TORFAEN council’s cabinet has agreed to meet its share of costs should a company that works with schools across Gwent have to make redundancies. 

Councillors were told the fear is Gwent’s Education Achievement Service could face liquidation if it was forced to make redundancies without having sufficient funds to meet the extra costs associated with laying off staff. 

The not-for-profit firm is guaranteed by the five local authorities in Gwent and works with schools to support them in boosting performance and implementation of the new curriculum in Wales. 

As it is reliant on funding agreements with the councils it is considered to be at risk from financial challenges facing the public sector while an agreement between them hasn’t been updated since the company was founded in 2012 when a different operating model was in place. 

According to a report to Torfaen’s Labour cabinet an informal agreement between the five councils was reached in 2016 “following a period of challenging industrial relations” when both staff terms and conditions and redundancy terms had to be renegotiated. 

The report said without an updated agreement the firm wouldn’t be able to meet its commitments should redundancies be required. It said the risk of a funding squeeze isn’t “quantified” at present but warned: “current funding does not make allowances for the abnormal cost burden that can be incurred in the event of severance arrangements being necessary.  

“These severance costs, which may be incurred due to the continued need to implement efficiencies given financial constraints, could force the company into liquidation” 

An agreement, similar to one already in place for joint services in Gwent, has now been drawn up with three of the other councils having already signed up to it though as the councils are the firm’s shareholders they would be liable for the costs in any event. 

The agreement sets out the councils will underwrite redundancy and pension costs, pro rata to the current percentage they already pay in core funding, though payments will be subject to the company first contributing 50 per cent of its retained balances towards the total cost. 

The company will also have to meet other costs such as payments in lieu of notice and holiday pay.