Issue - decisions

Decision

1. Cabinet approves the incorporation of the Environment SK companies (limited by shares) utilising Model articles of association

2. Cabinet approves the appointment of the following as Directors of Environment SK Ltd and Environment SK Commercial Services Ltd

·         Cabinet Member for Environment – Councillor Dr. Peter Moseley (Chairman)

·         Assistant Director Commercial and Operational – Ian Yates

·         Strategic Advisor (Housing Led Regeneration) – Tracey Blackwell

3. Cabinet approves the appointment of a Non-Executive Director to the Board of Environment SK Commercial Services Ltd

Considerations/Reasons for Decision

1. Report number ENV703 of the Cabinet Member for Environment
2. The Council’s Corporate Strategy and its emphasis on commercialism
3. The Council’s current grounds maintenance contract with Glendale which expires at the end of February 2019
4. A review of service delivery options by the Environment Overview and Scrutiny Committee
5. The decision made by Cabinet on 12 July 2018 to deliver the service through a company that is wholly owned by South Kesteven District Council and subsequent decision by Council on 26 July 2018 to make changes to the Council’s 2018/19 budget framework
6. New arrangements would require input from a range of the Council’s support services, for which Service Level Agreements were being prepared
7. New performance measures would be considered when the service is reviewed during the 2019/20 financial year
8. Section 1 of the Localism Act 2011
9. A company limited by shares would allow the Council to own and control the environmental services vehicle and allocate any profits for use in the Council’s wider activities
10. The group structure would separate the discrete classes of activity (core services and purely commercial activity)
11. The Companies Act 2006
12. Model Articles of Association for a company limited by shares as Appendix 1 to report number ENV703
13. Cabinet’s decision on 6 September 2018 to agree a review of the governance arrangements for all of the Council’s companies
14. Any commercial lending undertaken by the Council would be structured within the operating framework of the Treasury Management Strategy
15. Services provided to the company by the Council would be fully charged on a cost recovery basis
16. The Transfer of Undertakings (Protection of Employment) Regulations 1981
17. Public Contract Regulations 2018

Other options considered and assessed

The core grounds maintenance service could be delivered by establishing one company – Environment SK without the need for a separate commercial entity. The advice received to date indicates that the Council would need to be assured that commercial trading levels would not be at risk of exceeding the thresholds sets out in procurement regulations. Effectively this could limit the ambition of the company in terms of developing its commercial strategy and competing for new contracts. From the Council’s perspective this could limit the opportunities available to derive new revenue streams and therefore its ability to cross-subsidise other corporate services or invest in local priorities.