exercise reducing the budget gap in future years.

 

In response, a number of Members emphasised the significant future budget gap facing the Council and there being no indications that the reductions in grant funding from central government were to be reversed.  In addition, it was reiterated that the recommendations, if approved, only sought to progress this initiative to the next stage and no final decisions on establishing a LACC were to be made at this meeting;

 

(f)   recommendation 5.  Some Members questioned the need for this part of the recommendation and stated that they were fundamentally opposed to more public money being spent on this project at this time.  In reply, the Leader gave an assurance that the drawdown of any of the £126,750 would require the agreement of the JSG.

 

In accordance with Council Procedure Rule 15.5, a recorded vote was then undertaken on parts 1, 2, 3 and 4 of the motion.  The voting on these parts was recorded as follows:-

 

For the motion (22):        Cllrs Bastone, Blackler, Brown, Cane, Cuthbert, Foss, Gilbert, Hicks, Hitchins, Holway, Hopwood, May, Pearce, Pringle, Rowe, Saltern, Smerdon, Steer, Tucker, Ward, Wingate and Wright.

 

Against the motion (7):  Cllrs Baldry, Birch, Brazil, Green, Hodgson, Pennington and Vint.

 

Abstentions (1):               Cllr Bramble.

 

Absent (1):                        Cllr Hawkins.

 

In accordance with Council Procedure Rule 15.5, a recorded vote was then undertaken on part 5 of the motion.  The voting on this part was recorded as follows:-

 

For the motion (20):        Cllrs Bastone, Blackler, Brown, Cane, Cuthbert, Foss, Gilbert, Hicks, Hitchins, Holway, Hopwood, May, Pringle, Rowe, Smerdon, Steer, Tucker, Ward, Wingate and Wright.

 

Against the motion (8):  Cllrs Baldry, Birch, Brazil, Green, Hodgson, Pearce, Pennington and Vint.

 

Abstentions (2):              Cllrs Bramble and Saltern. 

 

     Absent (1):                       Cllr Hawkins.

 

It was then:

 

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 West Devon Borough 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;

 

2.         That a Joint Steering Group (JSG) with West Devon Borough 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 presented agenda report).  Such terms of reference to be finalised by the Executive Director (Strategy and Commissioning), in consultation with the Leader of the Council, 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 risk and governance;

 

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

 

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.