Three years after it was founded, Shropshire Council’s private company ip&e is finally making itself public. It has a new website. This looks cute as a sales pitch. It falls short on explaining what the company is up to. It doesn’t say what it might deliver for the people of Shropshire rather than its hoped for clients.
We need to know this information. Shropshire Council owns this company – though there are no rules stopping it being sold to the likes of Serco and Capita. Shropshire Council only owns this company on behalf of the electors of Shropshire – you and me. So surely we should expect to know what’s going on with ip&e?
Alas no. The company does not hold annual general meetings. It publishes its accounts as required by law, though you can’t find them on either Shropshire Council’s website or that for ip&e (here they are). It does produce a business plan – but you are not allowed to see that.
The business plan is not available for public inspection on the basis of the commercially sensitive information contained within it.
This is nonsense. I’ve seen the business plan and I can tell you that it contains nothing other than you would read in the Financial Times about any company with shareholders. But Shropshire Council’s cabinet has a compulsive desire for secrecy and it has declared that this report must be ‘exempt’ from public gaze.
This is more than an annoyance.
I wanted to tell you that ip&e was created ******* **** ** **** and it is ********. It sees an opportunity in ***** ******** with their ******* ** ******* ******-*** ***** ****.
But alas, council leader’s Keith Barrow’s cabinet has censored this message by making the business plan exempt. Here is the executive summary from the business plan. I have had to redact information you are not allowed to see:
I can see why Keith is nervous about ip&e. It has been a troubled company. It’s governance and management hasn’t been that stable. Thirteen directors have been appointed to its board and nine have departed since it was registered with Companies House in May 2012. A chief executive was appointed in October 2012. He departed nine months later. Keith Barrow confessed to the BBC he “couldn’t truthfully say that [the MD’s departure] had always been the plan.”
It’s worth looking at the company’s articles of association. They allow directors of ip&e to act in their own personal interests or that of any other company or organisation they are involved with (articles 20-23). All they need to do is declare their interest. After that, they can vote for a contract to go to their own company, even to themselves.
This is seriously worrying. ip&e is now down to four directors against the eight expected by the articles of association (article 25). The board meetings are secret. The business plan is exempt from public scrutiny. It is a golden rule that councillors and officers should never act in their own interests on council business. I am not suggesting for one minute that the directors of ip&e have done so. I am sure they have not. But as a public body we should never place councillors or officers in a position where they can influence or vote on decisions for their own or their associates’ advantage. ip&e’s articles of association allow that to happen with impunity.
By keeping the company’s ambitions of what ip&e might achieve for Shropshire in the shadows, Keith Barrow and the cabinet are not helping the company establish a public and business reputation. This is not the cabinet’s company. It is not Shropshire councillors’ company. This company belongs to the people of Shropshire. They should be allowed to know what it is up to and what it will deliver for Shropshire.
The cabinet paper accompanying the report says:
Community. One of the key aims of ip&e Ltd is to build community and social capital by operating responsibly, inclusively and in partnership with people that share the company’s values.
How does ip&e share values, build social capital and operate inclusively while it keeps so much of what it does secret from the very people it wants to be in partnership with?
The public cabinet report says:
One of the key aims of ip&e Ltd is to create public profit to be reinvested in Shropshire.
The truth is that ip&e is a driven by a political ambition to privatise services. At the heart of the cabinet’s ambition is a dislike for public services and a disrespect for what the public sector has achieved during the last century and this.
The troubled start to ip&e and its sloth-like progress in getting up to speed means that it is now running behind the market. Councils around the country have been working on new ways of operating, cooperating, sharing and innovating since well before 2012. The market ip&e is aiming for is shrinking rapidly.
The public papers say that ip&e is expected to make £237,000 profit on a turnover over of £12.5 million over the next three years (2% profit). But in the medium to longer term:
Moving forward, the profitability of ip&e Ltd will become a greater risk factor for the Council as funding to the public sector continues to reduce. There is a risk that the profit levels identified within the [business plan] will not be achieved.
Given that risk, council financial managers have wisely decided not to incorporate an expectation of any income from ip&e in the council’s future Business Plan and Financial Strategy.
That’s hardly a vote of confidence in Shropshire Council’s flagship company. Despite this the managers of ip&e are confident. They say in the secret business plan:
** *** ** *** ***** *** *** *****. ** **** *** ********.
We are all public shareholders in this company. We must have confidence in that statement.
You can hear my interview with Clare Ashford on BBC Radio Shropshire here. In a slip of the tongue I said that “ip&e has just four shareholders. I meant of course that it has just four directors. TIn fact it now has six, one appointed after I wrote this blog. There is only one share, held by Shropshire Council.