Agenda item

SSDC Local Authority Trading Company

Meeting of South Somerset District Council, Thursday 21st March 2019 7.30 pm (Item 119.)

Decision:

RESOLVED:	That Full Council agreed to:-
	a.	note that District Executive approved the setting-up of a Holding Company & Local Authority Trading Company (LATC) in the manner outlined in this report with delegated authority to the Director for Commercial Services and Income Generation, and S151 Officer in consultation with the relevant Portfolio Holders to proceed with the implementation as proposed within the document, following more detailed due diligence on the legal and financial set up of the company;
	b.	note that District Executive approved for Elleston - landscape management and horticultural services, to be the first traded service within that LATC structure. This is in accordance with the attached business plan (Appendix 2);
	c.	approve the principle of a working capital loan of up to £132,000 to the Trading Company following the creating of the companies following due diligence as outlined in recommendations (a) and (b) above, and delegate authority to the S151 Officer in consultation with the Portfolio Holder - Finance and Legal to agree final amount and commercial terms. The loan advance to be financed from the Council’s revenue reserves.
Reason:	To confirm that SSDC set up a holding company in order to take forward the trading of its services.

(Voting: 32 in favour, 11 against, 1 abstention)

Minutes:

The Portfolio Holder for Property and Climate Change and Income Generation advised that the principle setting-up of a Holding Company & Local Authority Trading Company had been agreed by District Executive and the report before Council was to agree the finance to set up a trading company to allow the Council to start commercial trading.

The Director (Commercial Services & Income Generation) confirmed the proposal was part of the Councils agreed Commercial Strategy and the loan was required to set up the trading company.

In response to questions from Members, the Director (Commercial Services & Income Generation) advised that:-

· There was more than one Act of Parliament governing a local authorities powers to provide services on a commercial basis and there were many local authorities taking advantage of this.

· Void clearance referred to at point 10.4 was to clear empty properties prior to new tenants moving in and if this was a potential future trading company then a separate business case would be presented to District Executive.

· The trading companies would be set up as limited companies so the liability would be limited. Morally, the Council could chose to cover any liability but it would be for Council to decide at that time.

· The proposal was to set up a trading company to bid for work which SSDC as a local authority was not allowed to under the Homes and Communities Association (HCA) regulations.

· It was recommended best practice that Councillors would own the trading company and the Executive Councillors would be shareholders with senior officers as the Directors.

· It was proposed that the land management company would deal with public open spaces and it was not intended to deal with road, kerbs or lighting.

The Chairman of the Scrutiny Committee confirmed that at their request, the Portfolio Holders would brief the Scrutiny Chairmen on their rationale and decisions for company governance arrangements prior to implementation.

Councillor Michael Lewis, as Leader of the Conservative group, proposed that recommendation 3 be deferred until the next meeting of the new Council in May 2019 as the Council was in purdah. This was seconded and on being put to the vote, was lost (voting: 13 in favour, 29 against, 2 abstentions).

The Leader of Council advised that Council business could and should progress as usual during the purdah period.

The original recommendations were then put to the vote and the majority of Members agreed to the the principle of a working capital loan of up to £132,000 to the Trading Company.

RESOLVED:	That Full Council agreed to:-
	a.	note that District Executive approved the setting-up of a Holding Company & Local Authority Trading Company (LATC) in the manner outlined in this report with delegated authority to the Director for Commercial Services and Income Generation, and S151 Officer in consultation with the relevant Portfolio Holders to proceed with the implementation as proposed within the document, following more detailed due diligence on the legal and financial set up of the company;
	b.	note that District Executive approved for Elleston - landscape management and horticultural services, to be the first traded service within that LATC structure. This is in accordance with the attached business plan (Appendix 2);
	c.	approve the principle of a working capital loan of up to £132,000 to the Trading Company following the creating of the companies following due diligence as outlined in recommendations (a) and (b) above, and delegate authority to the S151 Officer in consultation with the Portfolio Holder - Finance and Legal to agree final amount and commercial terms. The loan advance to be financed from the Council’s revenue reserves.
Reason:	To confirm that SSDC set up a holding company in order to take forward the trading of its services.