OXFORD City Council could launch its own profit-driven trading arm as it embarks on a project which would see some services overseen by a separate company.

Plans for the so-called 'local authority trading company' were given the support of councillors at a meeting of the city council's executive board on Tuesday.

Councillors agreed the structure of the company, which would create two new bodies, one to provide council services – a 'Teckal company' – and the other to oversee external trade, known as the 'trading company.'

Speaking at the meeting councillor Ed Turner said: "We need to go down this road if we are to expand on the income of trading that we do.

"It will bring real benefits for us."

Fellow councillor John Tanner said: "I think it's going to be a great success."

The city executive board had voted in March to approve in principle the setting up of a local authority trading company to carry out the performance of services currently provided to the council and traded externally by Oxford Direct Services.

It currently provides services such as commercial recycling and waste management, building repairs and maintenance and general civil engineering.

An officer's report into the launch of the new body stated: "Detailed financial modelling has been carried out to demonstrate that it is in the financial interests of the council to follow this course and identify the model that provides best value."

It adds that the primary motivator in the scheme is to generate profit to return back to the council.

It stated: "The company's purpose would be to deliver value to the council through driving efficient, value for money services and thorough generating income from external trading."

Local authority trading companies are separate bodies which can run as commercial entities but remain wholly owned by the parent local authority – in this instance Oxford City Council.

They can provide services to the market more widely than a council department would ordinarily and their purpose is to generate income, which will then be put back into the trading company and the city council.

Essex County Council was the first to launch its own, Essex Cares, in 2009 to provide social care services.

The city council would own the company and remain the single shareholder.

There were concerns expressed at the meeting, however, of the role the city council would end up playing in a profit-driving body.

Susan Brown warned that over time the entities could 'split' from each other and develop their own 'independent ethos'.

Officers will next prepare a full report for the council to consider on the new body in September or October.