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.’
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.
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?