Councillor Tony Smith introduced a report by the Director of Children’s Services that informed that in April 2014 this Council’s and Cheshire West and Chester (CW&C) Council’s Chief Executive had agreed a mandate to jointly develop a business case for a Schools Traded Services company.

The report was intended to enable the Cabinet to make a decision on the future delivery model for school traded services.  It proposed that a Separate Legal Entity (SLE) jointly owned by the Council and CW&C Council be established.  It contained the results of the business planning analysis and presented the Strategic Business Case.

The Cabinet was informed that the proposal would also be presented to CW&C Council’s Executive on 19 November 2014.  The project could only proceed if both Councils agreed to the recommendations.

The report contained exempt information in an Appendix as defined in Schedule 12A of the Local Government Act 1972.  It was in the public interest to exclude the press and public under Paragraph 3 ‘Information relating to the financial or business affairs of any particular person (including the authority holding the information)’. The information contained in the Appendix was commercially sensitive. (Item No. 23 on the agenda – Exempt Appendix – School Trading Services -, Minute No. 96 refers.)

Councillor Tony Smith thanked all of the officers who had contributed to this initiative.  It had involved a lot of hard work being carried out in a very short space of time.

Councillor Phil Davies informed that this was exactly the type of model for delivering services that the Council should be looking to adopt in the future.  He considered it to be an exciting initiative which had tremendous future potential and he wished it well and looked forward to receiving progress reports on it in due course.

RESOLVED: That

(1)  the overall direction and strategic agenda for change for schools traded services identified in the business case prepared jointly by CW&C and Wirral Councils be agreed;

(2)  the establishment of a Community Interest Company limited by shares and wholly owned and controlled jointly by Wirral and CW&C Councils for the purpose of providing the services identified in the business case to schools in their area and outside be agreed;

(3)  it be agreed that the Council will act as guarantor to the pension liabilities of the company as a designating body to the Merseyside Pension Scheme.  The risk to be mitigated by the SLE purchasing a bond for 20% of the risk, the remainder be guaranteed by the Local Authorities and a charge made to the SLE at market rate;

(4)  it be agreed to fund the historic deficit in the Merseyside Pension Fund on a shared basis with the SLE based on a notional share of the assets and liabilities of the Local Authority at the time of transfer;

(5)  be agreed to provide, in conjunction with CW&C Council, such further financial guarantees as the company may reasonably require subject to the requirements of state aid regulations and the approval of the Director of Finance;

(6)  it be agreed to meet the Local Authority designated set up costs of the new company, as identified in the business case jointly with CW&C Council (50/50 split); and 

(7)  the following delegations be agreed:

(a)  to authorise the Director of Children’s Services in collaboration with the Director of Resources and Head of Legal and Member Services to do all things necessary to establish the company and to allow it to provide services to schools in accordance with the business case. Including but not limited to the recruitment and appointment of a Managing Director for the company at the Head of Service, A pay band and the recruitment of the remaining board of executive and non-executive directors;

(b)  to determine the memorandum and articles of association of the company in accordance with the principles outlined in the business case, including those matters to be reserved to the Councils as shareholders and the content of the shareholder’s agreement;

(c)  to determine the shareholder governance arrangements in accordance with the principles outlined in the business case;

(d)  to determine the content of the following agreements to be entered into with the company:

(i)  the ‘buy back’ of council support services;

(ii)  the arrangements for the ‘strategic payment’;

(iii)  the provision of statutory services by the company for the councils;

(iv)  the agreement for the transfer of assets and staff to the company;

(v)  any other contractual arrangements required to give effect to the business case;

(vi)  pension admission and guarantee arrangements;

(vii)  any loan agreement for working capital or asset purchase.

(e)  to authorise the Head of Asset Management to determine the terms of any property lease or licence to the company required to give effect to the business case and on such detailed terms or conditions as deemed appropriate by the Head of Legal and Member Services.

(f)  to authorise the Head of Legal and Member Services to enter  into and execute all legal documents necessary to give effect to the establishment of the company and its operation in accordance with the business case.

(8)  the Cabinet notes and agrees that:

(a)  the business case for the company be based upon the financial assumptions listed at paragraph 8.1.2 of the report and further detailed in the business case. If, in the opinion of the Director of Resources, any of those assumptions have materially changed or any financial matter materially affects the detail of the business case; the matter will be the subject of a report to the Cabinet or the matter may be determined by the Director of Resources in consultation with the Cabinet Member for Children and Family Services and the Cabinet Member for Governance, Commissioning and Improvement; and

(b)  the pension’s liability, bond and admission arrangements and VAT status be the subject of further specialist financial advice. Any material impact upon the business case that arises as a consequence of that advice will be the subject of a report to the Cabinet or the matter may be determined by the Director of Resources in consultation with the Cabinet Member for Governance, Commissioning and Improvement.