The York Council is set to agree next week to outsource its warden call and equipment loan services.
The enterprise will be employee owned although the Council will retain a stake. It will be the first of its type in the country.
The Council provides a 24 hour monitoring and response service (Warden Call) to approximately 3,000 customers in York.
The Telecare service has over 1,600 customers who have at least one piece of Telecare equipment installed.
The Community Equipment Loan Store provides 46,046 pieces of equipment to people with mobility problems.
Against the background of increased competition, the Council claims that an employee owned company would be more responsive to customer needs
The new organisation will not be a charity. Hence it will have to charge VAT on its services and will have to pay corporation tax.
The financial forecast shows the new organisation gradually slipping into the red over a 5 year business plan period.
Charges increase by about 5% per year and the assumed growth in the number of customers is out between 5% and 8%.
There are currently around 1200 customers who do not pay for the service because they have limited incomes. The Council’s financial contribution gradually reduces over the 5 year period.
Critically, the new organisation would be competing in the commercial sector.
For example O2’s “Help at Hand” services charges £99 for handset plus £20 a month. But this system gives you GPS tracking, one touch button connecting to a specialised support centre and an automatic sensor if you have a fall.
EU legislation normally requires contracts like these to be let competitively. It seems that the Council does not intend to invite tenders.
It is unclear what will happen to existing customers if the new enterprise fails
All in all, this does look to be a risky strategy for the Council to adopt.
The existing services get very high customer satisfaction ratings so the only reason to fundamentally change the nature of the organisation would be to reduce expenditure.
Customers of the service will rightly be anxious about the quality of service that they can expect over the next few years.