Preparing for LGR: how can the new mega-authorities implement major changes and maintain essential services?
Norse Group CEO Justin Galliford believes that councils will need to consider radical alternatives beyond traditional outsourcing/insourcing to meet changing needs
Devolution is coming, and with it local government reorganisation which will put significant pressure on local authorities already facing major challenges. Money is tight, and there is a skills shortage which means resources are stretched.
We now know which councils are included in the first phase of LGR – a mixture of counties, unitaries and districts. And it’s clear that the task of merging them to form large unitaries – and then combined authorities – will be far from easy.
With attention focused on social care and children’s services, is there a risk that other essential activities such as waste collection, environmental services and highways will suffer? The success of the new authorities will depend on maintaining frontline services and finding cost savings. But how will this happen?
Bringing services inhouse is fraught with risk: will the new councils have the resources and skills to integrate several different operations, some insourced, some outsourced, and likely to have different end dates? There is also the question of which delivery model – DLO or LATCo. A DLO may give total control, but it brings far higher costs; and setting up a trading company is far from easy.
And simply looking to the private sector also carries risk – at a time when councils will need a high degree of control, and maximum flexibility, procurement will be extremely complex (and costly), and the rigidity of a contractual arrangement may be unhelpful.
As well as ensuring that bins are emptied and other important services continue seamlessly, there is the question of property. With the merger of several authorities into a single entity there will inevitably be buildings which are surplus to requirements; will the new councils have the resources and ability to manage the process of rationalising the corporate estate? Major decisions will have to be made – and implemented – over how to deal with these buildings – sell off, rent out or re-develop?
With so many unanswered questions, and additional pressure on already stretched resources, I believe that the answer lies in collaborative working. At Norse we have developed a groundbreaking partnership model, forming joint ventures with local authorities across the UK to deliver essential services. These JVs are co-owned by Norse and the councils, giving our partners a high degree of control, and combining the benefits of insourcing with commercial capability.
Crucially, the partnership model offers maximum flexibility; unlike a traditional contractual arrangement, when changes are required there is no need for re-negotiation, and no risk of variation charges. Board representation means that our partners have a direct say in how service changes are implemented, and in deciding the budget. And the ability to trade externally – with all of Norse Group’s resources and expertise to call on – can bring in valuable extra revenue streams, with profits returned to the public purse rather than private shareholders.
The new authorities will have so many things to contend with in the integration of several councils into a single body, there is a risk that some services will be adversely impacted; I believe that making use of partnership working offers an opportunity not just to make the transition seamless, but also to ensure long-term success.
