Commerciality is key to a successful LATCo

As local government leaders consider the challenges and opportunities presented by devolution and local government reorganisation, the Local Authority Trading Company (LATCo) model is increasingly returning to the agenda.

Growing interest reflects the ongoing pressure on council finances and the need for service delivery models that offer both flexibility and resilience during periods of significant structural change.

Many of the new unitary authorities, as well as councils outside the first phase of local government reorganisation, will be assessing the future delivery of frontline services. The LATCo model offers several advantages over both outsourcing and traditional direct labour organisations (DLOs). By combining commercial expertise with public service values, a LATCo can deliver cost efficiencies while maintaining social value. Profits are returned to the public purse rather than private shareholders, councils retain strategic control, and the model provides the flexibility to implement major service changes without the risk of costly variation charges.

However, one of the most significant benefits is often overlooked. Beyond operational efficiencies and service redesign, a successful LATCo can foster a strong commercial culture and generate additional revenue streams.

Norse Group has invested heavily over many years, particularly through its local authority partnerships, to grow external revenues alongside those generated through service delivery for partner councils. This commercial approach has enabled the organisation to secure contracts across a range of services from cleaning and catering through to estates and asset management via competitive tendering.

The result is increased turnover and stronger returns for partner councils. These revenues can be reinvested to strengthen financial resilience, protect employment, create new opportunities, support local economies and enhance social value. By returning profits to the public purse, LATCos can also help sustain and improve essential public services.

Exposure to market forces plays an important role in developing this commercial mindset. It is one of the key distinctions between a LATCo and a traditional DLO, while still retaining many of the benefits associated with insourcing. When supported by the right culture and leadership, a LATCo can maximise its potential and make a significant contribution to local government’s long-term sustainability.