Next steps for Local Authority Trading Companies

Existing Local Authority Trading Companies may be considering the next steps for Local Authority Trading Companies (LATC’s).

In my role as founder member of the LATCo Network, I have been asked by the chief executive of a Local Authority Trading Company (LATC) how they can go about offering services to neighbouring boroughs. Whilst this is something that should be encouraged, the conditions for doing so need to be right.

Whilst the freedoms derived from being a LATCo allow such expansion, your first priority is to your current shareholders and continuing to deliver excellent services to them. If you are achieving this along with positive recognition from your clients and customers at all levels, then you are probably ready for the challenges of expanding your business. If not, my advice is to continue developing where you are until you are clear you are doing it well.

Once you are armed with a good track record you can more readily get the ear of your neighbouring local authorities. LATC’s are governed by a few key areas of legislation, predominantly TECKAL –requirements. If you are a TECKAL LATCo you will be limited to undertake no more than 20% of your core turnover delivered to your host LA. So, a key question for yourselves is are you doing all that you can do with your shareholder or is their more headroom in this respect?

Before considering expansion, you need to determine where you have capacity within your own organisation. There are many examples of organisations that are not able to fully utilise their assets to full capacity. If you can do this in an efficient manner and cost savings can be brought to both your existing shareholder and other clients, then this can only be seen as a win/win situation.

There will be a need for a good strategic fit between your own organisation and the client you work for. If you do not truly share the same objectives the journey will be difficult and potentially doomed to fail. With this commonality your ability to hold your clients trust will ensure a fruitful relationship for both parties.

LATCo’s can provide unique partnerships that cannot really be achieved in private public arrangements. This is because the profits that you make will get recycled into the public purse not to corporate shareholders of a PLC. This is in many respects a compelling reason for other LA’s to partner with you rather than the private sector.

Opportunities to share procurement arrangements more widely often deliver true savings that can never be achieved in private/public arrangements. Additionally, the use of public procurement frameworks for example can add significant value through LATCo arrangements.

On the subject of procurement, significant costs will be incurred through any major exercise with the private sector. These can be saved in many respects through a partnership with a LATCo.

Lastly, never forget the added value that LATCo’s can bring to the party. Local services delivered by local people for local customers is a pretty strong reason why taking this approach will reap fantastic benefits all round. As a speaker at the upcoming LATCo Summit the inaugural 1day conference that brings together forward thinking, commercially minded Local Authorities, LATCo's and other public sector, not for profit and commercial organisations working in and around this sector as enablers.

The LATCo Network’s aim is to enable members to be sustainable businesses that exist for social good delivering services locally. Find out more about the Summit below.

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