The resignation of Shropshire’s council leader Keith Barrow from the board of ip&e has left the future of the company in limbo. My view is that the council should drop its obsession with making a profit out of other public sector organisations. ip&e must become the council’s innovation hub.
This company is very much a Barrow baby. He has been the champion promoting ip&e. He has been the one claiming that it will make the council enough money to alleviate some of the government’s cut to local government budgets. He has been, until today, the public face of ip&e.
But Barrow’s future as council leader is on the line. Can ip&e survive without him?
When Keith Barrow’s deputy Steve Charmley gave his annual portfolio report to the full council meeting in September, he ignored ip&e entirely (PDF). Under pressure in the council chamber from myself and others, he promised all councillors a tour of ip&e’s operation in Jupiter House.[i] We are still waiting for that tour. In any event, a tour of an office block is no substitute for a robust report on what ip&e has been doing.
If this is such a great company, why is it so secret? We have been asking for a copy of the company’s accounts for months. It transpires that the accounts were signed off by the auditors and the company secretary on 11 September. They were finally sent to councillors at 4pm yesterday afternoon.
The accounts are a mixed bag. They show a profit of £28,029 but a growing actuarial loss on pensions of £444,000. That’s pretty much to be expected when you create a private company with public sector liabilities.
There is simply no sign that this company will bring significant income into Shropshire Council anytime so, if ever. It is notable that council finance officers have refused to include any potential profits from ip&e in future budget estimates (PDF). They know that to do so would be too risky. They know there is no guarantee that ip&e will make any significant money at any point. It could just be a Barrow pipedream.
Our council’s finances are grim. They are going to be grimmer in the future. But in my book ip&e is not a solution to George Osborne’s decimation of public sector finance. Or the wanderlust of many in the Shropshire Council cabinet that seem to be wishing the cuts on to our county.
The cabinet needs to recognise that the chances of this ip&e making significant money are not great. The marketplace for making money out of public sector operations is very crowded. Companies, consultancies and other councils entered it a long time ago and ip&e is a long way behind the market.
We must change the way we work in local government. We have known that for a long time. The way to do this is to innovate. Everyone knows that can be hard within the current council structure, though it can be done.
The best future for ip&e is for it to transform itself the innovation arm of Shropshire Council. It should not be obsessed by profit (though of course it should not lose money). It should be reinvented as a social enterprise. Its ‘profits’ should be measured by how much it helps change the way that local government works at all levels in this county, including parish councils, and by the benefits it delivers to the people of Shropshire.
That’s what has gone wrong with ip&e from the beginning. Keith Barrow has been obsessed with it making money to make up for the cuts. Now he has been forced by his own errors to step away from the company, we should shift the focus of ip&e to making the county better, not making money. Its activities must emerge from the shadows with open reporting. That will need broader representation on its board, an annual general meeting and an honest annual report. It must be overseen by truly independent directors.
[i]. Shropshire Council insists that ip&e is based in an office block it leases on the outskirts of Shrewsbury, rather than allowing the company to get the best deal on the office rental market.
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