Contact : Christine Buckett, Property and Litigation Manager, ext. 7313

Andrew Seber, County Education Officer, ext. 6400

1 Summary

This report sets out the background to the recommendation to the appointment of Andrew Seber, The County Education Officer or his nominated Deputy to attend and vote on behalf of Hampshire County Council at Shareholders Meetings of The South Central Connexions Partnership Limited.

2 Background

2.1 Hampshire County Council own a share in South Central Connexions Partnership Limited, (SCCP) a company limited by guarantee and set up to provide the Connexions service to young people in Hampshire and the Isle of Wight. Other members of the Company include Southampton City Council, Portsmouth City Council, Isle of Wight County Council and VT Careers Management Limited.

2.2 Hampshire County Council own a share in VT Southern Careers Limited which provides services to SCCP and from which the County Council receives a dividend each year in the region of £200,000.

2.3 Hampshire County Council also provide services to SCCP under contract at an estimated value of £150,000 per annum.

2.4 The DfES has required Connexions Partnerships to find savings for 2004 / 05 onwards. The amount that SCCP needs to save is £1.81 million which is over 12% of its total income. Also as from the 1 April 2004 SCCP will begin to incur VAT - related liabilities for which it has no source of income. This would amount to approximately £150,934 per month.

2.5 The Board of SCCP has considered the options available to it and has decided that the only way to fund the savings and avoid the VAT - related liabilities, is to directly deliver the Connexion's services itself. The current contracts with VT Southern Careers Limited and Hampshire County Council and other providers come to an end on 31 July 2004 and SCCP propose to bring the service in-house for direct delivery thereafter.

2.6 VT Careers Management Limited have called an Extraordinary General Meeting of SCCP asking the Shareholders of the Company to re-consider the decision made by the Directors. The Shareholders meeting is fixed for the 21 May 2004.

2.7 It is the view of the County Education Officer and his advisors is that the proposals for direct delivery appear to be sound and further information is being obtained from SCCP to ensure that the proposals are subjected to detailed scrutiny in order to be satisfied that the Company would be able to deliver on all aspects. The SCCP Board expressed a clear view in favour of direct delivery and a number of young people who were present at the Board Meeting confirmed that they would prefer the clarity of a single service through direct delivery. The other Directors, representing a wide range of statutory and voluntary agencies, were of the same view. The proposals in the report to the SCCP Board appear to provide good value in terms of both money and a focus on front line services to the young people. Management and overhead costs are relatively low.

2.8 The County Council has an interest in VT Southern Careers through its shareholding and dividends. It is highly unlikely that dividends would be forthcoming in the future, either because the company will not have the business or profits would have been reduced significantly. Some services provided by the County Council under contract would be caught up in the establishment of direct delivery service which could, potentially, create some liabilities in terms of redundancies and premises and IT costs for the County Council.

3 Options.

3.1 SCCP asked each of the Local Authority Members of the Company if they would be prepared to adopt a lead body role for South Central

Connexions in order to make a saving in terms of VAT liability. The County Education Officer, in consultation with the Executive Member for Education, advised SCCP that Hampshire County Council was not prepared to take on that role. The principle reason being that the County Council already subsidise the Connexions services by approximately £100,000 per year through the current contractual arrangements. The County Education Officer is not confident that the amount of grant available for the service would enable the County Council to provide the high quality services that the County Council is used to providing and that there is a risk the Council's reputation for the provision of high quality services could be damaged by the restricted budget.

3.2 The County Education Officer and his advisors continue to press SCCP for further information to enable scrutiny of the Business Plan for the direct delivery of the service.

3.3 The Chief Executive is obtaining specialist legal advice in order to ensure that the apparent conflict between the interests of the County Council in VT Southern Careers Limited and SCCP can be appreciated and dealt with. The advice will also cover any potential liabilities for the County Council in terms of the potential liquidation of VT Southern Careers Limited. It is also thought that VT Careers Management Limited might try to mount some legal challenge to the decisions made by SCCP and legal advice will be sought in this respect should it become necessary.

3.4 The County Council must be represented at the Shareholders Meeting of SCCP and it is appropriate that Andrew Seber, or his nominated Deputy, should continue to represent the County Council's interests in this matter.

4 Recommendation

That authority be delegated to Andrew Seber, County Education Officer or his nominated Deputy, to attend Shareholders meetings of South Central Connexions Partnership Limited and vote as appropriate in order to represent the County Council's interests in the Connexions service.

Section 100 D - Local Government Act 1972 - background documents

The following documents discuss facts or matters on which this report, or an important part of it, is based and have been relied upon to a material extent in the preparation of this report.

NB: the list excludes :

1 Published works

2 Documents which disclose exempt or confidential information as defined in the Act.

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