Agenda item

Kent County Council - Commercial and Traded Services

Paul Carter CBE, Leader and Cabinet Member for Business Strategy, Audit and Transformation and Commercial and Traded Services of Kent County Council to answer question on Commercial and Traded Services.

Minutes:

The Chairman welcomed County Councillor Paul Carter, Leader and Cabinet Member for Business Strategy, Audit and Transformation and Commercial and Traded Services at Kent County Council and John Burr, CEO of Commercial Services, who gave an overview of Commercial and Traded Services at Kent County Council.

 

Mr. Carter and Mr. Burr tabled a leaflet providing an overview of the services provided by Commercial Services. Mr. Carter explained that Commercial Services had a combined turnover of £400 million, with three quarters from the LASER energy purchasing group. He explained that he did not want Commercial Services just to create artificial profits and so Commercial Services had separate accounts from the Council and no subsidies were provided. They clarified that 83% of the turnover come from businesses outside of KCC and the only service KCC staff were asked to use was Connect2Staff recruitment. Commercial Services contributed £5 million to £6 million per year back to the Council and had a target of £8.7 million in profit for the current year and £11 million in the next. Earlier that day Commercial Services had launched GEN2 property and professional services and they hoped that KCC Legal Services would be established as a separate Alternative Business Structure by the end of the year, to allow trading with both the public and private sectors.

 

Questions were asked of Mr. Carter and Mr. Burr.

 

The Chairman asked whether the service was sufficiently profitable, particularly given the large number of employees it had. They responded that, excluding energy brokerage, the profits were 5% which was comparable to retail businesses. 200 of their 600 employees were landscape gardeners. Commercial Services would be concerned if they overcharged other public authorities but competed instead on service provision, such as guaranteeing next day delivery. They noted that there had been a lack of investment over time and so 35% of orders were taken by fax while only 7% were through their website.

 

The Vice Chairman asked whether the increase in academy schools provided a greater opportunity for trading and whether KCC had considered the Council’s aim to become self-sustainable. Mr. Carter raised his concerns at the funding of County Councils and noted that KCC had £1billion of debt, which had been borrowed against the Revenue Support Grant. Academisation provided an opportunity for KCC for greater efficiencies in scale, particularly where other Local Authorities were withdrawing their role and some private sector companies had tarnished reputations. KCC were part of the One Public Estate model and had entered discussions to take on part of the health economy.

 

Asked about trading with the private sector, Mr. Burr confirmed that Commercial Services was made up of a “Teckal” company which had to take on work from the Council and a trading company set up under section 93 of the Local Government Act 2003 and could only win work through competitive tendering. Commercial Services had a 5 year plan for investment to ensure all services were rated good or better.

 

In response to a question, Mr. Burr advised that Commercial Services was regularly asked for advice from other Local Authorities considering a similar approach. However, the governance could be expensive and KCC had to learn from mistakes. Commercial Services had reduced the number of its divisions and had sought synergies, recognising that services needed to be lean. However they would leave a service if they were only able to compete through “grey” employment practices.

 

A Member asked about how much trading was done with District Councils. Mr. Carter and Mr. Burr advised that they experienced more activity outside Kent. The Chief Officer Corporate Services confirmed that the Council did purchase energy, stationery and MFDs through Commercial Services.

 

In response a question concerning KCC’s debt, Mr. Carter explained that the Council’s aim was to ensure sufficient revenue and so KCC were not focussing on selling assets such as the company.

 

Asked about Commercial Service’s competition with private sector services, Mr. Burr stated that the level of guarantees and audit requirements for Commercial Services provided reassurance to many local authority customers. London Boroughs, who were provided £100 million in energy, had stated they would not have entered the contracts if it had been with the private sector. Mr. Carter added that the service level with some private sector companies meant that contracts would not be renewed and they even planned for this.

 

The Chairman thanked Mr. Carter and Mr. Burr for their attendance.

 

Supporting documents:

 

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