Local Authority Trading Company – The new way forward for Adult Social Care
July 31, 2009
A new legal entity Essex Cares Limited will begin trading this summer representing a major shift in how Council’s may choose to externalise their remaining Adult Social Care Services over the next few years to compete in the open market.
What is a Local Authority Trading Company?
Essex Cares as a Local Authority Trading Company (LATC) represents a half way house for Essex County Council between services either remaining in-house or going through a traditional tender process to the open market. So far only a handful of Councils have chosen to consider this route, with Essex County Council one of the first to act, but with other Councils likely to follow suit as a way to maintain and make commercially competitive their remaining in-house services, particularly within the current context of service reshaping requirements in response to the arrival of the ‘personalisation’ agenda.
High performing Councils have the power to create LATC’s under the Local Government Act 2003. In simple terms the Council, as in the case of Essex County Council remains the shareholder of the new legal trading company, but with a commercial holding company created to run as a fully independent business, freed from the restrictions of Council control and able to compete openly in the market place in developing responsive ‘value for money’ outcomes in service delivery.
Essex Cares Limited
Essex Cares has been the creation of the Directorate of Adults, Health, and Community Well-being within Essex County Council under the stewardship of Jenny Owen, this year’s ADSS President and relates to the remaining in-house adult social care services now being externalised. This represents a cross section of daily services, both into people’s own homes or through more traditional day and employment services.
Under the holding company of Essex Cares Limited, three business stream subsidiaries will exist covering Older Care services (including a new reablement service), Employment and Inclusion covering learning disability day and work placements, and the countywide equipment service. The business will employ some 850 transferring Council staff and involves a substantial turnover in delivering services to some 10,000 people per year.
The initial contract between Essex County Council and Essex Cares is for three years during which time Essex Cares will need to demonstrate both value for money and efficiency saving targets including the introduction of key performance indicators (similar to PFI styled contracts). Thereafter, Essex Cares will need to compete in the open market for contract extensions based on reputation and commercial competitiveness.
The Manager and Service User Perspective
Mark Lloyd and Mike Walsh of CHS have been the lead management consultants for Essex Cares in managing the transfer process and change of culture within the business. Both have been impressed and struck by the enthusiasm and support from the transferring workforce.
In particular, staff who have worked in some cases for decades for Council services, see the benefit of the new Trading Company in developing greater commercial opportunities and offering potentially greater control for staff in shaping their future services and indeed longer term job security as part of a successful business. Already as a new legal entity Essex Cares is looking to tender and win further contracts to compliment the service base already in place both within and outside Essex.
One of the service managers for the Learning Disability Employment and Inclusion Service comments “before we were facing an uncertain future with the prospects of services either gradually being run down or tendered to the private sector. Essex Cares now gives us the chance to fully express our entrepreneur skills and truly empower our staff and service users to run their own business projects.”
The service manager in his role is already seeing the opportunities to develop a number of self sustaining work based employment schemes within the commercial and entrepreneurial framework including a new horticultural business near Chelmsford. Ben a service user within this business now has the opportunity to participate in the day to day running of selling the horticultural produce to the public on a commercial basis.
The new management team of which Mark is part have been keen to instil confidence in the teams to think about the challenges of personalisation and likely impact on a number of traditional services. During the life of the three year contract it is accepted many of the transferring services will be re-modelled and even closed to release monies for the self directed support roll out.
However, rather than waiting for this to occur under Essex Cares managers in day centres are already planning the creation of their own unique Personal Assistance Agency in the new market place of personalisation, which would probably never have happened if the services were remaining in-house. In other words managers are ‘thinking outside the box’ regarding how they can shape their future services within the new commercial environment.
Correspondingly Essex Cares will inherit the new reablement service which has replaced the previous in-house domiciliary care services, and has delivered encouraging results in assisting people towards independent living during its first year of operation. This service which has seen some 2,500 people during the last year with over 50% moving towards greater independence following an intensive package of support. With this model of support set to increase in capacity this will keep Essex Cares very much integrated within the wider Personalisation Agenda within the Council.
Conclusions
Many Councils will look with interest at the LATC model in Essex to see how it succeeds in the market place. Correspondingly it will give the Essex Council the best of both worlds remaining the Shareholder of the growing business but allowing Essex Cares to find its own way in competing for new work and seeing the modernisation of provider services in meeting the new world of personalisation.
Comments
Got something to say?