Bournemouth says ‘business as usual’ with Mouchel as other customers consider implications of ownership change
Bournemouth borough council has welcomed last weekend’s restructuring of outsourcing specialist Mouchel which has led to the company being taken over by its bankers.
Mouchel, whose other council customers include Milton Keynes, Lincolnshire, Oldham, and Bath & NE Somerset councils, will be owned by MRBL, a newly incorporated company owned by Mouchel’s lenders – RBS, Lloyds Banking Group and Barclays – together with the group’s management after acquiring the businesses from Mouchel’s administrator.
Mouchel said the acquisition “marks the completion of the group’s financial restructuring and provides the business with a strong financial platform for the future.”
Councillor John Beesley, leader of Bournemouth borough council, said the deal secures a future for staff and services provided to the council.
“Of course, we continue to manage, monitor and review the contract closely, to ensure that service targets are being met within the agreed contract price, so guaranteeing ongoing savings to the council,” he said. “It essentially remains business as usual for our incremental partnership and our relationship with MRBL remains strong as they continue to deliver. Already, the partnership has created 85 jobs in the local economy, and an investment of £7.71million into the Bournemouth contract.”
Grant Rumbles, chief executive of Mouchel, said: “The completion of this restructuring means that the long-term future of this business is secure and the jobs of more than 8,000 people have been preserved. We now have the right capital structure to take Mouchel forward. For our clients and suppliers it is business as usual. With a stable and supportive ownership structure and a balance sheet that is fit for purpose, Mouchel will be in a strong position to rebuild the business and start winning large contracts again.”
Mouchel’s financial worries have, however, left some of its key customers having to make critical decisions or alternative plans as the extent of the outsourcer’s financial worries emerged, although the company has insisted its working relationship with those customers is “business as usual”.
Earlier this year, Bournemouth’s cabinet agreed to ratify a previous decision to outsource the operation of the council’s human resources & organisational development and finance departments to Mouchel after considering a detailed independent risk assessment based on Mouchel’s financial statements, along with an impartial review of the risk management and contract governance arrangements that are already in place.
At the time, Councillor Beesley said, “We are extending this contract having undertaken a great deal of background work. The independent reviews acknowledge that all the relevant issues have been fully faced and dealt with by the council, and that robust measures have been put in place to plan for a variety of risks, including a strong exit strategy in the event of needing to bring services back in house.
“The independent reviews have commended the council’s governance and risk management processes relating to the incremental partnership. It is this comprehensive approach that has led to the council retaining £135,000 to cover the potential cost of bringing HR and finance back in house, should Mouchel fail, together with other significantly improved contractual measures which are commercially sensitive, to safeguard the council’s position.”
Milton Keynes council, which had a 12-year, £200m contract with Mouchel said earlier this month that it would terminate the contract and would take most services and staff back in-house.
It said Mouchel had successfully delivered operational and back office services but that the 12-year contract had been signed in 2004 since when the council faced “a very different political and economic environment from when the contract was originally conceived”.
Lincolnshire county council, which had a £490m, 16-year agreement signed in 1999, has begun a re-tender exercise, while Rochdale, which signed a 15-year, £200m contract in 2006 has shifted the contract to a subcontractor, Agilisys. Mouchel also has contracts with Oldham, Middlesbrough and Bath & NE Somerset councils.