Four virtual councils to merge services in private company

Four councils have unveiled proposals to merge all of their services into a single, jointly-owned standalone company.
Leaders at Cotswold, Forest of Dean and West Oxfordshire District Councils and Cheltenham Borough Council have set out their 2020 Vision for Joint Working, which councillors will vote on by the end of June.
The move would mean that the councils would no longer directly employ any of their own staff, although a small number of advisers may be retained for councillors.
David Neudegg, chief executive of West Oxfordshire District Council and Cotswold District Council, told Room 151: “Lots of councils, including ourselves, have done elements of this – shared services and standalone companies to deliver services – but nobody has taken the comprehensive approach we are suggesting.”
Neudegg said that initial estimates were that the councils could save £55 million over 10 years.
Savings from staff costs are estimated at between 15% and 23%, with a 2-3% estimated efficiency gain from joint procurement processes.
In addition, the document says that “substantial efficiencies could be achieved through developing an integrated plan across all of the councils by maximising space in a smaller number of buildings overall”.
The proposal outlines how the company could take the form of a holding company jointly owned by all four councils, with three sub-companies delivering the services.
Neudegg said that there would be inevitable staff reductions under the new structure, but that the process would take place on an “evolutionary basis” without large scale job losses.
An attempt would be made through any new company to provide geographical services in some service areas, such as planning, where they were considered beneficial, he said.
“It is possible that some teams might just focus on delivering services to one particular council.”
Some issues still have to be overcome, including legal restrictions on local authorities outsourcing statutory decision making functions, including the section 151 officer role.
Neudegg said: “The law seems to say that a statutory officer has to be employed by a council – it was formulated at a time when this sort of model was unimaginable.”
In addition, the councils will examine whether the establishment of a company changes the level of obligations placed on local authorities – from the publication of budget figures to freedom of information requests.
If members on all councils back the vision, with votes expected by the end of June, a detailed programme plan will be developed over the following six to nine months, with final approval expected in Spring next year.
The councils will use cash from a £500,000 transformation grant from central government in April to assist work on the new proposed arrangements.
Lynden Stowe, leader of Cotswold District Council, called the proposals “perhaps the most radical joint working approach in local government today”.
Patrick Molyneux, leader of Forest of Dean District Council, added: “By reducing the administration and running costs of the councils we can spend a bigger proportion of our budget on delivering the frontline services our communities need, while keeping the democratic decision making of local councillors intact.”
The participating councils are building on a track record of joint working, with all four already sharing finance, procurement, HR and payroll services.
Cheltenham and Cotswold councils already own a joint company, Ubico Ltd., to deliver waste, recycling and depot facility services, while Cotswold and West Oxfordshire councils were among the first authorities in the country to create a joint chief executive role in 2008.