Interview with Justin Galliford: Value-driven service delivery in a time of mass changes

In this fireside chat, LGIU’s Jonathan Carr-West sits down with Justin Galliford, CEO of Norse Group, to discuss the role of Local Authority Trading Companies (LATCOs) in the UK local government landscape and why LGIU and Norse are working together as strategic partners to support the sector.

They explore the challenges faced by councils, the implications of local government reorganisation, and the importance of values-driven service delivery. Justin shares insights on partnership models and his future vision for public services, emphasising the need for collaboration and a focus on social value.

This interview takes place ahead of the launch of our first major research output together next week.

Watch the full conversation on Youtube here.

01:56 – What is a Local Authority Trading Company (LATCo)?
04:08 –  Current challenges for local authorities’ delivery models
07:26 – The impact of local government reorganisation and devolution
10:03 – Supporting new unitary authorities
12:23 – The future of local government services
14:28 – Values-driven service delivery at Norse
17:56 – The partnership model in practice
20:50 – Long-term vision for public services
23:07 – Barriers to a preventive public service ecosystem
24:44 – Hopes for the future of local government

A written version of the interview has been edited down into a Q&A format, which you can read below.

Norse is a Local Authority Trading Company. Can you share a little bit about what Norse does and what a LATCo is?

A local authority trading company, or LATCo as it’s commonly referred to, is a limited company set up by a council. This allows it to operate commercially and generate profit, giving it some flexibilities with the services it provides that it may not have if it were fully in-house. Under local government regulation, councils can’t make a profit, but a local authority trading company can.

The origins of the concept really were born back in the late 80s under compulsory competitive tendering. The then-Conservative administration said that local authorities had to tender their services to ensure best value, or they could set their own company up, and that’s how Norse was born. Norfolk County Council decided it would set up some black coats, and those today are what we know as the Norse Group. It comprises of quite a diverse range of services. We provide adult social care here in Norfolk. We also provide facilities management right across the country, and that includes a very wide range of things covering everything really that a local authority might deliver at district, county or unitary level, probably with the exception of children’s services. In addition, we provide professional property services through our consultancy arm.

So that broad spectrum of services using the LATCo model has allowed us to partner with councils all across the country to help them deliver vital services, as well as generate a profit from external work and drive efficiency. The model as we use it allows our partners to demonstrate best value, to have a high degree of control over the operation, but also work with us so that we can bring in some of our operational knowledge and support from around the country from an economies of scale perspective to help innovate and deliver those services.

Are there particular issues that councils are facing today that are leading them to change their service delivery models? What are the challenges that may be driving change and innovation in this space?

It’s an interesting question, and there’s a number really. The first is just to look at the market conditions. As always with these things, we’ve seen trends. Over the last decade, a lot of outsourcing has involved fairly long-term arrangements. Now, we start to see a desire for that to move back to insourcing, particularly under the current government’s initiative, where they’re really quite keen on local authorities in-source.

Our model is an insourcing model. In many ways this is because it’s local authority to local authority. We’re owned by Norfolk County Council, and we work with other local authority partners to deliver those services. What we’re starting to see is this interest in bringing services back in, but also an acknowledgement that some councils who have put services out maybe for two or three contract cycles don’t have some of the skills they need from a client perspective or some of the back office systems anymore to deliver those things. So the LATCo model, as we put it forward, is a really good halfway house to help councils get that high degree of control, complete visibility because they co-own the company, but also use our skills and knowledge base to develop the team locally in the company we create.

They can do a number of things. In a few years’ time, they might look to take the service fully back in-house, so it’s a stepping stone, or market conditions might change, they might want to put it back out to tender, or indeed keep working with us. It’s very flexible. I think the other thing is some of the services that local authorities look to a private sector provider are quite specialist, and we’ve seen agglomeration in some of those areas. There are far fewer providers, which means getting best value through procurement in some instances can be challenging. So this is another good alternative.

Are we seeing unusual volatility at the moment, or are the patterns sort of fairly steady?

I think there are pockets of volatility. There are certainly some areas where we’re seeing this agglomeration I touched on, and it’s really hard. We do talk to customers who are struggling to get responses on some services when they go to tender. They might run our joint venture model as a parallel process to a competitive procurement exercise, as a safety valve or a backup, or even just to qualify what they get.

I think the other thing is, and of course, with regards to where England is at the moment,  is unitisation, local government reform (LGR) and devolution. Lots of councils they’re in a position where they know they need to renew their contracts or they need to do something different because they’ve got an issue with a current provider, but at the same time, they’re thinking about what will LGR mean? That’s quite an interesting dynamic. So we’re seeing some customers extend, some customers talk about a new arrangement given it’s public to public, so it gives them flexibility as they move into whatever the new world will look like. Those are certainly dynamics that we’re starting to see.

How are people explicitly framing those decisions in the context of reorganisation?

As you might expect, existing customers are saying that we’re not quite sure what the future holds, so we would like to extend for another contract term whic,h given the timeline for kind of vesting and full implementation of a new authority, really works pretty well. It’s still the early days in relative terms for a new authority when they’d come to review it again. We’re also being approached by stakeholders in potential new unitary models, saying, ‘Can we just talk to you about what this model might look like because we’d like to qualify something in our proposal?’. Equally of course, where it’s also getting utility when you think about what a new authority has to do and if we use the term, the strategic horizontal piece, thinking about how do you form a new authority, are we going to design from a very preventative base upwards in terms of new service delivery.

Many of the things we do are far more operationally focused. We kind of talk to people about being a vertical plugin, in the nicest way. The services we provide are really important, but on day one, you’ve got bigger things to be concerned with. So let’s run these in a joint venture model. We can do things on your timeline in terms of unifying, maybe how two or three services have been run in different districts, to bring them to one. Then, in a couple of years’ time, let’s come back to that.

The most obvious example would be waste collection. If you think about three or four district councils coming together in a new unitary, it is highly likely that they deliver their waste services in different ways. So let’s think about the challenges.

On day one, members of the public want to make sure that their service is still being provided. So on day one of a new venture, we might keep running the services discreetly as they currently are configured. But we know that the new authority will want to begin to bring them together. This is important, it’s front-facing from the public’s perspective, so we work with the authority to establish a timeline in a cost-transparent way. They can understand all of the costs to make sure we drive value and efficiency for them and begin to unify those services.

There’s a very practical element to it but the other thing to consider is when you’re helping customers consolidate services like this to a point of unification, if you went to the market now competitively through procurement and said we’ve got the same thing being done in three or four different ways we want you to bring it together, there’s risk. The market will price in risk, and it’s to their advantage to ensure that they deliver without incurring that risk and therefore increase their margin. I don’t criticise that as a commercial model. Ours is very different. We’re very transparent in our costs. We don’t look to profiteer from risk or expensive contract variations. It’s a very high degree of control from the authority and a really good level of cost transparency to help ensure best value.

That’s even further complicated, not just by a reorganisation, but by changing legislation. We’ve also got some big changes to waste legislation coming, particularly in recyclables and the introduction of food waste, which is yet more risk, equates to more cost, perhaps through a normally-tendered model. Our model is very flexible and very transparent. So you can see from that example, at a point of change, it has a certain utility that other models don’t offer.

How do you see that set of changes – local government reorganisation, devolution, creation of mayoral strategic authorities across various areas – How do you see the sector being radically different or shaping up in 5-10 years’ time?

I think the evidence from those mayoral combined authorities that already exist shows that it probably takes a couple of deals and iterations to move forward in a significantly different way. Of course, we should also acknowledge that it takes a massive amount of change just to move from point A to point B. You can’t underestimate that. I think a kind of 10 year time horizon looks potentially really, really interesting. Once you maybe get into that second deal space as MCAs become established and their remit gets worked out at a local level in terms of helping deliver place and drive economic growth. It’s early days, but I think exciting when you look at some of the poster boys and girls of what MCAs can deliver.

Do you see a lot of variation around the country in how people are approaching devolution and how they’re looking to prepare?

Absolutely, we do. The first thing to say is that the level of work that authorities are undertaking to pull together submissions is really incredible. The ones where we talk to customers and look at their documents is mind-blowing. Data-driven, very credible proposals are being put forward. That’s half the challenge here, central government’s going to receive an awful lot of very credible options. So how do they really evaluate those things? Within that, there’s some variance. I think you’d expect that when local leaders understand place really well. You want to see variance and indeed, I think that’s at the heart of what the government’s seeking to achieve. They aim to give people more flexibility to deliver better at a local place level. And that has to mean you see some differences.

You’ve talked about how, at Norse, you’re focused on values-driven service delivery. Can you tell us a bit about what you mean by that and how that manifests itself in the way you operate?

Our values journey has been really quite interesting, although we’ve been around as a company, in different carnations, for over three decades. More recently, we’ve done a really deep piece of work on values. We started at the bottom up with some think tank type work around our group. We employ about 8,000 people around England and Wales, so it’s quite intensive to do. But we understood what was important to them, why did they like working for the group and invariably that’s about how the work we do helps people in local communities. We really establish values by trying to listen to our staff and also our stakeholders, whether that’s customers or shareholders, and bringing those things together. We brought our values to life.

How do we embed that? Well, of course, culture is really important, as always, and many people listening will know, you’ve got the culture that originates and you’ve got the culture you want and you’re constantly working to move towards the culture that you want. It’s a journey that never ends. But in terms of living our values, I think that’s what’s really important, values are a verb, they’re a doing thing. So we try to build those into the way we operate. That comes down to being trying to be really open and transparent and having a high degree of integrity.

We’re a LATCo, we’re owned by an authority and quite rightly they want return from us. But there’s also a sort of social dividend as well. They are very supportive and they encourage us to do good things in the communities in which we work and help contribute. We’ve always had a strong ethos of helping people that may not have had opportunities that others have.

One of the things I’m proudest of is that across the group, we’ve got many people now in senior positions that joined us at a very different point in their life and their career. They’ve been able to progress through the group and we’ve been able to help them on their journey to kind of reach their potential. We work here in Norfolk in England. We do a lot of work with a local foundation to support a food hub initiative. We actually run all the logistics for dry goods and we move those out to food hubs to help feed people who are in food poverty which is one of those things that’s hidden. People can be at work but still be in food poverty given cost of living pressures and the inflation environment we’re in. That ties back to the things we do because the sorts of services we provide may touch those families in other ways. We provide school meal services. it’s not lost on us that we might provide a meal to a child at school and we’re also helping support the family more widely accessing reasonably priced food.

Social value has many dimensions for us and it’s something we’re always thinking about and trying to leverage. One of the things that I really like is that with the LATCo model and our joint venture model working with other customers, the question we increasingly want to ask is, “Well okay of course we can provide these services but what’s important to you in terms of social value as an authority and how can the company help deliver on that agenda for you?” And I think that’s really quite a powerful initiative.

Speaking of your partnership model, how does that work? Could you give us any examples of how it plays out in practice?

The partnership model takes the local authority trading company, to all intents and purposes a limited company, our partner, we’re delivering services for co-owns that company and appoints directors to the board along with us so that they have this very high degree of control. I talk about and we do a lot of work scoping the services that we’re to provide, and we’ll either bring staff and budget in directly from the council or perhaps from a contractor if the service has been outsourced. As we bring that service in, we can provide the as-is service, but also what’s really powerful is we can go on that journey as a partner to say, ‘What do you want the service to be? Where do you need it to go?’ And we can co-design that with them. So in a very open, transparent way from both a design perspective and also, again, the costing and financial perspective.

That way, we can build in other elements. we might build in apprenticeships, might build in broader social value initiatives and indeed support services to help add social value. For example, we’ve got an organisation of business within the group that does a lot of disabled adaptations, and quite often we find, certainly in England, customers might be struggling with relevant grant monies to go out and deliver adaptations into homes to help keep people in the homes longer rather than going into adult care settings. It’s multifaceted, but it’s all based on a strong relationship, with, of course, a good contract under it. A deep understanding of what the customer needs from us in the immediate term, but also what we can do in the longer term.

Thinking about the longer term. If you cast your mind even further forward, so if we think beyond 2030, public services 2040/2050, what’s your sort of vision do you have for how public services are delivered at a local level?

I could say the obvious stuff like we need more digital transformation and those things are given, but it’s about the world we live in, digitisation, big data and so on to help us inform our decisions. I think fundamentally, many of the services we’ve provided traditionally have been a response to pressures, and I think where I see us moving to hopefully, along a broader government and public sector agenda is delivering far more on the preventative because it has to be unequivocally true that if you spend a pound to prevent a problem, it’s far cheaper than dealing with the problem there after. Let’s take school meals as one example, so that children have access to a breakfast, a lunch, a snack pack. If you could continue that through education, I think you can have younger people in the workplace who have got far healthier eating habits, hopefully, present with far fewer problems in the health system later in life. The same can be said of our adult care service, far more preventative measures to keep people in their homes longer.

From a broader perspective, when you think about facilities management, that begins to extend to far more joined-up building management systems, so we have a far deeper, clearer record of the building costs to design and develop with a solid carbon footprint reduction. Then we manage it in such a way that we’ve got a solid green agenda throughout its life, and then decommissioning. A lot of this is about co-collaboration and then, I think if you put onto that layer, the capability, the possibility of tying in local authorities through to the health service, maybe through to DWP and police and crime, you’re developing services that move through those different layers, then you get to a really interesting space.

What do you think are the obstacles to that long-term vision of a joined-up, systematic, preventative public service ecosystem?

They’re probably the classics we talked about a decade ago. I think we’re moving towards breaking them down but certainly I know silos is one. I mean unfortunately we still have a lot of silos across the public sector where we have different stakeholders with different levels of power, and different strengths of voice that mean that you don’t get equal representation at the table sometimes, and that isn’t deliberate it’s just one of those things that are a phenomena that emerges through cultures.

We need to work far harder to ensure really positive stakeholder engagement with equal voice and equal footing. Then of course, so much of that is driven by money. The money has to be in the right places. We need to think about our funding structures so we don’t get competing funds, we don’t get one fund that gives power over another. This is all pretty deep stuff. Some of this goes back to Whitehall and really looking for a thorough desire and a will to get into the really nitty gritty stuff of redesigning the way in which so much of our public services are delivered. That’s a huge task.

When you look at the system now, what are two or three things that give you real hope for how the sector is developing?

I think the first thing to say is the ability for the sector to respond to challenge – it’s unparalleled, really. When you consider that local authorities have been under financial pressure against various elements of changing legislation since 2010, it was 15 years ago, but they always deliver. They always keep people at the heart of service. So that’s testimony to the grit of individuals that make up local authorities, both at an officer level and at a leadership level. Politically, it’s always heartening because no matter how challenging it is, local authorities always find a way of delivering. So I think that’s really, really impressive and very positive.

If I gave you a magic wand and you could change one thing, what would it be?

Funding. Again, not just in terms of how much, but far quicker to this integrated settlement where local leaders have the ability to determine how their budget is spent rather than having to work on the kind of pot system and individual budget.

This interview is part of LGIU’s new Future Local Lab – a holistic programme of resources aimed at helping you to prepare for and respond to the emerging challenges facing local government everywhere. It’s open to everyone, make sure you’re signed up today.