HOOPLE, the joint venture company set up to save Herefordshire Council millions spent on support services, seems certain to be split in two.

The split could be confirmed as soon as next week when a cabinet level decision is due.

Proposals developed jointly by the council and Hoople pitch new governance arrangements for the company and the delivery of efficiency targets totalling nearly £2million over the next four years. 

A future Hoople is seen as two entities – one delivering specific services directly to the council and the other delivering a range of commercial services to the market.

The council provider would be a so-called Teckal company allowing the authority arm’s-length  control over a legally separate, wholly-owned company carrying out services previously been undertaken by an in-house provider.

Teckal means the council does not need to run a lengthy procurement procedure or outsource that procedure to the private sector.

As recommended, the council and Wye Valley NHS Trust (WVT) can continue to procure support services from Hoople beyond the current contract term due to end in March next year.

The setting up of an additional commercial trading company lets Hoople develop wider commercial opportunities.

According to council papers, the future business strategy for Hoople must be owned by the new Hoople Board and “reflect the priorities of the shareholding organisations”.

Finalisation of this strategy – backed by a satisfactory business case – could be delegated to the council’s Director of Economy, Community and Corporate Geoff Hughes to take forward with the Board.

Hoople was established in 2011 as a joint venture company with WVT and the then primary care trust NHS Herefordshire to provide shared support services.

Following the national NHS reorganisation, the remaining shareholders are the council and WVT with the council holding the majority of the shares.

Although the council contract with Hoople is not exclusive, the partnership aims for the company assumed that Hoople would be the shareholders’ provider of choice for back office services.

Reduced government funding has seen the council make savings of £50 million in the four years since Hoople was set up.

On present projections, financial pressure on the council will continue with a further £18 million savings planned by 2016/17 to ensure that the council stays within its budget.

Hoople currently provides support services to the council in relation to human resources, finance, revenues and benefits and ICT.

WVT purely uses Hoople for IT services and represents 15% to the council’s 85% of shareholder turnover

In July last year, cabinet considered options for the future delivery of such services and the future for Hoople itself.

Work done since has lead to the recommendations going to cabinet member for corporate services Cllr Patricia Morgan next week.

Over the past year, the council has integrated the services it receives from Hoople to reduce overheads.

All council and Hoople support staff work - or will work - within the council’s Plough Lane offices.

Subject to legal advice, it is anticipated that staff resources would predominantly be based within the Teckal organisation.

Hoople has had a challenging 12 months.

In March last year, the Hereford Times reported that Hoople MD Mike Dearing was standing down with the company facing more than £1 million in savings.

Then, Mr Dearing warned that Hoople’s ability to influence performance and share fixed costs was limited by the council bringing services back in-house.

Hoople’s board also conceded that “continual changes” imposed by the council diminished the company’s confidence to recommend a dividend to date.

Changes were for 2014/15 alone were expected to see  Hoople’s turnover reduce to around £13 million and staff numbers fall to around 330.

By May, the council’s overview and scrutiny committee had opened a review of service commissioning from Hoople ahead of recommendations to cabinet ahead of the contract ending.

Two months later cabinet agreed to a set oif recommendations that would see the company split in two.

When Hoople was set up, staff transferred over as part of a shared services project partnering the council with the county’s NHS to save £33 million on back office support services.

Hoople had to achieve £11 million in cumulative savings for the council over 10 years.

Three years into a five-year service contract with the council, a total of £4m savings had been achieved.

A total cumulative saving of around £12 million has been forecast by the end of that contract.