Budget-cuts council may provide £100,000 safety net for chamber

Doncaster Council, which is currently looking to make huge budget cuts, agreed to provide a guarantee of £150,000 last November, after the town’s Chamber of Commerce said it was in financial problems.

The chamber has now approached the authority again to ask for similar assistance, although bosses have told council officers that they only require £100,000 to cover their liabilities until March 2013.

According to finance experts at the authority, support for the chamber was necessary last year to “support the cash flow of managing the transition of the chamber of commerce to a new business model.”

A year ago, the financial picture for the not-for-profit company which aims to provide business support and advice to its members in the Doncaster borough, was bleak with a projected £104,000 loss.

Its 24 staff also provide services for other firms and although it currently has a membership of around 1,000 businesses it is hoped to increase that number substantially over the next 12 months.

Doncaster Council’s regeneration and environment overview and scrutiny panel will be asked to consider three options tomorrow, before a final decision is made by its ruling cabinet later this month.

Members will be told that projections for the chamber’s future have brightened considerably, with new staff obtaining four business support contracts to the value of £592,000.

According to a report to the meeting, financial forecasts now show the chamber will make a profit in 2011/12 of £33,800, which improves the net worth of the company but will not be enough to cover financial commitments.

The first option open to councillors will be to continue with the guarantee of £150,000, which officers said would cover projected cash flow

A second option, which is recommended by council officers, is reduce the guarantee to £100,000, which would be “tight” but offer best value for taxpayers.

Removing support entirely for the chamber is the third option, but officers say this is not recommended because it could have an effect on the borough’s regeneration.

In the report, the council’s head of corporate finance Michelle MacFarlane, says: “To ensure the chamber can focus on operating for the future, and work towards a sustainable financial position it is recommended that the council continue its commitment to the business.

“This should be through regular interface with the chamber’s management team, and the bank guarantee overdraft for the lower amount at £100,000. This support is crucial to ensure the delivery of business support throughout the borough.”

The move will raise concerns among groups which have tried to save public services in the town, and it is recognised by officers that other local businesses will wonder why they are not offered similar support.

The report adds: “Should the council provide the guarantee there is the risk that this decision may establish precedence, for other businesses in diffuclties to approach the council for support.

“This remains a risk, which will need to be addressed as and when it occurs.

“When first agreeing to provide the guarantee in November 201, the council used its well-being powers under the Local Government Act 2000.

“This power allows the council to do anything it considers likely to achieve the improvement or promotion of the economic, social or environmental well-being of its area or inhabitants, including in this instance by way of a guarantee.”

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