Norse Group chief executive Justin Galliford
The Labour government seems determined to avoid the accusation that austerity is returning, but money will be in short supply for the public sector. While there is a commitment to improving public services, is it possible to have “sound money” at the same time?
There have been hints that longer-term funding deals are on the way, which will certainly help local authorities and may relieve some of the budgetary pressures. Devolution may mean increased freedom to re-engineer services, which will help drive down costs.
But councils are still going to find it tough without further direct financial support. This leaves councils with a dilemma: demand is rising inexorably for key services. At the same time we are all looking for ways to achieve net zero and increase social value. All of this costs money.
In my discussions with local government leaders, it is clear that there is a willingness to explore different ways of delivering services, and an appetite for innovation. Insourcing looks more and more attractive, but it raises the question of which works best: a traditional DLO, or the more radical local authority trading company (LATCo) model?
If it is well run, a trading company can generate significant profits, returning cash to the public purse without compromising public service values. CIPFA, an organisation we work very closely with, can provide invaluable guidance in setting up and running a successful trading company.
At Norse we have developed a partnership model which draws on our thirty-six years of trading experience. As a LATCo ourselves –wholly owned by Norfolk County Council – we have joint venture partnerships with over twenty local authorities. Our council partners enjoy the benefits of trading without having to go through the (often tortuous) process of forming their own company; and they have access to the wider resources at our disposal, particularly in sales and marketing, which can help develop revenue streams and increase profit share.
I believe that this type of collaboration, pooling resources for the greater good, offers local government a way to meet the financial challenges which we face, and maintain our commitment to public service values.
