A COUNCIL which must generate a further £40.3m of savings over the next three years to meet a £200m austerity challenge is set to extend its commercial ventures beyond the area it serves.

The executive of North Yorkshire County Council, which has seen a reduction of nearly 40 per cent in its spending power since 2011, will hear buying and operating a human resources firm based in the East Riding and Hull would support its plan to increase trading and income outside the county.

The acquisition is seen as an opportunity for faster growth, allowing North Yorkshire Educational Services (NYES), the council’s trading arm for that field, to benefit from existing relationships and contract arrangements, as selling to schools individually takes time to nurture relationships and for clients to build trust with a new service provider.

An officers’ report to the executive states: “To be able to increase income, the ability to acquire existing businesses in geographic areas where NYES do not have a foothold within the education sector is important.”

Officers said following initial analysis of financial accounts, contract arrangements, staffing information and credit history, it appeared the business was in a financially sound position with no long term liabilities.

The report states: “On this basis and the purchase price, this is a low risk financial investment.

“All local authorities are under the same financial pressure and the ability to pursue such work via this acquisition is a growth opportunity for NYES.

“NYES are confident that acquiring the company can provide a competitive offering...”

The creation of the company would support the council’s commercial growth with its expanding portfolio of services offered to external markets including initiatives in education, waste disposal, broadband, information governance and auditing and in property.

These commercial ambitions are driven by the council’s determination to protect as well as transform frontline services.

Last year the authority launched First North Law, becoming the first local authority in the North to trade its legal services. North Yorkshire’s trading arm. The Brierley Group generates sales of around £95m, contributes £2.2m towards council costs and adds £3.6m profit on top.