Business Clinic
Time for change in Dorset

Three councils in Dorset have launched the country’s first pan-council local authority trading company. Added to this there are plans to merge some or all of the councils in the region. Is this the future for local authorities? What does it mean for providers?

Local authority trading companies (LATCs) are growing as alternative ways for local authorities to deliver services. A recent report by Grant Thornton, Alternative service delivery models in local government – Spreading their wings: Building a successful local authority trading company sets out the main drivers for local authorities to take this route. ‘As councils have come under financial pressure, they have considered how to reduce costs, generate income and improve efficiency by introducing commercial structures. For many councils, the use of LATCs is a step towards becoming self-financing.

‘We predict that the number of LATCs will grow in the next five years. The main reason for this growth is local government’s desire to generate income to protect other services. Secondary drivers include:

  • The need for certain services to be separate from councils to allow them to compete in a wider geographical area;
  • A view that greater commercialisation will drive efficiency;
  • A view that certain services are non-essential to the council and would be better managed separately.’

Tricuro

Bournemouth Borough Council, Borough of Poole and Dorset County Council have come together to launch their LATC, Tricuro. The first pan-council LATC and reported to be the largest in the country, it sees the transfer of a number of all three councils’ existing adult care services, with a budget of over £38m and employing over 1,200 staff.

Transferred services include residential care; reablement; day services including skills training for independent living; shared lives; care catering services; Oh Crumbs! offering people with a disability opportunities to develop work skills and experience; support time and recovery for people with mental health conditions; and training projects including employment-related skills training for people with a disability.

Tricuro was set up to improve value for money through a partnership between the three councils and the LATC, which incentivises services to improve. It also enables the councils to hold managers to account for quality and financial performance. It enables significant cultural change within the workforce and management which should allow Tricuro to make efficiency savings and provide the council with a year-on-year reduction in costs. Tricuro can also generate additional income through trading with self-funders and other public bodies. This would keep the revenue within the LATC or the councils, so it could be reinvested in additional services. It is also hoped that it will develop an entrepreneurial culture by encouraging new ideas and services from staff and combining all three local authorities’ public sector perspectives with private sector discipline.

Although LATCs are increasingly being set up by councils, a joint, county-wide approach, taking on the services and pooling the resources of three different authorities is unique. As with other LATCs, it opens up the councils’ services to a wider audience, meaning they can be purchased by those receiving direct payments, carers and self-funders.

As a large provider of services, it is hoped that Tricuro will enjoy a ‘significant market position within the independent sector – making market penetration easier and with a high profile brand and reputation.’ It also enables smaller council run services to work alongside their new counterparts and offer services to residents that were traditionally outside their area.

Merging councils

In addition to the launch of Tricuro in September, it was also announced that a group of councils in Dorset is exploring plans to become a new, single unitary authority. The proposals have been set out by Bournemouth Borough Council, Borough of Poole, Christchurch Borough Council and East Dorset District Council. If agreed, the new council would be formed in April 2019 and would become the eighth largest local authority in England.

The councils involved say that the benefits are expected to be numerous and include:

  • Cost savings and more efficient service provision, through economies of scale, reduced management, better use of assets and buildings, and rationalisation of suppliers.
  • Better strategic planning.
  • Greater access to funding nationally and internationally.
  • Enhanced economic growth opportunities.

However, some Dorset councils were already looking into becoming a combined authority when this proposal was put forward. Draft proposals were exploring the possibility of the combined authority covering Bournemouth Borough Council; Dorset County Council; Christchurch Borough Council; East Dorset District Council; North Dorset District Council; Purbeck District Council; West Dorset District Council; Weymouth and Portland Borough Council; and Poole Borough Council.

Dorset County Council leader, Robert Gould said at the time of the single unitary council announcement, ‘There are so many public services which operate on a pan-Dorset basis that a more ambitious devolution plan should look towards one unitary authority for the whole county. Our priority is to identify the most cost-effective public service model for Dorset and all its communities. We need to develop a business case which is based on sound evidence and puts the people of Dorset at the heart of any decision.

‘There is a great deal more work to be done but I believe evidence is likely to show that a new single unitary council for the whole county will deliver the best outcomes for local people and make the best use of limited public money.’

Over to the experts…

Dorset councils are taking significant steps to manage the impact of ongoing budget pressures and efficiency savings. LATCs are more able to compete with private providers than traditional council-run services. As such, what does Tricuro mean for providers in the region? Also, does the clear intention to merge the councils in some way highlight the urgency of the situation facing local authorities across the country? What does a merger in Dorset mean for services, authorities, and providers in the region?

An extension of well-developed business acumen

Has the future already arrived or has the past caught up with the present? Local government is the most innovative part of public services according to the Cabinet Office and innovation is booming.

This example is just one of many innovative ways of trying to tackle the long standing issue of getting value for money while continuing to meet need. It sets in motion a new narrative on the relationship and dynamic between council and individual.

Councils are reeling from budget cuts (the ADASS Budget Survey 2015 calculates a 31% reduction in adult social care (ASC) budgets over the last five years) and the numbers of people living longer with complex long-term conditions is set to increase.

Integration of services isn’t new. Councils have been experimenting and implementing different ways of organising themselves almost since local government began. This is why, wherever you live, your experiences of services will differ, although your outcomes should be the same.

What is important is not so much the ethos, but whether individual personalised improved health and wellbeing outcomes are met and that individuals are protected from abuse. These are the marks of a civilised society and ASC must keep its eye firmly on these long-held principles.

Equally, it is vitally important that as well as securing quality outcomes, the interests of staff are protected. It is impossible to dislocate an enthused, well-trained and well-remunerated staff from a well-cared-for, secure and safeguarded public.

The experiment in Pan-Dorset of LATCs is an innovative extension of the existing, well-developed business acumen that councils have grown over the past 30 years. We shall all watch the changes with interest whilst giving every encouragement as we usher in the future face of local government.

Ray James, President, Association of Directors of Adult Social Services

Innovation will undoubtedly help councils

The squeeze on local authority funding is expected to tighten further with the forthcoming Spending Review. At a time when funding is being reduced, demand is growing. The pressures of an ageing population are particularly acute in the areas represented by the County Councils Network (CCN), where the number of over 65s significantly outstrips other parts of the country.

Even if Government listens to calls for additional ring-fenced funding for social care, councils will need to deliver innovative efficiency savings to continue to sustain vital services.

LATCs, such as the pan-Dorset initiative, are a shining example of what local partners can do together. By taking a commercial approach to service provision, LATCs have the potential to reduce costs while generating income for sustaining, improving and investing in local services. Tricuro follows in the line of other counties in developing LATCs which seek to provide community-based, preventative services, to keep people independent for longer and reduce long-term, recurring demand on both health and social care.

The use of LATCs will grow. A recent CCN survey of county leaders showed that 61% felt that traded services are regarded as an effective or very effective means of mitigating funding reductions over the next five years.

Whilst innovation will help councils meet the fiscal challenges, the merging of authorities or dreaded words of ‘local government re-organisation’ will never be far away. It’s clear that any proposal would need to be voluntarily agreed to by all partners to gain any traction with Government. It would also need to deliver the economies of scale to ensure it has the necessary economic benefits and efficiencies across public service providers. The Dorset proposal spans only part of Dorset and would seem to have neither to entice Government to take it seriously.

James Maker, Policy Manager, County Councils Network

Who commissions the commissioners?

As providers we had heard rumours as early as May 2014 that a LATC was being considered, but it was just an ‘option’ and we should not worry as there would be further consultation. Fast forward to December 2014 and, without further consultation, the local newspaper announced that a landmark agreement had been reached to form a new LATC.

From the Association’s perspective our concerns are around the potential advantages that will be available to the LATC and how exactly Dorset’s private providers fit within this model. Our members are fully aware that county councils are facing unprecedented pressures, yet there does not seem to be the same concern and emphasis placed upon the survival of Dorset care homes. We have already seen local homes closing and are now faced with significant uncertainty over the direction that the LATC will take.

Also, what happens if the scheme should fail? As happened in Chelsea and Kensington in 2011 and Stockport in 2012. Who will pick up the pieces and, more worryingly, the cost?

The Association has seen evidence of council-run care homes in Dorset commissioning services at higher rates than they will pay the private sector. How will the council keep our commercially-sensitive contracts private when they are commissioning with their own enterprise?

More worryingly, we are further informed by the council that all the contracts have already been awarded to the LATC for a period of five years. Providers are concerned once again, as we are commissioned one year at a time. Are we already seeing nepotism from the council towards their new-born baby?

The Council has answered some of the questions we have asked, but sadly we are currently left with more questions than answers.

Shan Seewooruthun, Chairman, Dorset Care Homes Association

 

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