Subscribe to trusted local news
In a time of both misinformation and too much information, quality journalism is more crucial than ever. By subscribing, you can help us get the story right.
- Subscription costs less than £1 a week with an annual plan.
Already a subscriber? Log in here.
29
Jul 2024
Are North Yorkshire Council’s companies value for taxpayers' money?
North Yorkshire Council believes its companies offer value for money for taxpayers - however some are sceptical.
The council owns or has an interest in 12 separate firms, some of which operate in the private sector while others deliver public services.
All of the firms come under the umbrella of its Brieley Group of companies.
Some are run in-house, while others are handed over to arms-length ventures to operate and, in some cases, turn a profit for the council.
A report before a shareholder committee at the authority showed that overall the firms generated £158.3 million and made a pre-tax profit of £3.93 million in 2023/24.
All but two companies - Brimhams Active and Brierley Homes - delivered a profit for the council.
Kerry Metcalfe, assistant director of commercial, property and procurement at the council, said the performance showed a “strong shareholder value” to the council.
She said:
The performance across the Brierley Group shows strong performance in most areas, with most organisations reporting higher pre-tax profits than budgeted.
Ms Metcalfe added the Brierley Group companies offered a "strong shareholder value" for the council due to the financial outturn in 2023/24.
Council-owned firms 'a constant worry'
However, some councillors do not feel that the council’s ventures offer enough value for money.
Cllr Steve Shaw-Wright, Labour group leader on North Yorkshire Council, told the Stray Ferret that the authority should focus on bringing more of the companies in-house.
He added that the money put into some of the companies should be offering a higher return for taxpayers.
He said:
I do not think there is a lot of excuses as to why we have not delivered as much money as we could have.
Cllr Shaw Wright added that he would welcome more companies being brought in-house, as is being done with Brimhams Active in the Harrogate district and Maple Park in Hambleton.
He said:
We need to able to bring back companies under our own control without bothering with the relevant market forces. We can hire our staff without competing with the private sector.
The value for money is not that much for what we put in. When you look at all the costs, we do not make that much money. I think we should be looking at what we can do in-house.
Cllr Steve Shaw-Wright and County Hall in Northallerton
However, Cllr Stuart Parsons, an independent on the authority, pointed out that North Yorkshire Council’s companies appeared to be performing better compared to other councils.
He said:
It’s always difficult to determine [value for money] but given the fact that most of the in-house companies appear to be operating at a profit things are certainly looking up.
If these companies continue to develop opportunities then the council could be in a much better position than many other councils.
Cllr Parsons added that, despite some of the companies turning a profit, council-run companies always represented a risk.
He said:
Council owned companies are a constant worry because if they fail then the taxpayer would have to bail them out. This risk is currently being managed but if there are any further hits to the economy then North Yorkshire Council will struggle.
‘Problematic lens’
The Local Government Association said in 2012 councils across the country would have to set up enterprises as they “adjust to significantly lower levels of central funding” under the then coalition government.
But the rise in the number of council companies also increases the chances of failure or high-losses by publicly-run firms.
North Yorkshire Council reported that Brimhams Active, which runs leisure services in Harrogate, reported a loss of £491,000 due to construction delays at its projects. The company is set to be brought in-house under changes.
However, the Chartered Institute of Public Finance and Accountancy has argued that the failure of some council companies has unfairly removed the spotlight from those which are run effectively.
In a report, Joanne Pitt, CIPFA local government policy manager, said the media attention on failing authority-run companies took attention away from those which are run well.
She said:
Unfortunately, it is often failure that grabs the headlines meaning those well-run council owned companies that have functioned effectively, delivering results and good services, begin to be viewed through the same problematic lens.
1