Half a million pounds of taxpayers’ money is set to be loaned to the controversial company being set up to run council services in Shropshire for profit, it was revealed today.
The money will be spent on recruiting and paying the salaries of managers of the IP&E Group, and paying for consultants from outside the council to provide legal, financial and personnel advice over the set up.
Union bosses today said the prospective loan was a ‘smack in the teeth’ for staff and questioned what guarantees were in place to ensure Shropshire Council got its money back.
The company is being set up by the council to run services for profit, with the first services due to be transferred across from April.
Councillors will vote whether to approve the loan at a meeting next Thursday.
If the loan is agreed, repayment would be deferred for a year before being paid back over the course of 18 months.
Alan James, branch officer for Shropshire Unison, said: “What happens if it doesn’t make a profit or it fails? There is no guarantee that the council taxpayer will get the money back.
“This is another smack in the teeth for staff.”
Councillor Alan Mosley, leader of the Labour group, added: “They talk about so-called public profit but you could also make public loss.
“It is pretty scandalous that we are going to spend even more money on consultants, particularly when we have legal, financial and personnel staff in the council. It is an insult to the staff of Shropshire Council.”
The report to next week’s meeting said: “A start up funding requirement of £500,000 has been identified.
“This figure includes recruitment and salary of managerial posts identified as required for the company for the first 12 to 18 months and also allows external advice to ensure the company is established in the most efficient way.”