Decision details

Decision details

Local Authority Trading Company - Progress report.

Decision Maker: City Executive Board (became Cabinet on 13 May 2019)

Decision status: Recommendations approved

Is Key decision?: Yes

Is subject to call in?: Yes


Finalisation of lease and licensing agreements with the LATCo covering the LATCo companies’ occupation of relevant Council premises and use of Council resources.


The Executive Director for Sustainable City submitted a progress report on the establishment of the Local Authority Trading Company.


Cllr Ed Turner, Board Member for Finance, Asset Management and Public Health presented the report.


The Service Transformation Manager presented the report. He said that  work was progressing well and there was verbal agreement that the Local Government Pension Scheme would be available to those staff transferring to the new company.  There had been productive discussions with the trade unions and financial modelling was well underway and a shareholders’ agreement had been drafted.  Notwithstanding the progress, this was a complex matter and much operational detail had yet to be determined.


The Chair reaffirmed that, at this stage, the Board was just being asked for approval in principle, looking to a further report in October. The business plan element of the proposal would be critical.


The Executive Director for Sustainable City reminded those present that the proposal was underpinned by the strong conviction that the proposal was in the best interests of the Council. 


The Interim Chief Executive was pleased that the work done had been able to give confidence to staff. He reaffirmed the importance of the Business Plan and the work now needed to progress it. Successful implementation had the potential to generate considerable new business for the Council. The two companies had been established as legal entities which would be  distinct from the Council but care would need to be taken to ensure that Council values and aims were not lost in the process.  While there was a clear ambition to have the new arrangements in place by 01 November it should be recognised that  (and it did not matter if) not every detail  was sorted by then.


Cllr Brown, Board Member for Customer and Corporate Services welcomed the Interim Chief Executive’s comments,  particularly the recognition of the desirability of a shared  ethos with the new companies.


Cllr Tanner, Board Member for A Clean and Green Oxford reminded those present that a failure to proceed on the lines  proposed would almost certainly result in the need for the Council to curtail its current level of activity. The Board thanked staff for their work on the project to date .


The City Executive Board resolved to:


1.    Approve the revised LATCo company structure as set out in this report, i.e. the creation of a “Teckal” company (to provide Council services – “the Teckal Company”) and a trading company (to trade with external customers – “the Trading Company”)


2.    Note that the Interim Chief Executive in consultation with the Council’s section 151 officer, Monitoring Officer and the Leader will be developing a full update report to be considered by the Board in September or October, which will contain recommendations on the following issues:


a.    A date (“the Transfer Date”), on which all service delivery currently carried out by the Council’s Direct Services will be transferred to the two new LATCo companies. :


b.    In regard to the Teckal Company, the terms of the Council’s entry into an appropriate agreement with the company (“the Service Contract”) under which the Teckal Company would undertake from the Transfer Date all relevant Council statutory functions and related work, as currently undertaken by Direct Services;


c.    The arrangements to transfer all Direct Services staff engaged in service delivery immediately prior to the Transfer Date to the Teckal Company, such transfer being subject to the TUPE regulations;


d.    The arrangements to ensure that all transferring staff will continue to have access to the Local Government Pension Scheme;


e.    The terms of the contract between the two LATCo companies and the Council (“the Support Contract”) under which the Council would provide support services to both companies;


f.     The terms under which the Council would enter into leases or licences with the two LATCO companies covering their occupation of relevant Council premises and use of Council resources;


g.    The arrangements made to transfer to the Trading Company of all contracts with third parties in existence on the Transfer Date


h.    The terms of the Shareholder’s Agreement to be made between the companies and the Council (acting though its Shareholder Group)




i.      The provisions of an initial Business Plan (or Plans) for the Companies.

j.      An aspiration that the project aim should be  to go live on 01 November 2017. 


3.    Agree to the transfer on the Transfer Date of all Direct Services staff engaged in service delivery immediately prior to the Transfer Date to the Teckal Company in accordance with all relevant employment law protecting terms and conditions of employment including pension, and for this to be reflected in the contract. This proposal being subject to consultation having taken place with the Trades Union concerned.


4.    Recommend to the Teckal company that it incorporates the new Council three year pay deal (if endorsed by a ballot of Trades Union members) into the employment contracts of the transferring staff for the three year period following its implementation by the Council.


5.    Agree to a transfer to the Trading company of the Council’s order book/external customer list, on terms to be agreed.


6.    Agree to grant a licence to the LATCo companies to use the Council’s “ox and ford” logo and the name “Oxford Direct Services” on terms to be agreed.


7.    Recommend that Council agrees to a further loan of a sum up to £200k to the LATCo companies, on State-Aid compliant terms, to enable the LATCo companies to fund their set up costs and to delegate to the Councils section 151 ofiicer, in consultation with the Interim Chief Executive and Council Leader, authority to approve spending of this money on other related matters


8.    Approve the governance arrangements for the LATCo companies set out in this report.


9.    Ensure that “client side” arrangements as set out in this report in regard to the Council’s management of its contract with the Teckal Company are fully worked up and agreed


10.Delegate authority to the Interim Chief Executive, in consultation with the Council’s s151 and Monitoring Officers and the Leader of the Council to agree on behalf of the Council any matter requiring the Council’s consent to properly implement the proposals set out in this report, including the ,terms of any leases or licences to be granted to the companies for operational premises, vehicles, intellectual property or other licences, the terms of any loan agreement and any other relevant matters





The City Executive Board resolved to:

Report author: Simon Howick

Publication date: 20/07/2017

Date of decision: 18/07/2017

Decided at meeting: 18/07/2017 - City Executive Board (became Cabinet on 13 May 2019)

Effective from: 25/07/2017

Accompanying Documents: