Agenda item

Purpose of the report:  Scrutiny of Services /Policy Development and Review

To update the Committee following agreement by Cabinet to create a Local Authority Trading Company for the future delivery of day services and community support options for people with disabilities and older people.

THE FOLLOWING ITEMS OF BUSINESS WERE CONSIDERED IN PRIVATE BY THE SELECT COMMITTEE.  HOWEVER, THE INFORMATION SET OUT BELOW IS NOT CONFIDENTIAL.

Declarations of interest: None.

Witnesses:

Simon Laker, Lead on Trading and Income Generation – Business Services

Paul Carey-Kent, Strategic Finance Manager - Adult Social Care

Key points raised during the discussion:

1.    The Committee was provided with an update on the creation of a Local Authority Trading Company (LATC) to deliver a variety of Adult Social Care services. It was highlighted that the approach had been to exercise caution, and learn from the experiences of other local authorities in implementing LATC models. The Committee was informed that the business principle had been to ensure a continuity of service. It was outlined that the LATC was expected to be implemented by April 2014. It was explained that the Council wanted to ensure a continuity of service, with the new branding for the LATC being gradually introduced.

2.    The Committee was informed that the LATC would receive no favourable terms when considered alongside other commissioning options for the Council. It would be commissioned for five years with a break clause after three years.

3.    The Committee queried who would be appointed as directors for the LATC. It was confirmed by officers that this was in the process of being decided, and the appointments would be made by the shareholder board. The Committee was informed that the shareholder board consisted of the Chief Executive, the Council’s Leader, Deputy Leader and the Cabinet Member for Business Services. It was clarified that the Council would retain full control of the LATC as sole shareholder. The Committee asked what contingencies were in place if the LATC proved unsuccessful, and officers commented that an exit strategy was in the process of being developed.

4.    The Committee raised concerns about the potential to create a two-tier staffing system through the transfer to a LATC, with new staff being paid at a lower rate than those who had Transfer of Undertakings (Protection of Employment) (TUPE) arrangements. Officers assured the Committee that both the Leader and Chief Executive had made it a clear priority that the LATC continued to invest in staff. The Committee was informed that it was proposed that Local Government pension schemes remain open to current and new employees. Officers commented that the business case made no assumptions about reducing staff levels of pay.

5.    The Committee was informed that the properties currently used by services in the LATC would be transferred, with a review of business requirements planned. Officers commented that the intention would be to make the LATC services more community-based. Officers outlined the details of the loan made by the Council to the LATC.

6.    The Committee queried whether the transfer of staff would increase the cost-per-head expenditure of staff remaining in the Council. Officers commented that the LATC would be strongly encouraged to continue using the Council’s support services, and that this would reduce a potential impact on the Council.

7.    Members expressed concern that the LATC model would lead to a decline in the quality of service. Officers gave assurance that both the Chief Executive and Cabinet had indicated that quality of service was considered paramount.

8.    The Committee questioned where the potential for growth existed for the LATC. It was explained that Surrey had a large self-funder market, as well as the potential to offer community support for those not eligible for Adult Social Care services. Options around providing services to other local authorities were also in the process of being explored.

9.    The Committee asked whether any profits made by the LATC would be re-invested into Adult Social Care. It was explained that the decision regarding any subsidy would be made by the shareholder board, and the Council through its business planning process. Members expressed concern that the finances may not be re-invested back into Adult Social Care.

Recommendations:

a)    That officers provide the finalised arrangements for the Local Authority Trading Company for the Committee to review at the 1 May 2014 meeting.

Action by: Lead on Trading and Income Generation – Business Services

b)    That a performance review of the Local Authority Trading Company is presented to the Committee in January 2015.

Action by: Lead on Trading and Income Generation – Business Services

c)    That the quality and safety of services provided by the Local Authority Trading Company remain paramount above revenue generation.

Action by: Lead on Trading and Income Generation – Business Services

d)    That any profit resulting from the Local Authority Trading Company be reinvested back into Adult Social Care Services.

Action by: Lead on Trading and Income Generation – Business Services

Actions/further information to be provided:

None.

Committee Next Steps:

The Committee will continue to review the LATC in accordance with the timescales set out in the above recommendations.