Beleaguered Northamptonshire County Council has decided to scrap a standalone company delivering social services due to worries about its over-reliance on council funding streams.
Last week, the council’s cabinet voted to scrap plans to move more council staff into its standalone company Olympus Care Services (OCS), choosing instead to bring the company’s employees back under council employment.
Earlier this month, government inspectors were sent in to Northamptonshire County Council over concerns about the authority’s finances.
A report prepared by officers for the cabinet meeting said: “… it is clear that OCS is no longer a viable going concern from a financial perspective.”
The report added that while OCS remains “highly rated” it remained dependent on a council block contract for funding.
“This contract and the budget has reduced year-on-year reflecting the council’s financial challenges,” the report added.
“While Olympus has provided savings and grown income it can no longer match delivery of its contract within the amount provided and threatens the ability to invest in the innovation and growth of services moving forward, therefore in some cases, making services unviable.”
The report said that auditors had expressed concerns about the company’s low reserves.
But a statement from the council denied that the company had failed to meet its anticipated original hopes for its financial performance.
It said: “While Olympus’s services and staff have continually delivered on the original growth and income objectives set for it as a separate trading company and its brand is recognised and highly-rated countywide — hence our decision to retain the brand — Northamptonshire County Council’s financial challenge has changed significantly, due to unprecedented demand for our services and reducing funding from central government.”
According to accounts lodged with Companies House, OCS made a pre-tax loss of £637,000 in the year to March 2017, following a £3.8m loss the previous year.
In the most recent accounts, the company said that although it was heavily reliant on the local authority for a high proportion of its income, “during 2017-18 we anticipate securing additional funding through health funding as well as new grants announced in the spring 2017 budget review that will result in additional investment and expanded services to support the social care and health economy.”
However, the council now says that bringing back the services in house will save it money on reduced support costs, buildings and infrastructure, VAT and reduced governance structures.
Councillor Lizzy Bowen, Northamptonshire County Council cabinet member for adult social care, said the move would “reduce the cost of running the services in OCS and allow us to use all the services, staff and their skills to deliver more of what we need.
“It will also mean OCS teams will work more and more alongside care management staff to ensure we deliver the right care, get the right outcomes and at the right cost.”
OCS began trading in 2012 with a remit to provide a range of care and support services in the county to older people and adults with disabilities.
The decision to take the services back in house follows last week’s news that Aylesbury Vale District Council was closing its standalone commercial company after two years, due to private sector competition.
