Westminster Council in Westco 'profit for bonus' row

By Ed DaveyBBC News, London
A London council, Westminster City Council, set up a private company using public money and drew up plans allowing it to split 25% of its profits between staff, BBC London has learned.

Under the Local Government Act 2003, all authorities were allowed to set up trading companies. The idea was that profits would be pumped back into front-line services for residents.

In 2007, Conservative-run Westminster Council set up Westco, a private company registered to its Town Hall address. It sells communications advice to Harrow, Basildon and Leicestershire councils.

But the BBC has obtained a document written last year detailing the possibility of splitting a quarter of its profits between the organisation's 10 staff.

'Scandalous'

While Westminster Council stressed it had not paid Westco staff bonuses, the document, by the council's director of finance Pete Carpenter, and entitled Westco Incentive Scheme, states: "The minutes of the committee meeting agreed the principle of making a bonus payment of 25% of profits.

"The incentive will be based on 25% of the profit before tax.

"The payment will be made to the department and it is their decision whether to pay this as a bonus to the staff or reinvest in their service."

Because it is a private company - not a public body - Westco does not have to respond to Freedom of Information requests.

But the BBC saw a copy of its accounts for the tax year 2009/2010 showing a payment of £45,110 was made under the heading "Incentive scheme".

The council insists this money was not paid to employees as bonuses, and instead used on training.

But Councillor Paul Dimoldenberg, leader of Westminster Labour Party, said: "Residents will be asking how they could even contemplate giving 25% of the profit of this council-owned company to a few already very highly paid council staff.

"The activities of Westco have remained a closely guarded secret.

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