SB Cares makes it three business failures in a row

by DOUGLAS SHEPHERD

A report lodged at Companies House by Scottish Borders Council admits its soon to be dissolved arms length company SB Cares "has struggled to realise the full potential of the model originally envisaged".

Councillors paid consultants Care & Health Solutions £160,000 for that model in a venture which has ended with the local authority having to take the adult social care services delivered by SB Cares and its 850 staff back under council control. The switch is scheduled for December 1st, a mere four and a half years after the company started trading.

The business racked up liabilities of over £7 million in four years, prompting external auditors KPMG to warn in their 2018/19 audit: "We draw attention to the profit and loss account of the financial statements which indicates that the LLP (Limited Liability Partnership) incurred a net loss of £2,851,000 for the year (2018: net loss of £735,000) and had net current liabilities of £7,556,000 (2018 net current liabilities of £4,705,000), and the LLP’s ability to continue as a going concern is dependent upon continued funding from Scottish Borders Council and Borders’ Integration Joint Board, which is in turn dependent upon the outcome of a strategic review being undertaken within Scottish Borders Council.

"These events and conditions, along with the other matters explained in the accounting policies, constitute a material uncertainty that may cast significant doubt on the LLP’s ability to continue as a going concern.”

It is worth noting that two other semi-private businesses set up by English local authorities on the advice of Care & Health Solutions have suffered similar fates to that of SB Cares.

As Not Just Sheep & Rugby reported several weeks ago, Buckinghamshire Care Ltd, sanctioned by Bucks County Council in 2013 had to be rescued at the end of 2016 following the emergence of financial problems and concerns over the level of care being delivered.

Then there is the case of Olympus Care Services, a business with 775 staff and an annual budget of £32 million which took over the running of social care services for Northamptonshire County Council in 2013. But after suffering a £3.8 million loss in 2017 Olympus also had to be taken back in-house. Auditors again sounded dire warnings about its financial stability.

At the same time government inspectors were sent in to Tory-run Northants council because of its chronic money problems which had brought the local authority to the brink of insolvency.

The failure and demise of SB Cares means three of the seven arms length businesses structured by Care & Health Solutions have ultimately collapsed.

In the SB Cares annual report available on the Companies House website the 2018/19 comprehensive loss is given as £2.593 million, less than the figure of £2.851 million quoted in the original unaudited version of the company's accounts. The net liabilities are stated as £7.298 million as opposed to the £7.556 million included in the unaudited accounts.

As the report goes on to record: "On 26th September 2019 members took the decision to reintegrate SB Cares LLP and SB Supports LLP back into SBC on December 1st 2019. Members have agreed to voluntarily terminate the LLPs on December 1 and begin the process of reintegrating the services delivered, as well as the assets and liabilities held by the LLPs into the council from that date. Accordingly the members have not prepared the financial statements on a going concern basis".

The report concludes that while SB Cares has delivered financial and service benefits since inception, "it has struggled to realise the full potential of the model originally envisaged.

"After careful consideration, it is the view of the council management team that the benefits of the ALEO (arms length) structure for SB Cares no longer outweigh the challenges and risks now facing the business. The risks, which are likely to increase in future, make it appropriate for the council to now reintegrate SB Cares and SB Supports into the council".

The move marks a complete volte face for the management team and the elected members of SBC. They were told and agreed in 2014/15 that to continue delivering adult social care in-house was 'not an option' and would lead to increased financial issues and a reduction in service standards.