Agenda item

Report of the Director of Policy, Performance and Communications

6.1     The Committee received a report on Westco Trading Ltd, a trading arm of Westminster City Council providing communications, research and strategy services to external clients predominantly within local government. 

6.2     The agency was set up in 2007 as a way to trade the best local government communications practices with other Local Authorities (and to a lesser extent, central government and the third sector) and by doing so, provide WCC employees with professional development opportunities and develop new innovation for use within WCC.

6.3     Westco is a limited company selling services to external clients as a commercial venture, generating a financial contribution to the Council in the form of an annual payment back to Westminster at the end of every financial year. Westco has traded successfully since its inception, providing services to over 75 clients.

6.4     There is a growing trend in Local Government as budget pressures grow to progress with establishing trading companies with alternative service delivery models and property being the two key areas of commercial focus within the sector.

6.5            Councillor Tony Devenish, Westco Chairman, provided a presentation on the company’s work, turnover and clients and its aspirations over the next two years.

6.6            Councillor Connell informed the committee that Francis Ingham, Director General of the Public Relations and Comms Association (PRCA) and CEO of International Communications Consultancy Organisation ICCO, had been due to attend the meeting as an expert witness but had to send his apologies due to illness.

6.7            Julian Ellerby (Director of Policy & Communications at London Borough of Lambeth and formerly Director of Policy and Communications at Lambeth Council who was involved in the setting up of Lamco) had provided key lines of enquiry the Committee may wish to consider. 

6.8            The committee asked about Westco’s legal status and whether it had a separate identity from the City Council. Councillor Devenish explained that Westco is wholly owned by the Local Authority. In addition to providing those benefits highlighted in paragraph 6.2 above it can also the Council with highly skilled staff working on client accounts as required. It is non-political in its operations and has provided services to local authorities across the political spectrum.

6.9            Members asked why some of Westco’s employees are employed by the City Council and others by Westco on different terms and conditions. Councillor Devenish explained that the majority of staff are employed directly by Westco on more flexible contracts from WCC employees in order to provide flexibility to reflect market requirements.  With regards to pay and terms and conditions, he explained that employees that had transferred from other councils under TUPE conditions would remain on those same terms and conditions.

6.10        The Committee asked in the context of Westco’s profitability whether it receives space or services from the City Council that it pays for and how these costs are accounted for within its budget.  Councillor Devenish stated that the company continually keeps such issues under review.  He advised that a consultancy would ordinarily look to achieve a 20-30% margin, whereas Westco aims to achieve a more reasonable figure of 12% although it does provide slightly more preferential rates to organisations that have links to the Council, such as CityWest Homes.

6.11        Councillor Devenish was asked whether having access to Council accommodation in City Hall is helpful to support its requirements.  He stated that being located in central London and adjacent to Government departments rather than specifically in City Hall is essential.

6.12        Councillor Devenish was referred to the fact that some local authorities in England Wales have established trading companies with a focus on providing a social value that benefits residents. These include energy distribution, ethical commercial property portfolios and residential care homes.  Some Councilors expressed a desire to see a trading body with this form of focus.  Ian Farrow, Westco MD, advised that Westco does provide work with a social value.  He explained that the company is recognised as a leader in communications and marketing across the local authority sector where it has helped to highlight important issues and run campaigns to recruit much needed carers.

6.13        The Committee was surprised to note that more than half of councils own a trading company, and at the rate it is increasing, full coverage by 2020 is a possibility.  In light of this and reducing budgets Members asked whether Westco has a business plan to support its growth aspirations?  Councillor Devenish stated that most local authorities that have a trading company are focused on development with some providing procurement expertise.  He believed that Westminster was quite unique in its focus.  Ian Farrow explained that Westco had launched the Westco Commission to identify the emerging needs for local authorities and how it can help them meet them.  He explained that local authorities are focused on expanding economic growth within their areas.  In order to grow their services they will need effective marketing and leadership skills, services and resources which Westco can provide. 

6.14        RESOLVED:

1.     The Committee was pleased and interested to hear about the demands for Westco’s services and that it had delivered a range of benefits to the City Council including £1,257,389 (up to latest figures 2015-2016) in profit contributions. Members noted that the Westco Commission had worked to identify new service offers to grow the business. Whilst the committee believed from the evidence provided there was still more work required to meet the increased turnover aspirations it recognised that Westco has a reactive and flexible business model.

2.     The committee noted with interest the wide range of public sector clients that Westco provided services to and that these included local authorities from across the political spectrum. Evidence of Westco’s track record was evidenced by the fact that it retained 70% of its client base.

3.     Members have asked for further information to support Westco’s assertion that it has helped the City Council to retain talent by providing unique opportunities for professional development. The committee was also less clear about Westco’s ability to provide capacity and resilience to the Council in times of need against the commitment to provide services to clients although it noted the assertion that the company has a very extensive network of contacts that it can call upon for expertise and resources.

6.15    ACTIONS: The Committee would like a briefing note on:

1.     How costs are apportioned/recharged between Westco and the Council;

2.     What the retained value of the company is;

3.     Why Westco’s liabilities have risen sharply; and

4.     Evidence to back-up the claim that Westco has helped the Council to retain talent. (Action for: Ian Farrow, Westco MD and Christos Pishias, Project Manager, Communications)