Philip McCourt, Director of Law and Governance, introduced a report on Edsential Community Interest Company, a company wholly owned equally by the Council and Cheshire West and Chester Council, which had experienced significant trading and financial difficulties as a consequence of the COVID 19 Pandemic. It had been in negotiation with officers of both the Council and Cheshire West and Chester Council with a view to obtaining additional financial support. In order for the auditors to sign off the company as a “going concern”, however, it needed to demonstrate that there was a reasonable expectation that the company had adequate resources to continue to be operational.

To this end, the shareholders, Wirral Council and Cheshire West and Chester Council, had been asked to provide a letter of comfort that they would provide a means to adequate funding to give assurance that the company would remain viable and have a realistic mechanism for recovering the recent and projected losses.

The core, underlying business (prior to Covid-19) had proven to be profitable and marginally cash generative. Subject to adequate revised business plans, consideration of the company’s resources and long term consequences of any short term support provided and the assessment of need at the close of lockdown and re-opening of Edsential’s activities, it was considered in the Council’s interest as a shareholder, together with Cheshire West and Chester Council, to provide such funding and the letter of comfort in advance of that detailed application.

Philip McCourt also referred to the Council’s current appointee to the board of directors of Edsential, Simone White, whose role within the Council had changed upon her promotion to Director of Children’s Services. It was considered, therefore, that her role was best taken up by another officer related to the delivery of education and youth provision and create a separation to respect the conflict of interest between company and Council.

In response to comments from Members, Philip McCourt confirmed that the purpose of the letter was about offering confidence that the company would be a going concern and was for funding and finance distinct from the £2m cashflow agreement over a five year period agreed by the Committee on 21 December, 2020 (minute 38 refers).

Members expressed support for the proposal as Edsential provided a valuable service to schools across the Borough.

On a motion by the  Chair, seconded by Councillor Jeff Green, it was -

Resolved – That,

(1)  the Director of Law and Governance be authorised, in consultation with the Director of Resources, to:

(a) provide a letter of comfort to Edsential that financial support will be provided to the company over the forthcoming period, in the form of Covid related funding support and/or a commercial loan, to be offered in conjunction with Cheshire West & Chester Council and subject to approval by this Committee; and

(b) consider such a request for assistance from Edsential to this Council, which shall only be granted subject to the approval of this Committee and which consideration should include assessment of the request (due diligence), revised business plan(s) and any conditions considered appropriate to be applied at the point of offer;

(2)  the Director of Law and Governance be authorised, in consultation with the Director of Children’s Services, to appoint a replacement officer as a director of Edsential.