Agenda item

To consider approval to transition CoSocius Limited which is currently operating in “shadow mode” into a fully operational arms length trading company.

The Committee considered a report which sought approval to transition CoSocius Limited, which was currently operating in ‘shadow mode’, into a fully operational, arms-length, trading company.

Paragraph 3.1 of the report was amended with the following additional wording at the end of the paragraph:

“…, and which will represent a cost reduction in excess of 35% by the end of the current financial year.

The revised detailed business case delivers higher savings than the originally approved business case without the need for the predicted upfront costs.”

The Committee received a presentation highlighting the main elements of the Detailed Business Case.

In considering readiness for go-live, the Committee discussed the following issues:

• the financial viability of the company as a stand-alone trading entity
• the five year financial model and projected shareholder returns
• the financial, legal and risk implications of the future operating model for the Councils and the company
• the governance, contractual and performance framework for the new company
• the transition and benefit realisation plans
• programme assurance evidence

The Committee concluded that the pre-requisites for go-live were in place and that CoSocius Limited should transition to a fully operational, arms-length, trading company.

RESOLVED:  That

(1)       the transition of CoSocius Limited to a trading entity from 1^st April 2014, with planned operational transfers of contracts and staff effective on 1^st May 2014 be approved.

(2)       the Head of Legal and Democratic Services in Cheshire West and Chester and the Head of Legal and Monitoring Officer in Cheshire East, in consultation with the Section 151 Officers for each authority, be authorised to finalise the detailed terms and conditions for, and enter into, all necessary legal documentation required to give effect to recommendation (1) including but not limited to the:

·        Contract for Services;

·        IT Systems and Services agreement;

·        Support Services Agreement

·        Leases of Goldsmith House and Kelly House;

·        Working Capital Agreement;

·        Data processing and Data Sharing Agreement;

and

(i)         approve the provision of a joint working capital facility to the Company of £7m on terms to be agreed by the Head of Finance (CWaC) and Chief Operating Officer (CEC);

(ii)        agree the provision of a joint guarantee by the two Councils in respect of pension liabilities for the duration of the contract for services in respect of transferring staff with an estimated value of £7.3m;

(iii)       agree to the provision, by the two Councils, of such financial guarantees as the Company may reasonably require for the duration of the Contract for Services subject to the approval of the Head of Finance (CWaC) and Chief Operating Officer (CEC) on a case by case basis including parent company guarantees up to £50k;

(iv)       endorse the 5 year financial model, on the understanding that regular reports are submitted to the Shareholder Board and appropriate Council governance committees.

(3)       the cost reduction activity outlined in Section 5.2.4 that proposes to replace a proportion of contractor staff with fixed term contracts be endorsed.

(4)       the Transition Improvement Plan included in Appendix 7 be endorsed.

(5)       the Programme Board to prepare for a formal ‘Closure’ of the delivery programme, focusing on the cut-over to transitional activity and produces a final closure report including lessons learned.

(6)       the Section 151 officers for each Council, in consultation with their respective Head of Legal Services and the Chair and Vice-Chairman of the Committee, be authorised to implement the final governance structure of the Company as referred to in section 10.1 of the report.

(7)       the savings that have been achieved, as referred to in section 3.1 of the report, be noted.