With growing interest in Local Authority Trading Companies, Norse Group CEO Justin Galliford explains how they can succeed in delivering key services

In my discussions with local government leaders, I have noticed that the LATCo model is firmly back on the agenda. This rising interest stems, I believe, from the continuing pressure on finances, and in particular the impact of devolution and local government reorganisation: this has prompted councils to look again at service delivery, and consider which model offers the flexibility needed to make structural changes.

For those councils slated to form the new unitary authorities in 2027, the need to review their service delivery model is now pressing. Although attention will naturally focus on adult and children’s services, substantial savings are also likely to come from combining frontline services such as waste, FM, ICES and property services.

However, this will be far from easy. Merging councils will likely inherit a mix of different delivery methods – some in-house, some outsourced – and arrangements that are not coterminous.

Procuring these services will be highly complex. Achieving economies of scale will require significant service redesign, and because existing contracts will expire at different times, the transition could take several years and carry major financial and operational risk.

Many of the new authorities will be considering bringing these services in-house: this offers the flexibility and direct control which will be necessary for a successful transition. It also satisfies any ideological preference for insourcing. The key question then becomes how to structure that model: through a DLO or a LATCo.

Compared with both outsourcing and traditional DLO-based insourcing, the LATCo model offers several important advantages:

  • the combination of commercial knowhow and public service values can provide cost efficiency without diluting social value;
  • profits are returned to the public purse rather than to private shareholders;
  • the council has control over the company;
  • and, perhaps most importantly, the flexibility to implement major changes without the need for contract re-negotiation, and without the risk of financial penalty in the form of variation charges.

But there is a further benefit, which is often overlooked when the focus is on operational activities and service re-engineering – the development of a commercial culture, and the revenue growth which can result.

At Norse, we have invested heavily over the years, particularly in our local authority partnerships, to drive external sales as well as the revenues from delivering partner councils’ services. Over the years, we have been able to win large numbers of contracts, increasing turnover and boosting profit share for our partner councils; reinvesting to provide security; protecting jobs and creating employment opportunities; helping the local economy; and increasing social value.

Returning profits to our partner councils also means that vital local services can be maintained and improved.

More than 60% of Norse Group’s turnover comes from local authority partnerships. Its joint venture model combines the council’s strengths—local knowledge, public sector values, democratic accountability and service delivery experience—with those of a commercially experienced partner, including service integration, external revenue generation, long-term planning and investment, and strong operational cost control. When structured well, a joint venture can give a local authority direct influence over service delivery, reduce financial risk and generate returns more quickly.

Creating a trading company—whether wholly owned or established through a strategic partnership—does not mean sacrificing the qualities councils and residents value most: strong services, workforce protection, community focus and local accountability. These are fundamental features of a LATCo. As Jonathan Werran of Localis has described it, this is “ethical commercialism”, and it is increasingly seen as a viable direction for local government.

A public/public partnership, such as a Norse joint venture, offers a practical route to insourcing without the same level of risk. It also provides the flexibility needed to redesign services in response to reorganisation and rising demand. Strategic changes and adjustments to working practices can be agreed and delivered much more easily within a joint venture, making it far closer to insourcing than to outsourcing.

When operational changes need funding, a trading company such as Norse brings proven commercial expertise and private-sector levels of efficiency. It can also trade in the open market to generate valuable additional revenue with minimal risk to the council, while ensuring profits are returned to the public purse rather than private shareholders.

As collaboration and partnership working continue to gain momentum, I am convinced this approach offers the right blend of commercial expertise and public service values.

Norse Group is the UK’s leading local authority trading company. Wholly owned by Norfolk County Council, Norse has developed an insourcing model as a radical alternative to traditional outsourcing – the joint venture partnership. The company now has LATCo partnerships with over 20 councils, providing a wide range of services including property consultancy, environmental and waste services, ICES, highways, transport and FM.