William Eichler 17 May 2018

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

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.'

SIGN UP
For your free daily news bulletin
Highways jobs

Standards, Compliance and Development Manager - Children’s residential provisions

Oxfordshire County Council
£57187.00 - £60485.00
This role will lead on Quality Assurance, Standards development, and Regulatory compliance for Oxfordshire’s residential children’s provision, including the unregulated reforms 2022. The post holder will conduct internal inspections within the registe Countywide
Recuriter: Oxfordshire County Council

Streetcare LGV Driver / Operative - WMF2112e

Westmorland and Furness Council
£27,711 - £28,624
Westmorland and Furness Council are seeking to employ an enthusiastic and motivated person into a Street Cleansing role Cumbria
Recuriter: Westmorland and Furness Council

Specialist Communication Support Worker (CDC)

City Of Doncaster Council
Grade 7, £27,259 - £29,955 (pay award pending)
The City of Doncaster Council puts improving the life of its residents at the centre of everything we do. Doncaster, South Yorkshire
Recuriter: City Of Doncaster Council

Apprentice Social Value

Durham County Council
£14,566
Earn. Learn. Qualify.   Do you want to earn while you learn, with the chance of progression once you qualify? Do you want the opportunity to grow, dev Durham
Recuriter: Durham County Council

Pay Reward and Employment Services Support Officers

Durham County Council
£25,584 to £27,711 p.a. (Grade 5) Pay Award Pending
An exciting opportunity has arisen for ten Pay, Reward & Employment Services Support Officers to join our CIPP accredited team.   WHAT IS INVOLVED?  Spennymoor
Recuriter: Durham County Council
Linkedin Banner