William Eichler 17 May 2018

Councils should give ALEOs ‘careful consideration’ before use, watchdog warns

Councils should give ALEOs ‘careful consideration’ before use, watchdog warns image

The local authority spending watchdog in Scotland has acknowledged the benefits of arms-length external organisations (ALEOs) but warned they require ‘careful consideration’ before adoption.

There are an estimated 130 ALEOs - ranging from companies to community organisations and charities - in Scotland, with an annual spend of more than £1.3bn.

The majority of these arms-length external organisations run sports and leisure centres or cultural services like museums and theatres. But others provide social care services, property management, and commercial activities.

A report from the Accounts Commission published today found ALEOs help councils reduce their costs, as well as increase uptake in sport and leisure activities and improve standards of care.

The report also noted local authorities had strengthened their oversight of ALEOs and were showing improving practice in evaluating them as an option.

However, the report said councils could do more to involve the public and wider stakeholders in that evaluation process.

The Commission also warned local authorities needed to guard against potential conflicts of interest that might arise from councillors sitting on ALEO boards as well as carrying out their council role.

There has also been a change in the Scottish government’s tax code which will affect these organisations, the Commission said.

An estimated half of ALEOs are registered charities and this allows them relief from non-domestic rates. Under the new rules, this will not be available to new ALEOs.

‘ALEOs can and do provide significant benefits,’ said Graham Sharp, chair of the Accounts Commission.

‘But they are not without risk and changes in tax relief may make the creation of an ALEO a less attractive option for the future.

‘This is highly complex area. Councils need to give it careful consideration to ensure they make the right decisions for their own communities.’

Rory Alexander, partner and local government lead at Morton Fraser, said: 'The reality of the Accounts Commission report is that ALEOs are likely to be used less now by Local Authorities, the tax implications as well as the need for improved governance and scrutiny making them less appealing.

'The question that now remains is if local authorities are still looking to use ALEOs do the benefits outweigh the risks, especially when essential public services and the taxpayer's money are both at stake.'

Prepare for the 5G revolution image

Prepare for the 5G revolution

Local authorities are aware 5G is imminent and could have a dramatic effect on their frontline services according to a survey by The MJ and BT as Michael Burton reports.
Launch of LocalGov Patterns image

Launch of LocalGov Patterns

Alessandra Canella explains how a new project will help build a shared service pattern library for local government.
Highways jobs

Air Quality Monitoring Project Manager

Birmingham City Council
£34,788 - £42,683
Seeking a skilled and dedicated individual with a background in environmental protection and air quality to... Birmingham, West Midlands
Recuriter: Birmingham City Council

Membership Sales Advisor

Chelmsford City Council
Grade 3 - £17,931 per annum
The newly opened Riverside Leisure Centre boasts fantastic facilities offering a range of great value memberships. We’re looking for a self-motivat... Chelmsford, Essex
Recuriter: Chelmsford City Council

Business Administration Apprentice

London Borough of Richmond upon Thames and London Borough of Wandsworth
£214 per week
Our Apprenticeship scheme provides a perfect way to earn a wage while you gain vital work experience and a nationally recognised qualification. London (Greater)
Recuriter: London Borough of Richmond upon Thames and London Borough of Wandsworth

Recycling Operative

London Borough of Richmond upon Thames and London Borough of Wandsworth
£21,188 - £25,675 depending on skills
Are you looking for an opportunity where your health and well-being will be promoted? London (Greater)
Recuriter: London Borough of Richmond upon Thames and London Borough of Wandsworth

Home Improvement Agency Officer

Sandwell Metropolitan Borough Council
£29,636 - £33,799 per annum
Have you got experience working with Aids and Adaptations? If so we have an exciting opportunity. Sandwell, West Midlands
Recuriter: Sandwell Metropolitan Borough Council

Local Government News

Latest issue - Local Goverrnemnt News

This issue of Local Government News explores how councils can tackle modern slavery and trafficking in their supply chains, finds out more about Cambridge's first cohousing scheme and the launch of a new project to build a shared service pattern library for local government.

This issue also contains a special focus on children's services and how councils are protecting children following local safeguarding children boards being abolished.

Register for your free magazine