Agenda item

(1)       Mr Sweetland, Cabinet Member for Commercial and Traded Services, and Mr McPherson, Managing Director Commercial Services, introduced the report which provided information about the progress made to improve the management, governance and operations of Commercial Services following an independent review and consideration by the Shareholder Board for Commercial Services.

(2)               Mr McPherson also gave a short presentation outlining the transformation journey undergone by Commercial Services from being an organisation that had delivered services to the Council for the last 70 years without any real consideration of cost, profit or loss to a commercial arm that is properly structured, governed and managed to meet the growth challenges of the future in a viable, sustainable and profitable way.  He outlined the scheme of delegation, the mission statement, the divisional structure and drew attention to some highlights including the facts that Kent Commercial Services: is the largest single public sector owned trading organisation; had returned over £60m to KCC over the last 15 years; employs 820 staff locally; contributes more than £8,000 per employee* net per annum to KCC; conducts 83% of its turnover outside the influence of KCC; and brings income exceeding £250m into the county annually.

(3)               In response to questions, Mr Sweetland, Mr Austerberry and Mr McPherson said that:

(a)       Staff previously employed in 26 separate business units had transferred to the relevant commercial company; there was no cross subsidy from the “Teckal” company to the S95 company and complex measures were in place to ensure corporation tax and other liabilities were correctly assigned.

(b)       It was difficult to obtain an accurate market value for Commercial Services as some elements such as Laser (in effect a cooperative of local authorities combining to leverage the energy markets) were not saleable and there were no private sector bench marks. It had, however, been previously valued at between £35m-£40m.  Mr McPherson also assured members that Commercial Services was an independent, arms length, viable company wholly owned by KCC and that it did not receive any capital or revenue injections from the authority and paid an agreed dividend to KCC annually;

(c)        Appropriate branding was used in supplying goods and services to private sector organisations;

(d)       By having a bus and coach business the market had been successfully moderated. This business would cease in autumn 2013 when the remaining contracts which were only marginally profitable came to an end;

(e)       Although there was no need to moderate the bus and coach market at the present time, it was not being ruled out for the future if the need re-emerged;

(f)         Commercial Services employed apprentices and were looking to employ more.  In addition Yeoman’s (an arm of the landscape division) successfully employed people with learning difficulties.  

(4)       Members of the Committee also commented that:

(a)       It was pleasing to see the progress of Commercial Services over the last 2-3 years;

(b)       The decision not to follow other authorities’ example in disposing of their commercial services was a good one.

(5)       RESOLVED that the progress made following the changes to improve the management, governance and operations of Commercial Services be noted.