A company jointly owned by Cheshire West and Chester Council and Cheshire East Council which was set up with the aim of saving millions of pounds for Cheshire's council taxpayers, instead reported an overall loss of £2.6m for 2015-16.
CoSocius Ltd was launched in April 2014 to deliver essential business services to both local authorities and market services to outside organisations.
In May 2014 contracts and over 300 members of council staff from East and West who were formerly working in Cheshire Shared Services providing payroll, payments and IT functions were transferred to the new limited company.
At the time the Councils said "Once established the company is expected to generate savings in excess of £5m after the first five years, rising to £1.6m annually."
A statement issued on Friday 27th May, on behalf of both Councils, Councillor David Armstrong, Cheshire West and Chester Council's Cabinet Member for Legal and Finance, and Councillor Peter Groves, Cheshire East Council's Cabinet Member for Finance and Assets, said:
"CoSocius reported an overall loss of £2.6m for 2015-16. As owners of the company, these costs will be met by Cheshire West and Chester and Cheshire East Councils.
"While CoSocius itself ran at a loss, the two Councils generated £1m of savings on ICT and transactional services, reducing the net additional cost from such services to £1.6m across both Councils.
"Both Councils have met their share of these costs from their 2015-16 budgets. Thanks to savings and efficiencies delivered elsewhere, the two authorities have still delivered an overall underspend against planned expenditure for the year.
"All costs associated with CoSocius have therefore been contained without further impact on the finances of either Council or any new costs to the tax payer."
Councillors Armstrong and Groves continued: "Both Cheshire West and Chester and Cheshire East Councils are committed to working innovatively to deliver quality services and value for money for local taxpayers.
"As a business, CoSocius was able to trade with other organisations in addition to providing Council services, and was designed to reduce costs by eliminating waste and improving efficiency.
"Unfortunately, the fast-evolving nature of the ICT market meant that CoSocius experienced higher than expected running costs and fewer opportunities to grow its business commercially beyond the services provided to both local authorities. Sadly, this meant that CoSocius was not the success we hoped it would be.
"In October 2015 the Councils made the decision to bring the services back 'in house' and close down CoSocius. As part of this process steps have already been implemented to address the current overspend and bring costs back into line with budgeted levels for 2016-17.
"This decision was made for sound financial and practical reasons, and at the earliest practical opportunity, to best protect the interests of local Council Tax payers as well as to ensure ICT and transactional service continuity to both authorities."
Comments
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Perhaps we should take the money from their pension pots to compensate taxpayers? That may focus their minds on the consequences of their folly.
Let's push for an inquiry and hold the culprits to account. Perhaps the MD Mr Hudson would like to comment?
No doubt a spokesperson will state that lessons have been learnt.
How much less frustrating was it, when we had no idea what our council was screwing up?
WTC do need to get control of some of our services. They will do a far better job. Remember the s106 money CE have grabbed from Wilmslow and the total lack of income for Wilmslow from Manchester Airport with part of its boundary within our parish.
I would have thought that it was common knowledge that the ICT sector has advanced as quickly as this since its inception. If the Council was unable to anticipate "the heat" they should have kept out of the kitchen. No excuse.
Just like the European Union !!!
a company, with suitably inadequate councillors running it, yet again, designing courses on "Easy Guide: How to easily lose loads of council taxpayers' money whilst blaming others".
As those famous politicians once said.. ( and their advice still, it would appear,still holds good to day in relation to misuse of revenue ) .....
Sir Humphrey: A tiny mistake. The sort that anyone can make ...
Hacker: A tiny mistake? 75,000 pounds? Give me an example of a big mistake....
Sir Humphrey: Letting people find out about it.