A pension deficit hanging over the firm running Aberdeen’s council care homes has swollen to more than £10million.
The hole in Bon Accord Care’s finances was described as “profound and dramatic” in the body’s annual review, which will be considered by councillors next week.
The arm’s-length company, owned entirely by the city council, was established two years ago to manage about 800 staff, residential homes, day centres, rehabilitation facilities and sheltered housing care.
The Press and Journal revealed in August that Bon Accord Care’s 2013/14 accounts showed that the body was hit by total losses of £8.195million because of a historic pension liability that was moved onto its balance sheet by the council.
It has now emerged that the gap has increased by a further £2million in the last year, to more than £10million.
The body’s annual review states: “This has a profound and dramatic effect on the company balance sheets – they show a significant negative net worth.”
Aside from the pension issue, the company recorded a trading surplus of £47,000 for 2014/15, improving on the £384,000 deficit reported in its first eight months of its operation.
The report highlighted positive changes at Bon Accord Care in the last year, including saving £700,000 on occupational therapy services.
Managing Director Sandra Ross wrote in the review: “It has been an encouraging year for us with positive performance across the areas of finance, quality and service.
“There has been a significant amount of work undertaken across Bon Accord at all levels within the company to achieve this, something our whole team should feel proud of.”
Finance director Alistair MacLean said it had been a “successful year both operationally and financially”.
He added: “The company will continually aim to secure every business efficiency possible to maximise the service volume and quality of all our services delivered to the citizens of Aberdeen.”
The transfer of care services to an arm’s length body was initially proposed by the Liberal Democrat-SNP council administration in 2011.
After the 2012 election, however, the plan was approved by the Labour-Independent-Conservative alliance in 2013 by 22 votes to 20, despite SNP and Lib Dem opposition.