A WORKING group of councillors from West Devon Borough Council and South Hams District Council is recommending to its members not to move forward with the proposal to set up a company to run their services.

This means that the proposal to set up a Local Authority Controlled Company (LACC) is now unlikely to move forward in its current form. 

The member-led working group (joint steering group) was set up to answer nine critical questions. It has concluded that, while there are no legal or technical matters that would prevent the councils from setting up a LACC, additional costs in the early years would take the councils longer to pay back than the members of the joint steering group were comfortable with.

A decision not to move ahead at this time could mean that both councils will have to continue to explore other ways to close their looming funding gap of £1.5-million between both councils.

Setting up a company owned by the councils to run their services is just one solution that the councils have been looking into to help close the funding gap in their finances and provide a way for both to continue to deliver essential services.

The idea to set up a LACC (a company owned by both councils) has been talked about by West Devon and South Hams which have shared staff arrangement since the transformation programme called T18 began over three years ago. 

The ambition of T18 has always been to transform how the councils work; to deliver better value for money for the customer; be more customer focused; and ultimately close a huge funding gap of £4.7- million between both councils, which the reduction in central government funding had created.

This would also have enabled the councils to become self-sufficient and be able to sell their services to other organisations in order to generate a profit. 

However, this would be a huge step for both councils and not without risk.

The recommendation follows months of discussion and exploration and detailed advice from finance and legal professionals.

The joint steering group will be recommending that fellow councillors vote against setting up a company when they meet on February 7 (West Devon) and February 9 (South Hams) to make their final decision. 

Leader of West Devon Borough Council Cllr Philip Sanders said: ‘I can confidently say, as part of the working group set up to explore the unanswered questions, that officers have responded to our concerns with robust information and thorough exploration of all of our questions. 

‘Despite our “no” recommendation to both councils, one thing is certain and that is that we will have to become more commercial and find other ways of funding ourselves if we want to continue to deliver the services that we currently provide to our customers.  This journey has not come to an end, it is just taking a different path.’