In the last few years increasing numbers of local authorities have been setting up companies, with varying degrees of success. This has been driven by funding challenges to a large extent and characterised by transferring in-house services out into a company, but there are many that have been created as a means of 'insourcing' i.e. taking the opportunity to bring services back from private sector providers into a company that they wholly or partly owned.
I have seen a number of authorities take this opportunity to take back control of services such as waste. Many of these outsourced contracts were set up around the start of austerity measures put in place by the Coalition Government in 2010 and set to run for lengthy periods which have not provided the flexibility required to deal with ongoing funding pressures. As these contracts come up for renewal, some authorities have found that better value for money could be achieved through setting up their own wholly owned company, or going into a joint venture company with another authority or another local authority controlled company. The Teckal exemption, which enables the direct award of services to a publicly owned body, has been a key enabler for this shift.
Looking to the future, as more authorities consider alternatives to the traditional forms of outsourcing, more of these companies seem likely. Joint ventures in particular provide a strong platform for growth, building on the scale and expertise that the collaboration can bring. However, as the market becomes more populated with these companies the risk of a Teckal challenge increases which is something local authorities will need to watch out for.
Overall, joint ventures can be a viable alternative delivery model for local authorities. Our research indicates that the numbers of joint ventures will continue to rise, and in particular we expect to see others follow examples of successful public-public partnerships.