Staff at a company created to save South Holland District Council money face an uncertain period after a cost-cutting review was initiated over the Christmas holidays.
Compass Point Business Services (East Coast) Ltd (CPBS) was set up in 2010 by owners South Holland District Council (SHDC) and East Lindsey District Council to save the authorities money on services.
It currently employs over 220 staff to cover both councils’ services in IT, human resources, financial services and revenues and benefits.
Staff from both local authorities were transferred to the new company.
While the councils say setting up CPBS has saved them millions of pounds over the years, the company will itself now be the subject of a cost-cutting review by its managerial staff.
A decision notice published by SHDC on Wednesday, December 27 states that: “CPBS be required to deliver a level of efficiency savings and resulting reduced cost base to the satisfaction of both councils.”
The “business case for transformation”, as the notice calls it, must be submitted by May 31.
The review comes after a report by accountancy firm Grant Thornton received by SHDC at its meeting in November claimed that there “remained opportunities for further reductions” within CPBS.
The current 10-year contract with the CPBS Board and East Lindsey District Council is to be terminated with a new five-year contract planned to start on July 31. An option is included to extend the contract for a further five-years after that.
Coun Gary Porter, leader of SHDC, told The Voice: “The real matter is that the council is carrying on working with CPBS and its staff for probably 10 more years.
“All of the staff were unsure if we would carry on using them or go elsewhere for our services but we’re staying with them and restructuring. That’s the main decision.
“Members of CPBS staff have received briefings on this for three or four months so it’s not something they’re coming in to cold.
“All staff know our finances are under constant review. In two years there’s a full change coming as we lose all our central government funding and nobody working in local government thinks its going to be the same as it was.
“I don’t know why it (the notice) came out over Christmas. I think it was signed before Christmas. The reason for its timing is nothing to do with hiding it over Christmas and it’s down to fitting in with the calendar of meetings.”
CPBS was initially created as part of a 10-year contract with East Lindsey District Council providing 67 per cent of costs and SHDC 37 per cent based on the population of the two districts.
The council states that the immediate annual savings from its creation in 2010 was £2.1 million across both councils plus an additional five per cent year-on-year saving.
It also states that between 2011/12 and 2017/18 the annual contract figure it paid to CPBS has reduced from £8.24m to £7.65m.
A spokesperson for SHDC said: “The council in conjunction with East Lindsey District Council have to consider the future direction for the company they wholly own.
“The company and its future options are subject to consideration and approval by South Holland District Council and East Lindsey District Council.”
