LATCOs: improving service delivery and driving profit

Martin Cresswell, chair of Lampton Group, discusses how Local Authority Trading Company (LATCO) models can deliver commercial profit for local authorities, drive innovation and result in service improvements for residents.

The current pressure on local government is immense, particularly when it comes to funding and the impact on local services. Addressing these challenges requires bold moves. Delivering high-quality, sustainable services for residents is at the forefront for every council, but delivering these successfully, and in a cost-effective way, requires innovation and a significant change in operating model for many.

In the past decade, local authorities have been reassessing their service delivery models, moving beyond traditional outsourcing to consider alternatives, with some even forming joint venture partnerships. This shift stems from the need to strike a balance between maintaining control over essential services, and embracing flexibility and innovation.

That’s where Local Authority Trading Companies (LATCOs) come in. LATCOs present a hybrid model offering significant advantages for local governments. By establishing LATCOs, local authorities can tap into private-sector expertise and experience while maintaining control and assurance over service provision. These entities function as commercial ventures, efficiently delivering essential services while generating additional capital and revenue streams that can be used to reinvest in the delivery and maintenance of essential local services for residents.

The LATCO model has been transformative for the London Borough of Hounslow (LBH), allowing it to enhance community outcomes while maintaining a commercial approach through its wholly owned company, Lampton Group.

Supporting communities in a sustainable way

Structuring a business as a LATCO instils a more business-oriented mindset, encouraging increased operational flexibility and establishing new revenue streams. Importantly, any profits generated are reinvested back into the local community, rather than being lost to the private sector. This reinvestment plays a critical role in enhancing the delivery of essential services, whether it’s enhancing the cleanliness and green spaces of boroughs, developing and maintaining homes or providing services that greatly enhance residents’ health and well-being.

As providers of front-line services, LATCOs also serve as the council’s eyes and ears, actively monitoring activities and fostering collaborative relationships with community groups. Drawing insights from these partnerships and their on-the-ground presence, LATCOs can facilitate both reactive responses and proactive initiatives.

At Lampton Group, our tenure as a LATCO within the London Borough of Hounslow (LBH) has been marked by a steadfast commitment to delivering exceptional services. While many councils grapple with budget cuts, our commercial model provides us with a strategic edge. By generating revenue that’s reinvested back into the London Borough of Hounslow, we not only save the council money but also alleviate financial pressures. For example, our commercial cleaning business also has contracts outside of the borough, bringing in new revenue streams.

Operating as a LATCO has allowed us to forge a deep understanding of local needs, as our shared values align closely with those of the council. This has put us in a unique position to identify and meet residents’ service requirements effectively.

While our journey hasn’t been without its challenges, the outcomes speak for themselves. We boast one of London’s leading refuse and recycling services. In 2022, we also launched our Commercial Recycling and Waste collection service, supporting Hounslow businesses in reducing the carbon impact of their waste and recycling. In the past year, Lampton Recycle has invested in developing this service, increasing our customer base by 73 per cent.

In addition, we have expanded our work in greenspaces across the borough. While we deliver essential parks development and maintenance across the borough, our team have also expanded horticultural and maintenance services to local businesses, local business parks and other landmark facilities such as Chiswick House and Gardens.

Through Lampton Leisure we have seen impressive post-pandemic leisure membership and have introduced new, commercially driven member services. In addition, we have also created a thriving property investment business and recently launched a commercial heating business supplying trusted heating services to domestic customers at competitive rates to continue to meet local needs and drive revenue back into services.

Through innovation, job creation, and profitability, we’ve not only contributed to the council’s financial health but also enhanced services and social value for the community. Our ethos reflects a business mindset with a genuine commitment to community wellbeing.

Bridging the public sector skills gap

Alongside job creation, LATCOs have the added benefit of retaining many skills locally that are often lost to the more commercially driven private sector.

Local governments and their teams play a vital role in shaping communities and delivering services that consistently improve residents’ lives. Serving as a means to connect the public and private sectors, LATCOs can also act more commercially when it comes to employee attraction and retention, helping to drive progress.

The emphasis on commercial viability and adaptability fosters innovation, particularly in areas like sustainability, digital services, and operational efficiency. By embracing public-private collaboration, and retaining skills, the LATCO model can support councils in improving service quality and community outcomes.

LATCOs also serve as a valuable mechanism to address skills shortages, propelling local governments towards a more resilient and dynamic future.

A long-term view

Setting up a LATCO should be approached as a long-term strategic endeavour, rather than a temporary solution. Success hinges on several key factors including a well-defined purpose, robust governance structures, and alignment across the organisation. These elements are essential for ensuring sustained success and impactful outcomes over time.

Especially in uncertain times, local authorities must embrace innovative approaches to deliver essential services effectively and sustainably. By harnessing private-sector expertise while maintaining control over service delivery, they can ensure efficiency, quality, and additional revenue generation, thereby bolstering the local economy. Realising the full potential of LATCOs holds the promise of achieving both social and commercial success amidst today’s challenges.