Justin Galliford
Traditional outsourcing of services may offer local authorities cost savings, but it can also present risk.
In the current challenging financial environment, outsourcing providers are incurring increased costs in both labour and materials, at rates not envisaged even a few months ago.
Unless contracts contain clauses designed to restrict price increases, they will inevitably be passed on to the local authority, thereby offsetting the savings used to justify the outsourcing in the first place.
In the past, where they have not been able to pass on cost increases, we have seen cases of a number of high-profile outsourcing providers collapsing, causing massive problems for local authorities in terms of maintaining service provision.
We have also experienced a reduction in competition among suppliers, with further consolidation expected as the business environment deteriorates.
At Norse, in addition to increasing efficiency and achieving savings, our partnerships offer an alternative to a solely cost-reduction approach.
Using our commercial skills, we develop revenues which complement the effectiveness of robust cost control.
The flexibility of the joint venture model means that we are able to trade freely in the external market, opening up profitable new income streams.
This external trade also maximises efficiency by reducing under-utilisation of resources.
Profits generated through external revenues, along with cost savings resulting from a more commercial approach, are passed to our local authority partners through a profit share arrangement.
Our ‘ethical commercialisation’ approach ensures that, while making profit, we also adhere to the sustainability and socio-economic issues embodied in the Environmental, Social and Governance (ESG) guidelines, maintaining the all-important public service ethos of ensuring wider social value, and following Norse’s mantra of improving people’s lives.
To illustrate the potential of commercial trading in our partnerships, in the last five years alone Norse Group has returned over £65m to the public purse.
By using our experience and resources to bring in additional revenue, maintaining and even increasing levels of funding, our partnership model is proven to provide local authorities with an effective vehicle to protect essential public services.
To find out more about our joint venture partnerships, please visit norsepartnerships.co.uk
