Agenda item

To consider a report seeking approval of a number of operational decisions regarding the new Alternative Service Delivery Vehicles.

In February 2013 the Council had set out its three year plan to becoming a strategic commissioning council.  Since then it has reviewed how key services could be best delivered by putting the needs of the people, service users and businesses of Cheshire East first. 

In setting up Alternative Service Delivery Vehicles (ASDV’s) the Council had considered a range of options and had already set up and established two, these being Tatton Park Enterprises Ltd and East Cheshire Engine of the North.  A second wave of ASDV’s were due to go live in the first quarter of 2014/15 namely, Ansa Environmental Services (ANSA), Orbitas Bereavement Services (Orbitas), Everybody Sport and Recreation Ltd (ESAR) and CoSocius Ltd – shared HR/Finance/ICT back office services with Cheshire West and Chester Council (CoSocius). 

In addition the Council was going to create a new wholly owned company, Cheshire East Ltd., to act as parent company to all the others.  This company would hold 80% of the shares in its subsidiaries and the Council would hold the remaining 20%.

It was noted that arrangements relating to the Council’s strategic contract with the Engine of the North would be considered at a meeting of the Cabinet in April.  In addition CoSocius, which was owned jointly with Cheshire West and Chester Council, was governed through the Shared Services Joint Committee and would not covered by the proposals in the report unless specifically referenced; similarly ESAR was not covered by the report unless specifically referenced.

The meeting was attended by Mr C Nicholson, on behalf of the Joint Trade Unions, and he requested that the recommendation 2.8 of the report be replaced as follows:

That the companies remain within the NJC bargaining process for 2014/15.  Beyond 2014/15 the Council will review this annually.

The Cabinet agreed to the request.

The Portfolio Holder for Children and Family Services made particular reference to recommendation 2.3 of the report, and to para 10.17, relating to ESAR and the length of contracts.  She reported that in response to legal considerations the contract would need to be for a 10 year term with an option to extend by 5 years.  In addition she emphasised that all of the objections and representations made in relation to open spaces had been properly considered.  They had all been responded to and were reflected in this document.

RESOLVED

That:

1.    Contracts do not provide for automatic indexation of payments and that:

i.      a minimum savings target will be set for each Council owned and controlled company annually, and

ii.    an annual fixed cap fee set for ESAR.

      Accordingly, detailed negotiations will take place each year on the level of the management fee within this cost envelope (see paragraph 10.10 of the report). 

2.    Any associated lease periods be coterminous with the relevant contract length and the standard contract length for Council owned and controlled companies is 7 years (see paragraph 10.15 of the report).

3.    For ESAR the contract length be 10 years (plus 5 years extension) and the lease period be 15 years with a break-point at 10 years. 

4.    The approach set out in paragraph 10.37 of the report in relation to pensions arrangements be approved.  In particular, the Council will guarantee pension liabilities as follows:

      The Council shall provide the Administering Authority a guarantee of the payment of all sums by the companies ANSA, Orbitas, CoSocius and ESAR due under the terms of admission to the LGPS and under the LGPS Regulations arising in respect of or in connection with Eligible Employees.

5.   A loan of up to £3.5m on a commercial basis be provided to CoSocius to provide the company with half of its immediate cashflow requirements (see paragraph. 10.44 of the report).

6.  The Council act as financial guarantor for all companies that are owned and controlled by the Council (see paragraphs 10.45 to 10.46 of the report).

7. The approach to the incubation period and charging for support services as set out in paragraphs 10.51 to 10.62 of the report be approved.

8.  The Council’s companies remain within the NJC bargaining process for 2014/15.  Beyond 2014/15 the Council will review this annually.

9.  The properties to be transferred to ESAR under leases consist of certain playing fields as well as the leisure centres.  S123 of the Local Government Act requires that where such public open space is to be disposed of the Council must first advertise its intentions and consider any objections to the proposed disposal.  Having advertised the intentions, paragraphs 10.76 to 10.78 of the report set out a proposed change arising from this.  Cabinet considered and agreed this change.

   10.  That business plans for all companies be agreed and signed off by the Leader, relevant Portfolio Holder and the Executive Director of Strategic Commissioning. 

11.  In addition to the specific recommendations, Cabinet approves the general approach laid out in this document.

12.  The Chief Operating Officer as Section 151 Officer be authorised to take any necessary and consequential action arising for the above recommendations, as set out in 1 to 11 above, only to be exercised in agreement with the Leader of the Council.

13.  The Head of Legal Services and Monitoring Officer be authorised to enter into any necessary documentation to give effect to the above recommendations as set out 1 to 12 above.