South Hams Council has put a last-minute brake on controversial plans to privatise council services and virtually all of its staff.
For the last five-months the council has been looking at setting up a local authority company which would employ some 400 South Hams and West Devon staff and run council services from IT to rubbish collections.
The district council’s powerful executive had voted to press ahead with the project to form an arms-length operation run through a board of directors.
But just one week later the council agreed to take a less gung-ho approach while a specially formed working group looked into the idea further and studied some of the main concerns.
Some councillors are concerned the council was moving too fast following the massive cost-cutting shake-up which began three years ago and saw almost 100 jobs axed.
There were also major concerns about the staff pensions and the cost of setting up the new local authority company.
The new working group has also be tasked to sort out whether the council could end up being clobbered by coporation tax bills if it forges ahead with the plan.
Meanwhile, Unison, the union representing many local authority staff, has made it clear it is opposed to the proposed changes and is urging both South Hams and West Devon councillors to reject the setting up of any local authority controlled company.
South Hams Council leader John Tucker said there was no target date for the new committee to come up with answers.
‘It will be as and when we have the right information for members,’ he said.
‘A lot of members do have concerns about racing ahead. We listened to them and we came up with a new set of recommendations. It was decided it was better to put the handbrake on and come up with new recommendations.’
One of the major driving forces behind the idea of the setting up of the new company is the austerity cuts in Government cash support faced by local authorities across the country.
At the moment the council is not allowed to make a profit by selling its services to other local councils and organisations.
By setting up a local authority controlled company it would be able to transfer all its services into the new business, including its legal, finance human resources, development management, environmental health council tax and buisiness rates collection, waste collection and parks and open spaces operations. It would then be possible for the council to sell those services to other authorities to help boost its own coffers.
In February, the district council agreed to put £300,000 aside – half from South Hams and half from West Devon – to fund a detailed business case and implementation plan for setting up the new company.
Last month the executive recommended that the council ‘proceed with the implementation of a local authority controlled company’ subject to thje satisfactory outcome to the concenrs over pensions and corporation tax.
A week later the district council agreed a watered down version as councillors vopted to ‘proceed with the work which enables a more considered decision to be made with regard to the implementation of a local authority controlled company’ – again subject to the pensions and corporation tax problems.
Cllr Tucker made it clear that the two district councils were taking this extra step before making any final dxecisison.
He said: ‘For a while now we have been looking into the possibility of transferring all our services into a company which could generate a profit. We know that although we are financially okay this year, the funding gap will come back in future years and we needed to put a plan into place that would enable us to keep delivering services to our customers.
‘Our members have debated this fully, at overview and scrutiny committee, at executive and at full council. We have produced a business case and detailed reports on the options and issues, risks and way forward.
‘We have engaged consultants and experts in their field and today we took a fully debated and informed decision to keep going down this route.’