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Optalis Operation costs Wokingham Borough Council £50K more

March 29, 2013 12:00 PM

Liberal Democrat Councillors are extremely concerned about the additional costs of OPTALIS - the Wokingham Borough Council owned company that provides adult social care to the Borough's residents. A Special Council Executive Meeting was held on 28th March at which councillors were asked to approve a £50,000 injection into OPTALIS to help balance its books for the year 2012/13.

The Liberal Democrat representative on that committee, Cllr Prue Bray, said "The residents of Wokingham are being asked to provide £50,000 to make Optalis's balance sheet look better than it really is. The Conservatives claimed that this is entirely normal and the extra equity could have been provided when the company was set up. But they didn't anticipate the need for it then. Things don't seem to have gone as well as they thought, and it has become necessary to put more money in to avoid a poor credit rating affecting Optalis's ability to win new business. I find this deeply unsatisfactory. The council-owned limited companies are supposed to make money for the council, not cost us more."

Noting that Optalis had recently parted company with its finance director, Cllr Bray continued "This should have gone to the full council meeting for a decision, encouraging debate and showing transparency. Instead it went to a committee of only 6 councillors. There was a full council meeting only last week. The excuse given as to why the item did not go to that meeting was that the council did not know in time that the equity injection was needed. I find that deeply worrying, as it would mean Optalis had almost reached the end of its financial year before it realised it was going to need a helping hand. Surely it should have been obvious earlier?"

Councillor Bray voted against the recommendation. The Liberal Democrats will continue to scrutinise the limited companies and to demand greater transparency on their activities.

Further information:

1 OPTALIS started trading in June 2011 as a Local Authority Trading Company set up by Wokingham Borough Council.

2 The equity injection of £50,000 was to cover an equity deficit of £39,000, following a first year loss of £84,000 and a forecast profit for the second year of trading (to 31st March 2013) of £45,000.

3 In August last year Lib Dem opposition councillors challenged the Conservative decision to pay councillors acting as Non-Executive Directors of council-owned limited companies an additional £6K p.a. each. The Conservatives decided to continue the payments. This means an additional £12K cost for OPTALIS that could have been avoided.