Southwest One makes pre-tax loss of £16.5m
A private company set up in Somerset to save two councils and the police money has made a £16.5m pre-tax loss.
Southwest One, which is 75% owned by IBM, is responsible for back office functions for the Somerset county and Taunton Deane councils and the police.
The company said new services required up-front investment in the early stages as "major new systems and working practices were introduced".
Somerset council said it would not cost extra money as it was a fixed contract.
David Huxtable, the councillor responsible for resources at the county council, said: "I don't have any concerns or fears about the ability of the company to deliver our services because we made sure we partnered with huge international business and I have security in that.
"We asked people to bid to run our services at less cost to us and that's what they did.
"It may be that they over or under bid for the contract but I feel that is their problem, and not necessarily ours."
The joint venture company was set up in 2007 when the county council was Lib Dem-controlled and aims to make savings of £200m over 10 years.
So far Southwest One has identified more than £144m of savings, £53m of which are already in place.
When the Tories gained control of the county council, leader Ken Maddock announced that there would be an inquiry into the contract.
The results of that is expected within the next two months.
Southwest One hopes to replicate this service to other public sector organisations.