York Council social enterprise company crashes

We warned in 2013 (click) that the Council plan, to hive off some social care services to a new company, were “highly risky”.

The plan was to start a “Be Independent” social enterprise to run warden call and disabled equipment loan services.

Most of the income for the new organisation would still come from the Council. It was claimed though that it could complete for other business thereby reducing the demands on taxpayers.

5 years later and it is clear that the company has failed. This is not entirely surprising as the draft  “business plan” (still available to view here “on line”) published in 2013 actually forecast that the operation would be loss making

A report the Council’s Executive next week suggests that the service be brought back under the Councils direct control.

The number of customers using the service has fallen from 2878 to 2448, about half of which are subsidised by the Council.

“Be Independent” have failed to win any new contracts during the last 5 years and lost an existing contract with the NHS to provide equipment services in the Vale of York.

The company is now loss making.

In the last financial year, it recorded a working deficit of £167,000.

If the work transfers back to the Council it will cost taxpayers an additional £95,000 a year.

One of the negative aspects of hiving off activities is that some jobs get a pay hike. The Council says that staff at “Be Independent” in the main enjoy the same conditions of service as Council employees. TUPE would therefore apply to any transferees.

The Council report fails to identify the salaries being paid to all staff although £273,000 pa is listed as “Directors remuneration”. (The latest accounts registered with Company House for 2017 list Directors remuneration as £106.443).

There was until last year one CYC appointed Director (Cllr Funnell) but this appointment was terminated on 31st March 2017. It is unclear who has been charged with safeguarding the Councils interests on the “Be Independent” board since then.

There is no comparison in the papers between the 2013 business plan and outturns.

External legal advice is apparently  being taken by the Council.