First profit for Shropshire Council venture - bosses claim ip&e on cusp of huge growth

Results for the year ending March 31 show that the private company, set up by the council in an attempt to sell its services to outside bodies, achieved revenue of £1.162 million, and a profit of £28,029.

But sales to Shropshire Council itself during that period clocked in at £1.145 million, meaning that sales to non-council organisations totalled just £16,617.

In a statement accompanying the newly-released accounts, the group today insisted it was on the cusp of a huge acceleration in its growth.

And council leader Keith Barrow said that its current full-year revenue targets are more than 10 times higher than those achieved this year, at around £15 million.

But the new figures are likely to disappoint in terms of the company's ability to attract business from other authorities.

It had been hoped IP&E would be able to sell its services and expertise to bodies across the UK, but has so far failed to attract any meaningful contracts.

The statement, written by IP&E's finance and commercial director Tim Smith, said: "A lot of hard work has gone into setting up the business, getting the right people in post, creating a new commercial focus and preparing for the company's rapid expansion in the forthcoming financial year.

"We will ensure that Shropshire Council continues to receive high quality and cost effective services whilst we position the company to gain new business and deliver higher levels of profit back to our shareholder."

The figures also reveal that IP&E has drawn out around £90,000 from a £500,000 loan facility set up by the council to help establish the private enterprise, and that repayment was due to begin in April.

A closer inspection of the costs incurred by IP&E over the period show that it paid rent of £27,807 on its headquarters on Shrewsbury Business Park, as well as shelling out £87,550 on consultancy.

Among the organisations to have bought services from IP&E are the City of Liverpool, which employed the company's design team to help with its £16 million Mi technology health programme.

Connecting Shropshire – of which Shropshire Council is a partner – and Shropshire Towns and Rural Housing, which took over the council's housing stock in 2013 and remains another council partner, also used its communications team's services.

Positive small steps for infant business

It has been variously dogged by controversy, painted as unaccountable and unelected, and hailed as a key part of the future of local government in Shropshire.

But the release of full-year accounts provide a glimpse behind the curtain at what ip&e is achieving for the county council, and how close it is to achieving its goals.

Ip&e was set up as a stand-alone company with the intention of generating extra revenue.

Shropshire Council leader Keith Barrow was instrumental in the setting up of the company. The release of the accounts ironically coincides with him stepping down from his role as a director after an "oversight" in which he failed to disclose a conflict of interest.

But his vision of a revenue-making body to boost council coffers is very much alive.

Like every council, Shropshire is facing unprecedented spending cuts. It looked at ip&e as a way of maintaining services within our own county but also bringing in revenue by offering its expertise to other organisations and charging for the service.

So far, the signs don't suggest a huge amount of progress.

Today's figures within the pile of accounts show organisations are pitching in a low five-figure sum for services provided by the council's private company.

But bosses insist ip&e is in its infancy. It is a case of small steps, and growth is on the horizon.

In the statement accompanying the newly-released data, company director Tim Smith presented an optimistic view of the future.

He said: "2015/16 looks to be a very promising year ahead for the company. One which will see further rapid growth.

"We will shortly see ip&e Limited delivering health prevention services, education support services, business support and regulatory services, and design consultancy services to a wider market.

"All of which will expand our workforce and turnover but more importantly allow us to deliver exceptional outcomes to our customers and the people of Shropshire."

Over the last year, revenue has grown from £305,945 to £1.16 million, and it has moved from a loss of £114,701 to a profit of £28,029.

A revaluation of its pensions actually removes £444,000 from that figure, but in truth this is an accounting tool that does not reflect the company's performance, and does not lead to a cash loss.

What do today's accounts tell us about Ip&e?

Shropshire Council's deputy leader Steve Charmley provides the answers

Q: Do the external deals include council affiliated bodies – Connecting Shropshire, Shropshire Towns and Rural Housing?

A: The ip&e communications service is provided to Connecting Shropshire and Shropshire Town and Rural Housing as part of an agreement which originates from Shropshire Council and which is delivered by ip&e Limited.

Q: Is ip&e achieving its goal of raising additional money by reaching out to external organisations, given the relatively low figure above?

A: Ip&e Limited continues to secure external work and generate income in partnership with Shropshire Council by successfully trading in the education, health, local government and private sectors. The work undertaken by the company's business design team along with health and third sector partners in the City of Liverpool is an example of this.

Q: Has ip&e now begun repaying the council loan?

A: Yes. The council loan will be repaid in full in the financial year ending March 31, 2017.

Q: Directors' salaries totalled almost £24,000. Would this expense have existed if it was within the council?

A: The cost reflects the charge by the council to the company for executive directors' time.

The company directors are employed by Shropshire Council and are seconded to work for the company.

Q: Rent of £27,807 was paid over the period – does the council own ip&e's building?

A: No. The building is leased.

Q: More than £87,000 was spent on consultancy. What was this for?

A: This relates to work undertaken by a business design consultant who assisted the council and the company with service transformation which led to budgetary savings being achieved. This contract ended during the course of financial year 2014/15.

Q: If you had to summarise the company's aims in a single line, what would it be and how close to meeting it is ip&e, both at the accounting year end and now?

A: The company aims to provide high-quality services and products that meet customer requirements and in doing so create jobs, wealth and profit which can be invested back to support public services in Shropshire.

The company continues to employ more staff, generate more income and is on target to achieve a further trading profit in the current financial year.

Over the summer, opposition parties in Shropshire Council hit out at the performance of ip&e. They criticised a perceived lack of accountability and transparency within the company.

However, council leader Keith Barrow insisted at the time that the company was providing value for tax payers and would raise money which could be used to provide services for the public.

That has proved to be true – to an extent. Sales of services to Shropshire Council constitute 98.5 per cent of the company's overall revenue, with sales to other organisations worth just £16,617.

Ip&e – the name stands for inspiring partnerships and enterprise – says it is "a partnership organisation able to change and adapt with your business needs".

At present, a lot of its work is carried out by its business design team, which is helping adapt services within the council, looking at new methods of working, savings that can be made, and ways to "improve the customer experience".

It has been involved in the council's adult social care service, helping improve customer satisfaction and the council to handle increased demand.

It has also been involved with the £16 million Mi technology health programme in Liverpool, looking at how that programme deals with customers. The overall scheme is aimed at helping people in Liverpool monitor their own health with technology.

Also seconded to ip&e, which operates from Jupiter House on Shrewsbury Business Park, is the communications team, and Mr Smith said that department had enjoyed "a busy year".

It provides services for Shropshire Council, plus Shropshire Towns and Rural Housing and Connecting Shropshire, which is behind the roll-out of broadband in the county, in partnership with BT and Shropshire Council.

During the year, ip&e employed an average of 24 members of staff, up from 13 the previous year.

Five directors served on the board, including councillors Keith Barrow, Steve Charmley and Mike Owen, as well as council officers Tim Smith and Nicki Beardmore. Mr Smith, Mr Charmley, and Ms Beardmore are the current serving officers.