Seven councils including Brighton & Hove formed a consortium to save money in 2010; now they might be considering forming a company to make a profit as well.
The SE7 group, which also includes East Sussex, West Sussex, Kent, Hampshire, Medway and Surrey councils, has a memorandum of understanding to combine some resources and budgets to keep costs down. This is achieved by negotiating major contracts as a single entity, including highways construction & maintenance, special education facilities, waste management and information technology.
The Leader of East Sussex County Council, Peter Jones, has indicated that they are considering forming a private company that could make a profit by tendering to provide services to other non-SE7 authorities or taking SE7-outsourced contracts in-house e.g. waste [Brighton & Hove already has an in-house waste collection service – City Clean].
The move is prompted by the prospect of further cuts in grant funding for local authorities from central government. The SE7 arrangement is predicted to save the seven councils about £74m by 2014/15 and a figure of £1.5bn has been suggested for savings over the longer term.
ECONOMIC PARTNERSHIP COMMENT
Although local authorities are often called businesses, they aren’t really. Many of the council’s services are prohibited from making a profit and many council procedures mitigate against making a profit even if they were allowed. Council procurement procedures are laborious, overly-bureaucratic and unimaginative and decision making is often glacially slow.
Inevitably the use of public funds requires far more checks and balances than a business spending its own money and taking the attendant risks to make sure it is spent with the upmost probity . But the culture and procedures designed to be not only fair but to also demonstrate it with crystal transparency to anyone and everyone that is interested does not lend itself to the fleet-footed decision making that is necessary in a business in difficult times.
If the SE7 group want to form a company, it might be wise to outsource its management and cut if free from any political control. Of course, that's not going to happen.
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