HEREFORDSHIRE Council is to review its future with Hoople, the joint venture company it set up to save £33m on support services that now faces big cuts of its own.

In March, the Hereford Times reported that Hoople MD Mike Dearing was standing down with the company facing more than £1m in service cuts.

On Monday, the council’s overview and scrutiny committee will open talks on an approach to the future commissioning of services from Hoople.

Members are expected to agree on a set of criteria by which service delivery options can be assessed ahead of the council’s contract with Hoople ending in March next year.

A cabinet decision on the review is due in July.

In a report to the committee, Mr Dearing warns of Hoople already having to take “greater risk” to ensure it can cope with its existing – and expected – workload.

Hoople’s ability to influence performance and share fixed costs was, he said, limited by the council bringing services back in-house, he said.

Negotiating the extent of the cuts took nearly six months and around 1,000 hours of management time.

“This not only has a considerable direct cost, but also a significant potential opportunity cost – in future it is hoped reductions can be managed more pragmatically,” said Mr Dearing.

Hoople Ltd was set up as joint venture company in April 2011 as part of a shared services project that partnered the council with the county’s NHS to save £33m over the provision of “back office” support services such as human resources, recruitment and training; finance, revenues and benefits and Information Technology (IT).

The Council owns 74.7% of Hoople, with the remaining 25.3% owned by the Wye Valley NHS Trust.

A business case for Hoople was based on achieving £11m cumulative savings for the council over ten years. Three years into a five year service contract with the council £4m savings - cumulative to March 2013 - have been achieved.

Further savings have been made in areas outside the formal contract such as £350k by creating Hoople Resourcing and offering a low cost agency service, £160k a year for the next six years in New Homes Bonus due to reducing the empty property register, £250k through technology efficiencies and £850k of reclaimed social care direct payments.

A total cumulative saving of £12m is forecast for the end of the five-year contract.

The recently renegotiated service level agreement for 2014/15  has achieved a contract variation to deliver further savings in excess of £1.2 million.

Hoople also now  provides support services to range of community organisations, care homes, schools and academies, Herefordshire CCG and GPs, Taurus Healthcare and various boards and agencies.

The company has also established a High Street recruitment agency  specialising in the public sector, and, with an OFSTED excellence rating is seen as a key independent training provider in the county with 400 apprentices working toward a qualification.

But services provided to the Council have been further reduced as part of an ongoing overall renegotiation of service levels.

These reductions have been greater than those specified in the original contract and are seeing services change, stop and, in some cases, return to the Council.

Hoople’s annual turnover over the past three years has been around £16m maintained in the face of major contract reductions and no profit from the services provided to shareholders.

While Hoople stresses it continues to be profitable, its board concedes that “continual changes” imposed by the council diminish the company’s confidence to recommend a dividend to date.

The agreed changes for 2014/15 will see Hoople’s turnover reduce to  around £13M and staff numbers fall to around 330.

Mr Dearing says that these changes will reduce the “level of expertise” Hoople can offer to the council.

But the company, he said, has managed to protect business growth across a wider customer base.