Justin Galliford highlights the benefits to councils of the returns from external trading
In a previous column I talked about the broad range of benefits that joint venture partnerships bring to local authorities. Here I am going to look deeper into the specific benefits of the revenue generated from external trading. With more austerity on the horizon, many councils are warning that they have no more flexibility left to balance their books.
This of course means that any further pressures on finances will need to be met by looking even closer at their existing services budgets: a seemingly hopeless task given the pressures of the recent years and the current economic turmoil, not to mention the impact of inflationary.
One of the key features of the joint venture model is the freedom to trade in the external market, opening up profitable new income streams. Within a partnership arrangement, the local authority, making use of its partner's commercial knowhow, has the ability to raise considerable additional revenue via commercial activity in service divisions it already provides under local and centrally funded income.
Areas such as grounds and buildings maintenance, security and facilities management, catering, trade waste collection and transport services all offer opportunities to deliver additional revenue by taking on external commercial contracts. In my experience many organisations are attracted by the involvement of the council, finding that it offers a high degree of security and helps their social value credentials.
The profits generated through such commercial revenues can play a significant role in bolstering councils' income – all Norse partnerships have a well-established profit share mechanism, and in the last five years the group has returned over £65m to the public purse.
Our 20-plus local authority partnerships bring in around £50m a year from external contracts, income that is further augmented by the value of greater operational efficiency from employing under-utilised capital resources, generating cost savings for our partners.
Clearly it really does profit local authorities to look at external commercial trading via a partnership.
For more information on Norse partnerships, visit www.norsepartnerships.co.uk
