The benefits of the model come from developing ‘ethical commercialism’, writes Justin Galliford, CEO of Norse Group. Sponsored comment from Norse Group.
Over the past few years the local authority trading company (LATCo) model has seen growing interest from councils; a LATCo is seen as a means of addressing their financial challenges while retaining their community values.
Justin Galliford, CEO of Norse Group
The problem is that the wider benefits of a LATCo – cost savings, greater innovation, generation of external revenue and job creation – risk being lost if one fundamental element is missing: a commercial culture. This can be an all too common omission given that many local authorities lack the necessary business skills.
If a LATCo doesn’t have a commercial culture it is really no more than a direct labour organisation.
One of the reasons for Norse’s success is the company’s business knowhow, developed over many years, and founded on its trading record; tendering for, and winning, external contracts has given us a competitive edge which pervades all of our operations, without diluting our public service ethos.
This is where the value of our partnership model becomes clear: it is able to combine the strengths of the partner council – local knowledge, public sector values, democratic accountability – with those of a commercially skilled partner: efficiency, external revenue streams, long-termism in planning and investment and market knowledge.
Working in partnership
In Labour’s Democratising Local Public Services, published in 2019, the party highlighted a key problem with traditional outsourcing: councils maintaining responsibility for delivering services but losing the ability to deliver them effectively.
A partnership LATCo addresses this relationship between ownership and delivery by including council representatives on its board and by working collaboratively. The model also addresses the seven clusters in support of insourcing identified in the Labour plan: “Lower costs, a public service ethos, a longer time horizon, greater scope for coordination and integration of services, economies of scale, greater accountability and transparency, and better management of risk.”
Working in partnership gives local authorities access to an existing commercial culture, and gives them all of the benefits of an established trading company with minimal risk.
It is what Jonathan Werran, chief executive of thinktank Localis, aptly termed “ethical commercialism”.
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