Aylesbury closes standalone company in the face of competition
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Vale Commerce
A district council has closed its standalone commercial company after two years, due to private sector competition.
Aylesbury Vale District Council has allowed its wholly-owned company Vale Commerce, created in December 2015, to become dormant.
Two brands operated by the company — Limecart, offering household cleaning services and Incgen, providing business services — will now return to council ownership.
A report to councillors last week said: “Vale Commerce was started to test if conceptually it would be possible to run subscription services for additional residential and business incubation services.
“This has been achieved, however the marketplace is a congested one, and also challenging in terms of a subcontracting model.”
An option to inject more cash into the company was rejected because ‘the benefits at this time do not outweigh the risks and costs’, it said.
The company was created with a £50,000 loan from the council, but made a £37,000 loss in its first year of operations.
However, the council said that during the current financial year, the company generated new income, mainly through sales to the council itself.
The council report said: “The total council spend since its creation of £115,000 is netted off by the commercial team income for the year
“With income invoiced and committed this will be sufficient to cover a final loan repayment to the council to ensure the company is left without liabilities and in a neutral financial position, thereby enabling it to enter dormant status.”
Aylesbury Vale will now examine how its commercial team can develop the brands once operated by Vale Commerce.
The news comes after Room151 reported that a separate standalone telecommunications company set up and owned by the council has sold all of its assets to a rival private sector operator.
A number of local authorities have set up standalone companies to raise revenue from charging for services in recent years.
The recent revision of the Chartered Institute of Public Finance and Accountancy’s prudential code was undertaken partly in response to commercialisation within councils.
