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Aberdeen care firm hit by £8million loss

Aberdeen City Council
Aberdeen City Council

A company set up to run Aberdeen’s council care homes and services for vulnerable people faces “significant uncertainty” after being hit by an £8.2million loss.

New figures revealing the true scale of Bon Accord Care’s financial challenges were branded “deeply concerning” last night – and triggered a fresh political war of words.

The arm’s-length body was established two years to manage about 800 staff, as well as city residential homes, day centres, rehabilitation facilities and care at sheltered housing.

Last October it was reported to the council that it had suffered losses of more than £383,000 in its first year.

But the 2013/14 financial statements for Bon Accord Care – seen by the Press and Journal – show that it was actually hit by a “total recognised loss” of £8.195million.

A huge pension deficit that was transferred to the body’s accounts is behind the figure.

The documents also show that its cash flow at the end of March last year was just £5,066.

Council chiefs insisted last night they had “every confidence” in Bon Accord Care.

In the latest available audited financial statements, the company’s finance director John Maclean said the period had been “challenging both operationally and financially”.

On the pension fund deficit, he said: “Clearly this presents a significant uncertainty to the company going forward.

“That aside the company faces many challenges relating to the start-up phase of the company and in the medium to long term.”

In an apparent reference to cutting costs, Mr Maclean added that a “drive to reduce unit price would continue”, particularly addressing high levels of staff sickness and attempts to boost productivity.

The company is not due to file its accounts for 2014/15 until the end of December.

David Forbes, chairman of the Future Choices charity, which was set up following the closure of a council run care centre in 2008, said the figures were alarming.

He said: “If I was a family member of someone who was a client I would be deeply concerned.

“The thing is, with cuts coming from all levels, central government and local government, it’s going to put pressure on carers in the field.”

The transfer of care services to an arm’s length body was initially proposed by the Liberal Democrat-SNP council administration between 2007-12.

However, the plan was approved by the Labour-Independent-Conservative alliance in 2013 by 22 votes to 20, despite SNP and Lib Dem opposition.

Kevin Stewart, SNP MSP for Aberdeen Central and convener of Holyrood’s local government committee, called on the council to re-take control of the services.

“It’s quite clear that Bon Accord Care is in a precarious position and the council needs to ensure that the people of Aberdeen who require care are given the best possible care,” he said.

“I’m not convinced that is the case when an organisation is in such a poor financial position.

“I think it was daft to transfer it in the first place, and that the council should take social care back in-house.”

Labour’s Willie Young, the council’s finance convener, hit back last night.

“It wasn’t Labour who created Bon Accord Care, it was Kevin Stewart when he was convener of finance and resources. He brought this to council seven times – this was brought forward by the SNP.

“The council can only work with the resources we have. The council is the lowest funded in Scotland, and Kevin Stewart should reflect on that.

“I’ve got every confidence that Bon Accord Care will continue to do the right thing.”

Opposition Liberal Democrat councillor Martin Greig said the deficit was a “great worry”.

“I sympathise with Bon Accord Care and the tough decisions it is faced with. Their budget problems affect all of us in one way or another.”