Agenda item

(To receive a report from Pete Moore (Executive Director for Finance and Public Protection), which seeks approval to the involvement of Lincolnshire County Council in the establishment, alongside its ESPO partner authorities, of a trading company to enable ESPO to expand the customer base to which it provides services beyond public bodies)

That the Executive:

(1) Notes the recommendation of the ESPO Management Committee, having reviewed the detailed business case and other documents, to establish a trading company;

(2) Approves the establishment and the taking up of County Council membership of a new trading company, ‘ESPO Trading Limited’ on the basis outlined in this report;

(3) Notes that the Board of Directors of the trading company will include five officers, acting as Executive Directors made up as follows:

(i) Three officers from ESPO being the following office holders:

· Director of ESPO

· Deputy Director and Chief Commercial Officer

· Assistant Director of Finance and IT

(ii) The Director of Corporate Resources (Leicestershire County Council) or his nominee;

(iii) An officer nominated by the other Shareholders (member authorities of ESPO);

(4) Approves the granting by the Council of an indemnity within the scope permitted by the Local Authorities (Indemnities for Members and Officers) Order 2004 to any County Council officers discharging the role of Executive Director of the Company;

(5) Notes that the Shareholders (member authorities) may nominate up to two Non-Executive Directors to serve on the Board of the Company;

(6) Notes that each of the six member authorities will be equal shareholders in the new Company and approve the appointment of Councillor R D Butroid as the County Council's shareholder representative on the new company;

(7) Notes that the shareholder representatives (Elected Members) will be responsible for taking strategic decisions and agreeing the Annual Business Plan for the Company; and

(8) Delegates to the Executive Director for Finance and Public Protection in consultation with the Leader of the Council authority to agrees the terms of and sign the necessary documentation to give effect to this decision and to agree the nomination of an officer from the ESPO member authorities to be an Executive Director of the company.

Consideration was given to a report from the Executive Director for Finance and Public Protection, which sought approval to the involvement of Lincolnshire County Council in the establishment, alongside its ESPO partner authorities, of a trading company to enable ESPO to expand the customer base to which it provided services beyond public bodies.

The Chief Legal Officer advised that ESPO was a public sector buying organisation managed by a local government joint committee, jointly owned by six local authorities, one being Lincolnshire County Council. As it was not a separate legal entity, its functions were performed through Leicestershire County Council, which acted as a servicing authority to the Joint Committee.

ESPO had traded on a self-funded basis and its sole power to trade was through its servicing authority under the Local Authorities (Goods and Services) Act 1970 which restricted it to only trading with other public bodies within the UK. This market was shrinking as local authority resources reduced and services were outsourced to private or voluntary sector organisations.

With this in mind, ESPO's Management Committee had explored alternative markets and potential customers that were not public bodies and proposed the creation of ESPO Trading Ltd. The new company could trade with organisations with a public sector ethos, and not be restricted by the 1970 Act.

In response to a question, the Executive was assured that should any issues arise with the newly-established ESPO Trading Ltd, each member authority would only be liable for the value of their individual shares.

A Member commented that there could potentially be a conflict of interest between ESPO and ESPO Trading Ltd. Further to this, it was highlighted to the Executive that this had been identified as a potential risk within the Risk Assessment, paragraph 37, page 212, of the agenda pack.

The Chairman of the Overview and Scrutiny Management Board advised that the Board had considered a report on ESPO Trading Company Limited at its meeting on 26 October 2017. The Board had unanimously supported the recommendations within the report.

RESOLVED