Justin Galliford
Across the country councils are struggling to maintain services in the face of relentless cost increases, skills shortages and rising demand on services. There have been several reports in the media about the financial pressures faced by councils, and it seems to me that a lack of certainty in an election year only adds to the challenge.
It is perhaps no surprise that there is increasing interest in Local Authority Trading Companies. They can give councils all the benefits of insourcing: control over services; direct employment of staff, in a more commercial environment; and they are popular – poll after poll has shown that residents prefer frontline services to be provided by their council rather than the private sector.
Crucially, and unlike a traditional DLO, they also offer the opportunity to create a more commercial culture, with greater operational efficiency and the ability to trade externally and develop revenue streams. Profits are returned to council coffers rather than private shareholders, helping to close the funding gap and protect public services.
At a time of great uncertainty over the funding of services, perhaps the greatest benefit is the flexibility to bring in changes – such as reducing waste collection frequencies – without the need to renegotiate contracts, and without the penalty of variation charges. As new regulations come in, which will require changes to vehicles and service configuration, and with continuing pressure to achieve net zero, this ability to re-engineer and innovate will become even more important.
Norse’s joint venture model can help councils get the benefits of a wholly-owned LATCo, and I am seeing great interest in using our partnerships as a stepping stone to a wholly owned company: at the end of the agreed term, Norse relinquishes its interest, and the partner council takes over ownership.
I have no doubt that interest in the LATCo model will increase over the next few years, as the pressures on local authorities increase, and they are forced to consider new ways of operating.
